Hope all of you are recovering well from New Year's Eve. But it's time to get back to business.
Car dealership revenue experienced a significant drop from 2022 to 2023 due to various factors. The first contributing factor was the decline in new car sales, which fell by 8.2% in 2022 compared to the previous year. This decrease was primarily attributed to the ongoing semiconductor microchip shortage and additional supply chain disruptions.
Another factor was the increase in vehicle prices, which led to higher monthly payments for consumers. The average new vehicle price in December 2022 was $46,382, a 2.5% increase from the previous year. Additionally, interest rates on car loans climbed as the Federal Reserve increased interest rates throughout 2022. These factors, coupled with reduced OEM incentive spending, made it more difficult for consumers to purchase new vehicles.
Lastly, the overall economic climate in 2022 and 2023 played a role in the decline of car dealership revenue. With higher vehicle prices, increased borrowing costs, and a decrease in new vehicle production, car dealerships faced a challenging environment, leading to lower sales and revenue.
Also, wishing all of out Spies a happy and prosperous 2024!