Dealers face ongoing apprehensions in 2024, primarily related to elevated interest rates and the affordability of vehicles. While some express confidence in the profitability of service, parts, and collision operations, concerns persist among dealership executives. Participants in Automotive News' 2024 Dealer Outlook Survey emphasize their wariness regarding the potential disruptions caused by interest rates and affordability in their businesses. The majority fear a decrease in new-car profit margins year over year, anticipating increased spending on advertising for vehicles and services due to consumer anxieties about rising purchase prices and borrowing costs. Additionally, a recession in the coming year is not entirely ruled out by many respondents.
Ben Keating, President of Keating Auto Group in Victoria, Texas, acknowledged the demand for vehicles but cautioned about the challenges in meeting that demand. Ranked No. 15 on Automotive News' list of the top 150 dealership groups in the U.S., Keating Auto Group remains cautiously optimistic about selling more vehicles in 2024 compared to 2023. However, Keating anticipates higher marketing expenses for new vehicles, leading to reduced overall profitability compared to the previous year.
Insights from the Automotive News survey, which involved 208 dealers and dealership managers, reveal diverse perspectives. Approximately one-third expect a decline in overall dealership performance in 2024, while 39 percent foresee an improvement. Mixed opinions also surround overall dealership profit, with 37 percent anticipating a decline, 32 percent expecting stability, and 31 percent anticipating an increase in 2024.
Regarding 2023 financial performance, 55 percent of respondents reported profitability, albeit lower than 2022 figures. One-third experienced increased profitability in 2023, while 12 percent reported unprofitable operations.
Concerns about a potential recession in 2024 persist, with 67 percent expressing moderate to extreme concern about the adverse impact of a significant economic downturn on their businesses.