New-vehicle inventory grew and prices rose in 2023, but not as dramatically as the year before, according to a new report from the National Automobile Dealers Association.
The average retail selling price for a new vehicle increased 1.6 percent to $47,014 in 2023, marking slower growth than the 9.2 percent increase in 2022, according to the NADA 2023 Annual Financial Profile of America’s Franchised New-Car Dealerships. And new-vehicle inventory grew 38 percent to 2.3 million at the end of 2023, but the progress was a smaller change than 2022’s roughly 50 percent increase.
The NADA Data financial profile of U.S. franchised dealerships is published twice a year. There were 16,835 dealerships at the end of 2023, according to the report.
“We started to see signs of the market normalizing in the back half of last year, and I think that is going to be the story for 2024,” said NADA Chief Economist Patrick Manzi. “We are going to see more normal seasonal sales patterns of vehicles.”
The average number of new vehicles sold per dealership grew in 2023, up 12 percent to 918. The uptick represents a reversal of the 8.5 percent decrease in 2022.
In 2023, inventory levels grew overall but varied widely by brand, Manzi said. And the manufacturers with higher inventory increased their incentive spending noticeably, he said.
“Some of the brands with the most in-demand products still have very tight inventory levels and are turning their cars fast,” Manzi said. “But those with older products or even more expensive products still have a lot of cars on the lot.”
Last year saw more standard price adjustments for new vehicles to account for inflation, Manzi said. Inflation, meanwhile, has eased somewhat and the Federal Reserve left interest rates unchanged last month.
But “we did see a fairly big jump in payments, and that was despite a somewhat muted average transaction price,” Manzi said. “One of the challenges this year for dealers is going to be working with the customer to find a car that they can afford given the high interest rate environment.”
Total sales revenue per dealership in 2023 fell slightly to $71.7 million, down from $71.9 million in 2022. New vehicles represented 53.6 percent of total sales, with used vehicles accounting for 34 percent and service and parts sales accounting for 12.4 percent. The percentages are similar to the 2022 breakdown.
Total dealership employment in 2023 reached 1.1 million workers for the first time since before the pandemic, Manzi said, up from 1.07 million workers in 2022.
The total annual payroll at new-car dealerships dropped 2.6 percent to $92.5 billion in 2023. The average number of employees per store fell slightly to 63 last year, down from 64 in 2022.
“There was some big downsizing when the pandemic started, and we didn’t see dealers immediately rush to hire everyone back,” Manzi said. But “as sales volumes have picked up, we have seen employment grow.”