Raleigh, N.C., September 17, 2013—
Privately held auto dealers are driving their third year in a row of higher sales, although the pace of increases has slowed from last year, according to industry data
from Sageworks, a financial information company.
Sales at privately held auto dealers in the 12 months ended Aug. 31 were 8.2 percent higher than the year-ago period, according to industry
The increases are important, because while publicly traded auto dealer groups such as AutoNation Inc. (NYSE: AN) and CarMax Inc. (KMX) may get many of the headlines, companies that are privately held
dominate new car sales in the U.S.
Most of the top 10 U.S. auto dealers are publicly traded, but the majority of the other 90 companies on WardsAuto’s 2013 Megadealer 100
list are privately held. And the entire list of 100 dealers combined accounts for only 2,339 of the nearly 17,900 U.S. dealerships and only 16 percent of new cars and 5 percent of used vehicles sold in 2012, according to Wards.
The data from Sageworks, which uses a financial statement analysis
of private companies, is consistent with government statistics on auto dealers. Advance estimates Friday from the U.S. Census Bureau’s survey-based retail sales report showed auto and other motor vehicle dealers in August posted 1 percent growth from July and a 12.3 percent increase from August 2012.
“Dealers are having a pretty good year,” said Sageworks analyst Brad Schaefer. “Their sales percent change is still pretty high. The growth rate is lower than it was during each of the past two years, but remember, dealers were making a rapid recovery from the recession, so it’s now normalized a little more.”
New and used-vehicle dealers in Sageworks’ database, on average, have also seen profit margins strengthen over the past 12 months. Average net profit margin for the Aug. 30-ended 12 months was nearly 3 percent, compared with 2.4 percent in the year-earlier period. The most recent profit margins are more than a full percentage point above the average margin in the August 2010-ended 12 months – a material difference, Schaefer noted. Auto dealer margins
, however, are typically lower than many other types of retailers and for private companies across all industries. The average margin for companies across all industries was 6.7 percent in the most recent period, according to Sageworks data.
“With the improvement in the economy in general, a lot of consumers are more willing to purchase new cars – or a different car,” Schaefer said. “The interest-rate environment definitely helps with that, too. The trend we saw before was to hold onto your car and get it repaired or serviced.”
Indeed, the Federal Reserve’s latest Senior Loan Officer Survey
found that more banks had eased standards on auto loans recently, reducing spreads and increasing the maximum maturity.
Net profit margin has been adjusted to exclude taxes and include owner compensation in excess of their market-rate salaries. These adjustments are commonly made to private company financials in order to provide a more accurate picture of the companies’ operational performance.
About the Data
possesses a proprietary database of privately held company financial statements aggregated by industry. Each day, approximately 1,000 of these financial statements are collected by Sageworks from accounting firms, banks, and credit unions through a cooperative data model with Sageworks’ clients. The data is segmented and can be queried by 1,400 industry codes
, 70 financial metrics, company size, and geographic location.
Sageworks is a financial information company that provides financial analysis and industry benchmarking
solutions to accounting firms. Sageworks’ data and applications are used by thousands of banks and accounting firms across North America. Sageworks provides industry data on private companies to U.S. accounting firms at no cost. The company has been named to the Inc. 500 list of the fastest growing privately held companies in the U.S. and to the Deloitte Technology Fast 500.
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