New Car Profit Margins
New cars tend to have a profit margin between the invoice price and what the dealership actually pays for the vehicle of between 8% and 13%. The majority fall somewhere in between those figures. On average, the gross profit for a new car is $1,959.
An exclusive survey reveals a quarter of consumers think there’s upwards of 30% profit in a new car. But experts reveal manufacturer margins vary depending on make and model. Some brands are making 20 per cent on every new car sold. Others are lucky to scrape one percent out of a high volume model.
Used Car Profit Margins
The average gross profit for used cars is $2,337. Overhead expenses were 12.2% of revenue.
Car Manufacturers Profit Margins
The average profit margin for car manufacturers is between 5-10% per vehicle sold. More expensive, premium vehicles typically have higher profit margins.
Car dealerships generally aim for 8-10% profit margins on new vehicles. But after overhead costs, net margins are only 1-2%. Used cars have slightly better margins at around $2,337 average gross profit.
Profitability in the Auto Industry
Overall, the auto industry averages around 7.5% net profit. Sedans have tight margins, usually 8-13%, contributing to their decline. Pickups and SUVs compensate bigger revenue. Making fewer cars with limited options has increased incomes too.
Conclusion
So profitability ranges widely between vehicle types and automakers. But the average holds fairly steady year-over-year, allowing established brands to stay competitive. New players aim to disrupt the space by innovating production methods and sales approaches.