Auto retailer executives had a lot to say during the Q4 2024 earnings calls. In this week’s post, we recount three major themes from the public auto companies’ earnings calls.
Regular updates on issues important to the Auto Dealer industry
Auto retailer executives had a lot to say during the Q4 2024 earnings calls. In this week’s post, we recount three major themes from the public auto companies’ earnings calls.
The February 2025 SAAR came in at 16.0 million units, up 3.2% from last month and 2.1% from February 2024. While February typically records one of the lowest sales volumes each year, this month’s SAAR exceeded the average of the last five Februarys (approximately 15.3 million units). February 2025 performance reflected strength in consumer demand, primarily driven by improved inventory and incentive spending. Mercer Capital expects the March 2025 SAAR to come in around 16.0 million as consumers continue to be drawn in by a wider array of available inventory. Even after strong February sales, the industry will continue to face uncertainties surrounding import tariffs and electric vehicle tax policy over the next several months.
On December 23, 2024, Honda Motor Co. and Nissan Motor Co. shook up the automotive world by announcing a memorandum of understanding (“MOU”) to explore a potential merger alongside Nissan’s partner Mitsubishi. However, the road to consolidation proved bumpier than expected, as negotiations unraveled due to disagreements over the merger structure. While the formal merger talks have been publicly shelved, the question remains: Does Nissan still need a strategic partner to secure its future? And what does this uncertainty mean for Nissan dealers navigating the industry’s shifting tides? In this week’s post, we explore the rationale of a Nissan merger and what this might mean for Nissan dealers if a merger agreement happens sometime in the next year or two.
The January 2025 SAAR came in at 15.6 million units, down 7.5% from last month and up 3.8% from January 2024. January is typically one of the lowest months of sales volume each year, but as seasonal adjustments usually account for this, it is notable that this month’s SAAR dipped to the lowest point since January 2024. It is also worth mentioning that this month’s SAAR exceeded the average of the last five Januarys (approximately 15.4 million units). We expect the February 2025 SAAR to end up around 16.0 million as consumers continue to be drawn in by a wider array of available (and more affordable) inventory.
If you’ve never had your auto dealership valued, chances are that one day you will.
In our updated whitepaper, we describe the situations that may lead to a valuation of your auto dealership, provide an overview of what to expect during the valuation engagement, introduce some of the specific industry information and key valuation parameters that define the context in which an auto dealership is valued, discuss value drivers of an auto dealership, and describe the valuation methods and approaches typically used to value auto dealerships.
If you own an interest in an auto dealership, we encourage you to take a look. While the value of your dealership may not be top of mind today, chances are one day it will be.
The December 2024 SAAR came in at 16.8 million units, just slightly higher than last month and up 4.2% from December 2023. Notably, this month’s SAAR outpaced the last three Decembers and was the highest monthly SAAR since May 2021 (17.0 million units). As we look to January 2025, we expect the SAAR to come in around 16.5 million, primarily driven by the greater breadth of inventory available and increased affordability.
Each quarter, Experian releases an Automotive Market Trends report. This report includes vehicle registration data from each state’s Department of Motor Vehicles, vehicle manufacturers, and captive finance companies. This week, we summarize the data from the Q3 2024 report and add insights for our dealership audience.
The November 2024 SAAR came in at 16.5 million units, which is 1.5% higher than last month and 6.2% higher than November 2023. Of note, November 2024 had one more selling day than November 2023. According to J.D. Power, the year-over-year increase in total new-vehicle sales for November 2024 was forecast near the end of the month at 6.7% after being adjusted for the additional selling day, compared to an approximately 11.0% increase without adjusting for the additional selling day. Mercer Capital expects the December 2024 SAAR to come in around 16.5 million and the average transaction price to continue to moderate as vehicle purchasing will likely increase throughout the holidays and into the new year.
An auto dealership’s inventory management is a crucial part of its operations and significantly impacts the strength of the balance sheet, margin health, and profitability. While dealers cannot control their allocation from OEMs, they can and should respond with the most appropriate sales strategy for the inventory they receive. There are two main approaches available to dealers: maximize price or volume. The key is balancing these strategies to optimize both sales and profitability. We discuss the pros and cons in this week’s post.
The October 2024 SAAR came in at 16.0 million units, 1.7% higher than last month and 3.7% higher than October 2023. A strong October 2024 SAAR was accompanied by increased inventories and incentive spending levels industry wide, which put pressure on transaction prices and dealership profits. In the last two months of 2024, we expect the average transaction price to continue to moderate and to see an increase in vehicle purchasing throughout the holidays and into the new year as consumers react to recent rate cuts.
