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Are Auto Dealerships Really Important to the U.S. Economy?

Posted by Todd Bryant | Fri, Mar 03, 2017 @ 03:39 PM

auto dealershipsIn 2016, auto sales in the U.S. hit a new record of 18.4 million vehicles. The impressive numbers came straight after the previous all-time record of 17.47 million units in 2015. The sales amounted to nearly $900 billion, or about 20% of total retail sales. The annual results are positive for the seventh year in a row.

With its fast pace of development in the last few years, the dealership industry is certainly back on its feet after the slowdown during the economic crisis. It’s definitely returning to being one of the solid pillars of the U.S. economy.

auto dealershipsThe importance of auto dealerships is not only about record sales. They are beneficial for the U.S. because of employment opportunities, contribution in terms of taxes, and even their social and economic participation in the life of local communities.

Let’s look at the major points that prove the dealership industry is a significant source of growth for the U.S. economy.

The auto industry is expected to score sales above 17 million vehicles in 2017. If the projections turn out correct, this would be the third year in a row in which sales stay above this record number.

Car sales started returning to normal after the slowdown before 2010. In 2014, 16.5 million vehicles were purchased. The sales have been growing ever since. The data for 2016 surprised even the boldest predictions, hitting the 18.4 million record point. While projections for 2017 are not that ambitious, professionals in the field expect a steady level of sales.

A growing source of jobs

auto dealershipsAccording to research by the National Automobile Dealers Association (NADA), in 2015 there were 16,545 dealerships selling new vehicles. On average, each car sales business had 67 employees.

Auto dealerships created more than 2.3 million jobs across the country, of which more than a million were direct positions. Car sales employees received about $109 billion in net disposable income in 2015. Indirect and expenditure-induced employment created by the auto sales industry was most prominent in manufacturing and retail.

The job growth in the U.S. is projected to increase from 150,000 to 180,000 positions per month. With the steady development of the auto industry, it can be expected that a significant part of the new work opportunities will be created by dealerships.

A major contributor of state and federal taxes

The payroll of dealerships for 2015 was $63 billion according to NADA. More than $20 billion of this amount were paid for state and federal income taxes.

Auto dealerships contribute taxes in a number of other forms too. According to a 2015 NADA report, these include property taxes on company property, sales, corporate income, business and corporate license, excise, public utility and severance taxes. Property and sales taxes typically represent more than half of the overall taxes paid by dealerships.

An integral part of the community

Besides presenting huge financial and employment opportunities, auto dealerships are woven into the fabric of American society by contributing to community activities and events, educational seminars, charities and youth sports organizations, among others.

auto dealershipsIn addition, car sales businesses can be found in all urban and rural parts of the U.S. With ever-rising ethical standards in the industry, dealerships’ honesty and trustworthiness are further guaranteed by auto dealer bonds.

Dealerships can further contribute as well as benefit from CrossCheck’s Multiple Check program, a payment solution that simultaneously increases sales revenue while providing the means for most consumers to purchase a vehicle. The terms are simple.

Consumers write 2-4 checks that dealerships deposit over a 30-day period per mutually convenient schedules. Consumers don't need to apply for credit since it's not financing. The window gives consumers time to replenish their checking accounts, and the dealerships receive guaranteed payment as each check is deposited. Learn more by downloading our free guide.

Multiple Check Insider's Guide

 

Topics: Auto Dealerships

Written by Todd Bryant

Todd Bryant is the president and founder of Bryant Surety Bonds. He is a surety bonds expert with years of experience in helping auto dealers get bonded and start their business.