Bloomberg: Toyota Dealers Could See Billions in Revenue Losses
SOUTHFIELD, Mich. — In the aftermath of the automaker temporarily stopping sales of eight of its vehicles, U.S. Toyota brand dealers could lose significant used-car revenue, in addition to even steeper losses on the new-car side, according to a recent report from Bloomberg.
Specifically, Bloomberg — citing National Automobile Dealers Association chairman John McEleney — indicates that each dealer could see an average per-month revenue loss anywhere from $1.75 million to $2 million.
Though $1.25 million to $1.5 million of that would be from missed new-car revenue, lost sales on the used side would compose a significant chunk of dealers' losses, as well.
In total, dealers selling Toyota brand vehicles — of which there are 1,234 in the U.S. — could see their revenue from new and used sales dip an aggregate of $2.47 billion per month, according to Bloomberg.
"We've never really dealt with anything like this with any manufacturer," McEleney said.
That said, what may help lessen the impact of lost new and used sales for dealers are service profits, as consumers bring in recalled Toyota models — which totaled 2.3 million units — to swap out accelerator pedals or get the potential problem fixed.
Citing an AutoNation official's explanation, Bloomberg pointed out that franchise dealers can often reap significant profits from warranty work. Specifically, they tend to charge consumers $75 an hour or more in labor bills. Each accelerator requiring replacement can potentially gross dealers an average between $100 and $150, officials shared.
"Once the fix gets announced it will be a positive for our business," said Tony Pordon, a spokesman for Penske Automotive Group — which runs 17 Toyota stores in the U.S. Parts and service work is much more profitable than selling vehicles, composing almost half of gross profit."
In some good news for Toyota dealers, apparently, dealers have been notified that Toyota plans to pitch in and help compensate for their floor planning interest expenses on affected vehicles.
As far as how this halt will affect sales figures, Toyota spokeswoman Celeste Migliore said the automaker will examine January's numbers further when it announces monthly figures on Tuesday, saying: "It's a little premature to guess or estimate the impact on sales at this point."