A strengthening auto market resulted in more advertising by franchised car dealers during the first half of the year. Dealers invested 4% more on advertising compared to a year ago, spending a combined $4.46 billion from January through June, according to the National Automobile Dealers Association. That was the most spent by local dealers since the first half of 2019 before the pandemic upended the auto industry for several years.
The low point for dealer ad spending came in 2020 when the pandemic forced many local car dealerships to close their doors — some for good. During the first half of 2020, NADA said $3.6 billion was spent on advertising by dealers.
NADA says franchised dealers sold more than 7.8 million cars and light-duty trucks during the first half of the year, with sales topping $613 million. Dealerships also wrote nearly 133 million repair orders, with service and parts sales exceeding $76 billion.
“In the first half of 2024, new light-vehicle inventory continued to grow steadily,” said Patrick Manzi, Chief Economist at NADA. “Looking ahead, we expect that inventory levels will increase slightly throughout the remainder of the year and that the industry will see month-to-month sales and inventory patterns that were considered normal before the turbulent few years caused by the pandemic and microchip shortage.”
NADA says inventory was up 48% at the end of June compared to a year earlier, and more available inventory meant consumers didn’t have to wait as long to secure a new vehicle as they did during the past several years. Manzi says as inventory levels have grown so, too, has manufacturers’ incentive spending.
According to J.D. Power, average incentive spending per unit totaled $2,695 in June 2024, up 55% from June 2023. Those incentives often spur increased advertising levels, since brands need to get the word out to potential buyers that there are deals to be made. “Still, inventory levels vary by OEM, and those with more available inventory are likely to have higher incentive spending in the second half of 2024,” Manzi explained.
As more dealer incentives became available, per-vehicle spending on advertising has climbed higher. Dealers shelled out the most money for advertising on a per-unit-sold basis in the past six years.
NADA reports for every car or truck sold during the first half of the year, dealerships spent an average of $703 on advertising. That was a 30% increase from the $541 low point recorded in 2021.
NADA’s midyear update says the average selling price of a new car at a dealership was $47,278 during the first half of the year. The average new-vehicle transaction prices were roughly flat compared to the prior year’s average at midyear, sliding by $53. Used cars went for an average of $28,302.
“We expect that average transaction price growth will be flat to up slightly for the remainder of 2024,” Manzi said.
Comments