Hyundai may arguably be the hottest mainstream brand in the auto industry, but when it comes to dealer profitability, Hyundai dealers seem to lag behind their less popular rivals.
In a report by Automotive News, the CEO of a large dealer group told the paper that Hyundai “not yet a good business equation for dealers”. Even though the product is red hot, used car sales are weak, traffic through the service department is low and supply of the hot new cars being sold is said to be tight. These three factors are the most crucial when it comes to helping dealers turn a profit, and some potential franchisees are turning away from Hyundai as a result.
While service and used cars can cover as much as 85 percent of costs at a Chevrolet dealership, Hyundai can only count on those for 35 to 40 percent of costs, putting the onus on dealers to move new cars, which have much slimmer margins. Hyundai, for their part, has ambitious goals, aiming to become one of the most profitable dealer franchises around, but acknowledges that some of the factors that have fueled their success, like low sticker prices and reliable vehicles, may actually be hindering their progress.
[Source: Automotive News]