RVDA recently revealed dealership financial benchmarks through the first quarter of 2022. The report used data collected by Spader Business Management from dealers around the U.S. and reported averages for all dealerships for several representative metrics. RVDA Director of Industry Relations Jeff Kurowski analyzed the data.
Dealership profits rose and expenses fell from March 2020 to March 2022.
RV dealers, on average, greatly increased gross and net profits from 2019 to early 2022. Dealers spent less on personnel expenses, advertising, mortgages, property taxes, electricity and water in the same period.
RVDA’s report found gross margins on new RV sales averaged 18.7% in the first quarter of 2022. Gross margins on used RVs averaged 20.4% in the first quarter of 2022.
The gross margin on new RVs is the highest recorded by Spader/RVDA data in at least a decade. The used RV gross margin is even with 2021 as the highest level in at least a decade.
Average dealership net profits catapulted from 0.8% in 2019 to 10.7% in the first quarter of 2022. In 2021, net profits averaged 11.1%, more than twice the level of any year from 2011-2019.
Among the reasons for soaring net profits was declining personnel expenses. Personal expenses averaged 40.9% of gross margin in the first quarter of 2022. That is by far the lowest level in at least a decade, as personal expenses averaged between 47.8% and 50.5% for most of the decade until falling to 45.1% in 2020 and 42% in 2021.
In 2021, very few RVs accrued floor plan interest on dealer lots. Floor plan interest as a percentage of gross margin fell to 1% in 2021 and remained low at 1.7% in the first quarter of 2022. Floor plan interest ranged from 3.3% to 5% from 2011-2019 before plummeting to 2.2% in 2020.
Other expenses similarly fell. Advertising expenses went from 5.9% of gross margin in 2018 to 2.6% in 2021. Fixed expenses tumbled from 12.9% in 2019 to 8.3% in 2021. Other variable expenses fell from 12% in 2014 to 7.1% in 2021.
Some of those expenses have ticked up to start 2022, according to Spader/RVDA data. Advertising expenses averaged 3.9% of gross margin in the first quarter of 2022, up from 3.2% in the first quarter of 2021. Fixed expenses in the first quarter of 2022 were 8.9%. Variable expenses remained flat in the first quarter of 2022 at 7%.
“During the first quarter of the typical year, RV dealerships struggle to break even,” Kurowski said. “During the first quarters of 2021 and 2022, record retail sales volume led to higher profits, thanks in large part to lower expenses.”
The financial benchmark study was released in the RVDA’s June issue of RV Executive Today.
