Employing more than 32,000 people with $27 billion in annual sales, new study highlights impact of Commonwealth’s retail automotive industry
December 4, 2023
By Jeff Kelley for VADA.com
Virginia’s 457 franchised auto dealers employ more than 32,400 people, pay more than $2.5 billion in payroll wages, and generate $27.47 billion in sales. That’s according to an economic impact report released today by the Virginia Automobile Dealers Association (VADA), which commissioned a third-party study on the industry.
The latest Economic Impact Report is based primarily on 2022 data. Click the graphic to view the full report.
“The data reinforces a fact we have long known and share often: that Virginia dealers are a critical economic driver in the Commonwealth,” said Don Hall, VADA’s president and chief executive.
In 2022, the average Virginia dealership sold 630 new vehicles and 560 used cars or trucks and generated $60.1 million in sales. New vehicles represent 46% of total sales, followed by used vehicles at nearly 32%. Services, parts, and finance and insurance products make up the remainder.
The report from Auto Outlook Inc. covers only Virginia’s franchised car and truck dealers, defined as those dealerships that have a contractual agreement with an automobile manufacturer to sell and service vehicles. Franchised dealers sell and service both new and used vehicles.
Leading on EVs
Virginia dealers are driving Virginia’s transportation electrification. Electric vehicles account for 8.8% of all new vehicles sold in Virginia, up from just 3.1% in 2021. Dozens of new fully electric models will be released within the next year from well-known manufacturers, which are under an Environmental Protection Agency mandate that effectively requires 67.5% of U.S. car sales be electric by 2032. Virginia regulations require 100% of all new vehicles in Virginia to be fully electric by 2035.
Hall
“Auto dealers can’t just flip a switch and begin selling electric vehicles, they have to have trained sales professionals and service departments that can maintain and repair them, too,” says Steve Hoffman, VADA senior vice president and general manager.
The average Virginia dealership invests $348,000 to upgrade their infrastructure to support EVs, and Virginia dealers are expected to spend $159 million this year upgrading their facilities. “To sell these vehicles means upgrading service bays and equipment to handle batteries and manage vehicle technologies, train their people on how EVs work compared to gas-powered vehicles, and get technicians the training required to support them.”
Good-paying jobs and tax generation
The average dealership employs 67 full-timers with a payroll of $5.62 million. Statewide, dealerships pay $2.57 billion in wages. In 2022, the year on which the economic impact figures are based, dealerships paid nearly $224 million in fringe benefits such as insurance, benefits, and other perks.
The average dealership generates $3.87 million in taxes, including sales and use, payroll, real estate, and other taxes. Statewide, the industry contributes $1.77 billion to the Commonwealth’s tax base.
Service, parts, finance and insurance profit centers
The dealership’s service department, parts and accessories sales, finance and insurance products, and other services make up about 21% of total dealership revenue. “However, when it comes to service, parts, and F&I, while a lower percentage of overall store revenue, these teams deliver the highest profit margins and are critical to dealership profitability,” Hall says.
Virginia dealers employ 7,175 service technicians who handle 7.68 million repair orders each year. Similar to other states, the Commonwealth faces a shortage of nearly 1,400 automotive technicians. “We are working to do more to promote automotive education and careers in the industry that can, for the best of the best, bring salaries well into the six figures,” Hall says.
Dealers also contribute mightily to their communities. In 2022, Virginia auto dealers donated more than $16.7 million to charitable and civic causes.
“Dealers are an integral part of their communities, and they know that to truly succeed in this business means helping those in the community who are less fortunate,” says Hall. “Auto retail is a family business, it is a community business, and it continues to be a strong business that gives back mightily to the Commonwealth.”
About the Virginia Automobile Dealers Association
VADA has represented the interests of franchised new car and truck dealers in the Commonwealth of Virginia since 1943. www.vada.com
About the 2022 Economic Impact Report
The 2022 Economic Impact Report was prepared by Auto Outlook, Inc., an independent automotive market analysis firm, and was sponsored by the Virginia Automobile Dealers Association. The report was compiled based on data collected from AutoCount from Experian, Auto Outlook, Virginia’s new car dealerships, and government sources.