WionDrive News Desk 
Many auto retailers in the US have reported stern fourth-quarter profits after turbulent economy led to price cuts and incentives hike to lure buyers. It has, however, put a strain on new-vehicle margins. Dealer margins have been affected as higher vehicle production eased supply. In contrast to this, the auto dealers commanded high prices over the past few years, taking advantage of strong demand for new vehicles and short supplies of popular models given supply chain bottlenecks.
As per a report by Cox Automotive, discounts and incentives on new-vehicles continue to rise while putting downward pressure on pricing and profitability for dealers and automakers alike. Despite this, new-vehicle sales in US slowed in the first month of the year, the report added.
Another major concerns for retailers has been electric vehicles as they have had to shell out more money to market those battery-powered machines. The EV market has been varying levels of demand owing to their higher maintenance costs and lower resale values. Additionally, EV prices have come down significantly in the US in the past year, led by price cuts at Tesla.
On an earnings call, car retailer AutoNation’s CEO Mike Manley said that new vehicle margins continue to decline but the rate of moderation in the fourth quarter, which was about USD 120 per month was more modest than earlier quarters.
Despite falling new vehicle margins, retailers have shown confidence in their after-market service units, lifting their profits from maintenance related to new vehicles, with more technology and software adding an extra layer of complexity. Shares of Sonic Automotive, which missed fourth-quarter estimates on Wednesday, were down about 5% while AutoNation’s shares were also marginally down, while those of Lithia were slightly up.
