Key Takeaways From the 2024 BofA Global Summit

The outlook for the automotive industry remains a net positive as manufacturers and dealerships continue to embrace the shift from conventional gas-powered engines to hybrids and electric vehicles. While there have been some challenges—including a slow start to the year—information obtained from the 15^th annual Bank of America Global Automotive Summit shows stable schedules and resilient profits. Let’s look at some highlights.

Current Supply-Chain and Vehicle Demands

While the year opened with slow sales due, at least in part, to a spell of inclement weather, the industry made a fast turnaround in February and March. Available-to-purchase units (ATPs) are holding stable, and Ford and GM continue to build inventory. Ford specifically committed to keeping 60,000 units of its popular F-Series pickup trucks in stock through the close of the first quarter, allowing the brand to maintain quality. Additionally, Stellantis’s inventory remains high while the inventory for Japanese and Korean brands remains low.

Perhaps one of the more impactful commitments made during the summit comes from OEMs dedicated to maintaining inventory and demand. While it may not be ideal for some suppliers, this will help sustain pricing throughout the industry.

Many dealers in attendance expressed fair expectations, with new vehicle sales expected to reach the 15 million units range. Gross profit per unit (GPU) is expected to follow a similar trajectory to that of 2023 profits, potentially with a deterioration of about $100 a month.

The demand for used vehicles remains high as well, and sourcing pre-owned models is competitive—especially when it comes to recent models like the 2023 Ford F-150.

EV Sales Are Slowing but Still Growing

While interest and sales of EVs continue to grow, it’s still too soon to call them mainstream. Despite this, GM remains confident in its electric lineup. The company is on track to produce 200,000 to 300,000 EV units while remaining profit-positive. Ford announced plans for a smaller EV which the brand hopes will be a turning point for the Ford Model e. And many industry leaders agree with the path these industry giants are taking. EVs may not be taking over the roadways just yet, but they are still the industry’s future. Cox Automotive estimates that while EV sales growth has slowed, 2024 will be the segment’s best year yet, giving electric vehicles a 10% share of the market by the close of the year, up from 7.3% the previous year.

What does this mean for dealerships? At the time of the summit, while there are rumors that electrified powertrains have fallen out of favor with the public, there’s little in the way of concrete evidence. EVs have a high MDS and may require discounting to sell, but hybrid models have the lowest days’ supply of all powertrains, so interest in electrified, fuel-efficient vehicles remains strong. Car buyers may have misconceptions about the price of EVs and the logistics of recharging. As those beliefs continue to be dispelled, EV sales growth is likely to accelerate.

Polestar and VinFast Expand U.S. Offerings

The positive outlook on EV growth has drawn two newcomers to the U.S. automotive marketplace—startup EV companies Polestar and VinFast. While both have models available in the U.S. already, they plan to expand both the models available and their number of dealerships. Polestar plans to cement its place in the U.S. luxury EV segment with three available models (Polestar models 2, 3, and 4) and 30 dealers. VinFast is more focused on mass-market sales and plans to have a total of 130 points of sale by the end of 2025. The introduction of new electric models and increased availability is likely to garner more consumer interest as well.

Dealership Growth Potential

During the summit, most dealers stated positive expectations for dealership growth, with the majority predicting “mid-to-high-single-digit-same-store sales growth.” Much of that growth will likely come from the fixed ops department. Attendees emphasized that talented, certified technicians are a driving factor for fixed ops. Hiring and retaining talented technicians for your service center could significantly impact your P&S growth throughout the remainder of the year. Promoting your fixed ops department is just one of the many ways Strong Automotive can help your dealership grow in the second half of 2024.