About a year ago, I suggested our auto dealer
clients needed to be “nimble” as the retail market was re-designing itself. It continues to do so today with Ford announcing the sale of Volvo to the Chinese. I suspect that it will continue to take a different shape, but I am happy to report that Schneider Downs dealer’s clients and those across the country are doing the right things. NADA reports that net return on sales increased in 2009 over 2008 by 31%. The dealer of today is focused on cost controls and net returns.
A dealer’s ability to control costs was most likely not helped by the recent series of health care legislation. The impact of its requirements to provide increasingly expensive benefits or face penalty taxes, as well as the increase in Medicare tax, will make the control of expenses more difficult. Major companies are already projecting the cost of the health care bill will mean billions to them. Most dealerships will not escape its reach, as a large employer is defined as “companies with more than 50 employees” for purposes of its mandated coverage. When revising expense projections for 2010 and beyond, do not forget the increased cost for health care. In the meantime, continue to do what you are doing, keep an eye on your bottom line, and perhaps the other on our shareholders in Washington.
This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.