New car dealers vs. used car dealers: Mapping the job growth

Car sales

For the first time in over a decade, the new car industry is making serious headway—now on a trajectory to pass pre-recession status within a year, and 2001 status within another 10.

Interest rates are low, gas (was) cheap, and the national economy continues to make headway—all of which has helped fuel the success of the automotive industry. From 2009 to 2014, new and used car dealerships together grew more than 16 percent, adding nearly 166,000 jobs to total 1.82 million. And since consumer demand for new and used cars alike looks to remain strong, the auto industry could have a pretty smooth ride ahead.

But the growth hasn't been consistent across the U.S.; the two sub industries generally don't share hotspots. Texas and Florida, for instance, are hubs for new car dealer jobs, while used car jobs tend to cluster in California. Luck? Local business temperament? Population and retail growth? A host of historical factors? Probably all the above and then some.

But before mapping the job growth, let's orient ourselves with the industries' very different gain/loss patterns from 2001 to the end of the recession.

Recession: Before and after
The before and after shots could hardly be more different. (See the chart below.) New car dealers were stagnant or tanking for most of the new millennium. After weathering the doldrums from 2001 to 2007 (when it lost 1 percent), the industry dropped 18 percent during the recession, leveled out, and then grew an encouraging 15 percent from 2009 to 2014, though it has yet to regain pre-recession strength.

Used car dealers, on the other hand, saw a 20 percent upsurge from 2001 to 2007, lost only 15 percent to the recession, and climbed twice as fast as new cars (29 percent) from 2009 to 2014. And, since the used car industry was (and is) so much smaller than new cars (131,000 vs. 1.1M total jobs in 2007), the decline hit much fewer people: only 19,000 jobs lost compared to a whopping 200,000. The industry has now shot far past its pre-recession size.

All of this points to the fact that throughout the recession and even now several years after, people are more likely to pinch pennies. While new car growth is reflective of a stronger economy, tough times are still too recent for everyone to loosen their belts just yet.

Geographical picture
Now, starting with the 100 largest metro areas in the U.S., we've whittled them down to the top 10 MSAs for each industry with regard to two factors: concentration (in 2014) and job growth (percent growth from 2009 to 2014). The charts below compares the MSAs where new and used car industries are most concentrated. The higher the bubble, the higher the concentration; the larger the bubble, the larger the number of jobs in each MSA.

What we found:
New car dealers are generally most concentrated in MSAs with smaller workforces where total dealer jobs are in the 200-700 range. The exceptions are Miami (3,588 jobs) and Pittsburgh (2,475).

In contrast, used car dealers show the highest concentration in a number of cities with larger workforces: Nashville (1,917 jobs), Virginia Beach (1,445), Birmingham (1,256), and Oklahoma City (1,124).

Growth hotspots
The following charts illustrate where new and used car dealers have been adding the most jobs.

What we found for new car dealers:

  • Job growth has largely favored the South, with Lakeland-Winter Haven in central Florida (43 percent), Austin (40 percent), and North Port-Sarasota-Bradenton, Florida (31 percent), taking the lead.
  • Pittsburgh stands out for being the largest city with strong percent growth, leaping from about 9,000 jobs to nearly 12,000.

What we found for used car dealers:

  • Jobs more than quintupled in Oxnard-Thousand Oaks-Ventura, California, leaping from a mere 64 jobs to 329.
  • Jobs have been exploding all over California: Stockton-Lodi (232 percent growth), Fresno (186 percent), Bakersfield (178 percent), Sacramento (175 percent), Modesto (168 percent), and Riverside-San Bernardino-Ontario (145 percent).

Conclusion
For the first time in over a decade, the new car industry is making serious headway—now on a trajectory to pass pre-recession status within a year, and 2001 status within another 10. But don't be surprised if new car dealers still lag behind used car dealers, because truth is, more people (in good times as well as bad) simply go for lower costs.

This article originally appeared on The Desktop Economist, the blog of Economic Modeling Specialists Intl. For more on EMSI data—available at the county, MSA, and ZIP code level—or to see data for your region, contact us. Follow EMSI on Twitter (@DesktopEcon) or check us out on Linke