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The auto dealer who complains in negotiations that he barely makes a profit might actually be telling the truth.
That's because auto dealers are ranked No. 9 on a list of least profitable industries recently published by Raleigh, N.C.-based data analytics firm Sageworks. Auto sales, with a 3.2% profit margin from June 30, 2015, through June 30, 2016, are one spot ahead of grocery stores, which posted a 2.5% margin.
At least in theory, large grocery chains and auto dealers can make it up in volume. Lakeland-based Publix, for example, had $32.4 billion in sales last year, which makes a 2.5% margin a bit easier to swallow.
The least profitable industries don't have that kind of volume cushion.
The most unprofitable sector during the time period, the report shows, is oil and gas wells, with a -7.6% profit margin — the only one in the top 10 to have negative margins. Petroleum and petroleum product wholesalers also made the list of least profitable industries, with a net margin of 2.4%.
Just outside the top 10, ranked No. 11 on the list, is a Florida staple: Continuing care retirement communities and assisted living facilities for the elderly. At a 3.3% margin, the industry was tied with three other sectors: other motor vehicle dealers, home furnishing stores and furniture stores.
Top 10 least profitable industries
Industry profit margin
Oil and gas extraction -7.6%
Support activities for mining 0.6%
Beverage manufacturing 0.8%
Grocery and related products wholesalers 1.9%
Lawn and garden equipment and supply stores 2%
Miscellaneous durable goods wholesalers 2.3%
Petroleum and petroleum products wholesalers 2.4%
Grocery stores 2.5%
Auto dealers 3.2%
Building material and supplies dealers 3.2%
Source: Sageworks
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