Dealers are heading into 2026 with tighter front-end margins and customers stretched thinner than ever.
The problem: The latest data shows front PVR (gross profit per vehicle retailed before additional products) took a four-month slide after the early-year pre-tariff rush, only stabilizing in late Q3
Meanwhile, transaction prices hit $45,795 and average payments reached $756.
Nearly one in five new-car buyers is signing a $1,000+ monthly payment and some are even taking out short-term mortgages to make deals work—yes, mortgages for cars.
Add in tariff pressure, record service costs, and the end of the EV tax credit, and affordability is even more of a threat to dealership profitability.
Via JM&A
The silver lining: F&I sales are carrying the water right now.
F&I PVR (profit generated after finance products or add-ons are included) finished Q3 at its highest level since 2022, while service-contract penetration rose for the first time since May, according to the just-released JM&A’s Q3 Automotive Trends Report.
GAP product performance also began recovering and is still ahead of 2024 levels.
On top of that, lease penetration spiked to 15%, its highest since 2021, thanks to the EV tax-credit loophole—giving dealers a chance to structure more affordable payments and protect front-end volume.
Between the lines: Fixed ops (the dealership’s service and repair center) is the safety net.
“In 2026 you can expect strong service demand, but you’ll need to fight for margin through efficiency, digital use, EV readiness, and your parts/upsell strategy,” said JM&A’s Rob Bradshaw.
Rob Bradshaw
JM&A
Digital check-in, transparent MPIs, EV-specific labor rates, and technician development aren’t “nice to have.” They’re required.
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The Impact: Because F&I income and fixed ops gross are rising, dealers have a cushion against softening front-end performance.
Product income now outweighs finance reserve, lowering chargeback risk and boosting customer retention at the same time.
The EV buying surge—438,000 EVs sold in Q3—will also create a wave of high-margin used EV service opportunities over the next two years.
Bottom Line: Front-end volatility isn’t going away, but dealers don’t need it to.
If dealers build the right processes now—affordability conversations, consultative sales, EV readiness, transparent service workflows—they can survive and grow through the affordability turn.
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