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Hey everyone,
The first buy/sells of September are already hitting the board.
And we’re keeping tabs on each one in our Buy/Sell Tracker — a real-time playbook of who’s buying, who’s selling, and what it means for operators on the ground.
— CDG
First time reading the CDG Newsletter?
Welcome to the Market Pulse—your no-fluff cheatsheet to auto retail, built to help dealers price right, stock smart, and stay ahead.
Fixed ops is rebounding to 14.1% gross profit in Q2 2025: That’s up +8.4% YoY, cementing its role as the most reliable profit engine.
Service labor margins, a core part of fixed ops, are holding margins above 70%: Meaning every $100 billed in labor delivers $70+ in gross profit.
Post-warranty retention is where dealers are still losing ground: Margins and sentiment are strong in fixed ops, but once coverage ends, retention often falls to just 20–40%, per CDK Global.
(Source: CDK Global / Cox Automotive / Haig Partners)
Service margins are holding strong while vehicle sales profits are shrinking.
Fixed ops gross profit hit 14.1% in Q2 2025, up 8.4% vs last year.
That momentum accelerated in Q1 2025, when service and parts profit grew +5.8% and made up about 40% of a dealership’s total gross profit.
That’s a huge share considering fixed ops only brings in 12–13% of revenue, meaning a relatively small slice of the business is driving almost half the profit.
But it makes sense, because gross profit on new-vehicle sales fell to just 6.1% in 2024, while used-vehicle gross profit dropped nearly 16% YoY.
Service labor, by contrast, is running at 70%+ gross margins.
NOTE TO DEALERS:
When service is generating 40% of gross profit on just 12–13% of revenue, every process slip costs real $$$.
That presents an opportunity to leverage technology (AI included) to tighten response times and communication.
Think: Every service call or message getting answered within minutes, and status updates going out automatically before the customer ever has to ask.
Dealers’ fixed ops sentiment is rising in 2025 even as overall economic confidence is weakening.
The Fixed Ops Dealer Sentiment Index climbed to 66 in Q3 2025, up from 65 in Q2 and 62 in Q1.
On this scale, 50 = neutral, so a 66 signals dealers remain upbeat on service and parts profitability. (No shock there if you just read section one…)
Data sourced via Cox Automotive
On the other hand: Overall dealer profitability sentiment declined from 39 in Q2 to 38 in Q3, franchised dealer traffic sentiment fell from 50 in Q1 to 43 in Q3, current cost sentiment stayed elevated at 70, reflecting pressure on expenses, and EV sales outlook fell from 58 to 30 ahead of the September lease credit expiration.
WHY IT MATTERS:
With buyers holding onto their cars longer than ever and sales traffic softening, focus on post-warranty retention.
Think: Connecting with customers the month their coverage ends, offering bundles that secure the next two services, and using recalls (a required fix) to show buyers what your customer service is about.
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Margins and sentiment are holding in fixed ops, but post-warranty drop-off is truly where dealers are (and have been) losing customers.
These dos and don’ts show how operators are keeping them in the lane.
Do: Sell convenience like it’s inventory.
Mobile service keeps coming up as the most underutilized retention tool. Dealers say customers will pay a premium if it saves them time.
“They will indeed pay for convenience- IE, LOFs, tires, flushes, wipers, all done at their home or work locations if it means they don't have to go anywhere, wait forever, or get a ride or loaner,” Tommy Thompson, fixed ops director at Luke Fruia Motors, told CDG.
Do: Tie retention to financial incentives.
Loyalty programs and credits can give customers a reason to keep coming back, even after warranty coverage ends.
“Combined with OEM loyalty programs, the financial incentive to return to the dealership where they purchased their vehicle could be huge. Who would walk away from having another $1,000 or $2,000 to put down on a car? Or buy a [vehicle service contract] for their out-of-warranty vehicle? Or pay CP [customer pay] dollars for mobile service?” — David Rogers, former GM, shared.
Don’t: Skip over prepaid maintenance.
Failing to bundle prepaid maintenance, especially on used sales, is one of the fastest ways to lose customers post-warranty, per Thompson (Luke Fruia Motors) and Mike Murphy, area sales manager with Toyota Financial Services.
As Thompson explained: “You have sometimes 2 or 3 service visits to wow the customer and build a relationship that makes them refuse to go anywhere else for service, even when they have to pay for it.”
While Murphy, more bluntly, wrote: “Dealers are total morons if they are not selling or offering PPM for at least 2 years on every used vehicle sold (excluding exotics).”
The next 18 months aren’t about who moves the most cars — they’re about who wins customer-pay.
Some say mobile service is too much trouble.
But how do you eat an elephant? One bite at a time…
So whatever your lane (mobile repair, loyalty perks, prepaid maintenance), pick it, start small, prove it works, and scale fast. That’s how you keep post-warranty customers out of independents’ bays.
What do you think will be the biggest fixed ops play heading into 2026?
Missed yesterday’s episode of Daily Dealer Live?
Presented by:
Matt Bowers on OEM Pulse Check, Lafontaine on Underutilized Incentives
Featured guests:
Matt Bowers, Owner of Matt Bowers Automotive Group
Andrew Ruck, General Manager of Lafontaine Cadillac Buick GMC of Highland
