U.S. franchised dealers see year-over-year profit lift in Q1

For the first time since the pandemic-era highs, U.S. franchised dealerships posted a meaningful year-over-year profit gain. In Q1 2025, net pretax profit rose 3.7% across the average store year-over-year, according to new data from the Presidio-NCM Average Dealership Performance Benchmark​.

Driving the news: But it wasn’t strong front-end margins that powered the spike—it was a combination of rising service profits, stronger F&I income, and a March sales rush from buyers looking to get ahead of tariffs.

By the numbers:

• Fixed ops gross profit rose 5.6% YoY—and nearly 8% at import stores.

• F&I income per unit jumped 4.2% YoY to $1,613.

• New vehicle gross dropped 20.6% to $2,005—its lowest since 2020.

• Used vehicle gross ticked up 1.3% to $1,410​.

Translation: Dealers are squeezing more profit from the back end while front-end margins continue to slide.

Between the lines Much of the Q1 upside was front-loaded in March, as consumers rushed to purchase before any tariff-induced price increases. That urgency gave an artificial boost to volume—but not necessarily to sales margins.

• And as front-end margins—especially on new cars—continue to normalize, service and parts departments are picking up the slack, especially for domestic brands.

• With segment-wide profits down nearly 5% for domestics, and some brands like Stellantis struggling to hold volume, the average store hasn’t found its “rebound” quite yet.

The next test? Starts May 3, when auto parts tariffs are set to take effect. If vehicle prices rise, dealers could see some lift in front-end margins—but only if automakers don’t price themselves out of volume. The bigger concern is the dealership service center. As parts become more expensive, maintaining service profitability could get tougher if consumers put off maintenance and repairs.

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