In the first quarter of 2025, franchised U.S. auto dealerships saw a significant rebound in earnings, marking a potential turning point after nearly three years of declining profitability. According to the latest Presidio-NCM Average Dealership Performance Benchmark, the average dealership posted a 3.7% increase in net pretax profit compared to Q1 2024, indicating a recovery from the pandemic-related volatility.
The improvement follows a near-flat performance in Q4 2024, during which dealerships saw a 0.2% increase in profit. This uptick suggests that dealership performance may have stabilized after years of pandemic-driven disruption, though concerns over President Donald Trump’s potential tariffs loom large.
Q1 2025 PRESIDIO-NCM AVERAGE DEALERSHIP PERFORMANCE BENCHMARK
According to the report, vehicle sales surged in the first quarter, with March seeing a rush to purchase vehicles ahead of expected price increases due to tariff threats. Despite these concerns, the performance for Q1 2025 was significantly higher than pre-pandemic levels, nearly double the profitability seen in 2019.
Notably, the rebound wasn’t uniform across all market segments. Luxury dealerships saw an impressive 18% increase in profits, while imports posted a 6.1% rise. In contrast, domestic-brand dealerships experienced a 4.8% decline. In Q1 2025, dealerships increased their profits through higher sales and strong fixed operations, which rose 5.6% compared to the previous year.
However, the threat of new tariffs, if implemented, could weigh heavily on the automotive market. Tariffs are expected to raise vehicle prices and potentially decrease sales volumes in 2025, although the overall impact on the industry remains unclear.
The Presidio-NCM Average Dealership Profitability Index, introduced in late 2024, rose to 180 in Q1 2025, up from 173 at the end of 2024, reflecting the broader improvement in dealership profits. The data aggregates financial results from over 4,200 U.S. dealerships, representing nearly a quarter of all franchised outlets in the country.
George Karolis, president of The Presidio Group, remarked, “After years of volatility, we’re seeing profit performance stabilize and even trend higher, which could signal a new operational normal more robust than pre-pandemic levels.”
Despite the positive growth, some market segments remain under pressure. Domestic brands, in particular, are struggling, with a 4.8% decline in profits year-over-year. The impact of tariffs, as well as varying brand performances, will likely continue to shape the dealership landscape in the future.
Looking ahead, the key for dealers will be adaptability. Tariff policies, combined with brand-specific performance, will continue to impact dealership profitability, with luxury brands and certain imported models showing resilience, while domestic brands face ongoing challenges. The ability to navigate these complexities may define industry leaders in the years to come.
