As franchise dealers face shrinking vehicle margins and rising operating costs, a new dealer-owned cooperative is positioning itself as a tool to help level the playing field.
AutoTrust Dealer Alliance, founded by industry veteran David Mondragon, is launching a collective purchasing model designed to help franchise dealers reduce expenses, improve efficiencies, and retain more profitability. Mondragon joins us on the latest episode of Driving Solutions to discuss the company, which is less than four months old, and introduces its platform as dealers prepare for the 2026 NADA Show.
Mondragon said the concept of the company emerged as front-end vehicle grosses declined sharply from pandemic-era highs, while dealership expenses continued to climb across nearly every category.
"AutoTrust Dealer Alliance is 100% dealer-owned. So the dealer owns it, they have the equity."
Margin pressure forces focus on expenses
Front-end grosses that once exceeded $2,500 per vehicle during the chip shortage have fallen well below $1,000 in many cases. At the same time, inflation and higher vendor pricing have driven up costs for technology, advertising, and other core dealership services.
With fewer vehicles priced below $30,000, affordability has become a growing concern for consumers. Buyers are stretching loan terms, carrying more negative equity, and relying more heavily on F&I products to manage ownership risk. While F&I income has remained relatively stable, opportunities to offset declining vehicle margins are increasingly limited.
Collective scale targets cost advantages
Large public dealer groups benefit from scale-driven advantages such as preferred vendor pricing and lower operating costs. AutoTrust aims to extend similar advantages to independent franchise dealers by pooling purchasing volume across multiple rooftops.
Through its cooperative structure, AutoTrust negotiates pricing and terms across categories, including F&I products, technology platforms, advertising services, equipment, and operational supplies. Any savings or value created through those negotiations is returned directly to participating dealers.
Dealer-owned model emphasizes transparency
AutoTrust operates as a dealer-owned entity, with participating dealers holding equity and sharing in quarterly profit distributions. Governance is dealer-led, with advisory committees guiding strategy and vendor participation.
The model is designed to deliver incremental improvements that add up over time. Even small reductions in operating expenses can produce meaningful gains in net profitability when applied across an entire dealership.
Growth tied to dealer participation
AutoTrust plans to expand into additional procurement areas, including employee benefits and other high-cost operational categories. The company is targeting more than 1,000 participating dealers within three years, a scale that would rival the purchasing power of the largest public dealer groups.
AutoTrust executives will be meeting with dealers throughout the 2026 NADA Show as the company continues to build its network. Be sure to check them out at booth 6347N.
