On the Dash:
- Dealers are leaning on parts and service to offset weaker new-vehicle profitability.
- Average parts and service gross profit rose to $5 million per dealership in 2025.
- Ford is expanding parts availability and service support to capture more aging-vehicle business.
New-vehicle sales have softened as high prices continue to pressure consumer demand, and dealers are responding by leaning more heavily on higher-margin parts, service and finance and insurance operations. That strategy highlights the dealership business model’s ability to offset weakness in one department with stronger performance elsewhere.
According to a Kerrigan Advisors market analysis of publicly traded dealership group filings, dealer profitability surged during the pandemic as tight supply pushed automakers toward pricier, higher-margin vehicles and dealer markups climbed. Average pretax profit per dealership more than tripled, from $1.9 million in 2018 to $6.8 million in 2022. Yet, that profitability has since declined, falling to about $3.9 million in 2025.
Conversely, parts and service have moved in the opposite direction, with the average gross profit from those operations rising from $3.3 million in 2020 to $5 million in 2025, giving dealers an important source of profit as vehicle margins normalize.
Moreover, Ford is positioning its dealers to capture more of that opportunity, as the automaker recently recommitted to parts and service support for older vehicles and expanded technician training to help dealers service those models, with the average vehicle on U.S. roads approaching 13 years old.
According to Ford CEO Jim Farley, the company plans to expand its parts catalog to cover vehicles beyond its own portfolio, stating during the company’s Q1 2026 earnings call, “We’re going to expand our parts catalog, in terms of price and diversity, and we’re going to start to focus on not just Ford parts, but multimake parts.” Notably, that expansion could give dealers another avenue to attract service customers who own other brands.
