In today’s episode of Inside Automotive, George Karolis, president of The Presidio Group, breaks down the findings and critical takeaways from the 2024 Presidio-NCM Average Dealership Performance Benchmark report.
This comprehensive report, a partnership between The Presidio Group and NCM Associates, examines profitability, inventory, and interest rate impacts. It also provides an in-depth snapshot of the industry in 2024. The Presidio Group represents over 20% of the U.S. dealer market. The report offers fresh, timely data on profitability and margin trends, showcasing the industry’s performance ahead of public reports.
According to the report, throughout the first nine months of 2024, dealership profitability was down approximately 33% year-over-year. The fourth quarter helped offset the loss, and the average dealership ended the year just under 25%, with margins stabilizing.
Karolis highlights that the data suggests that the industry is at the tail end of the normalization process that has been ongoing since the highs of the pandemic era. There is a lot of optimism that the new normal has finally set in.
Additionally, the report revealed a strengthening in fixed operations, with gross profits increasing on average by about 4.6%. The Presidio Group’s survey confirmed that approximately 80% of dealers said fixed ops was a bright spot in their profits. Personnel expenses were relatively flat for the year while advertising and floorplan increased. However, the fixed gross trend of positivity has effectively offset these upticks.
Karolis also highlights factors influencing dealership profitability in 2025. Premium brands such as Lexus, Toyota, and Mercedes-Benz have fared better, particularly in favorable geographies. However, other brands, such as Nissan and Stellantis, continue to struggle with dealers focusing more on brand and location as key factors in selecting inventory.
The report found that there was a modest growth in F&I operations. On average, F&I income reveals a slight increase, up 0.3% to $1,581 per vehicle retailed (PVR). The consistency of F&I profitability primarily reflects dealerships following stable processes and maintaining steady performance in warranty and credit sales.
Luxury brands, such as Lexus and BMW, performed strongly, outpacing other brands in holding margins. The demand for premium vehicles remains high, with fewer dealerships and greater buying demand. Increased vehicle price points also contributed to the ability of luxury brands to sustain higher margins.
Karolis recommends that dealers focus on expenses and diversify their approach to maintain profitability. He also recommends that dealers closely monitor their personnel expenses, particularly as inflation pressures persist. Dealers should manage controllable costs, such as advertising and SGA (selling, general, and administrative) expenses. He also recommends maintaining a balanced approach between new and used sales, F&I, and fixed operations to best weather the current economic challenges.
Regarding mergers and acquisitions, The Presidio Group projects that it will be an active year, and the increased certainty of the market will drive more conversations and deals.
"We're in the middle to the latter stage of normalization, and it feels like we're closer to the tail end of it. It's creating more certainty and optimism for dealers." – George Karolis
