Key Takeaways:
- New vehicle gross profit fell 13.5% year-over-year to $1,840 per unit in Q2 2026, but improved 3.3% from Q1, while used vehicle gross profit rose for a second consecutive quarter.
- Finance and insurance income reached an all-time high of $1,769 per vehicle retailed in Q2 2026, and fixed operations generated 52.8% of total dealership gross profit.
- Dealership M&A transactions rose 23% year-over-year in the first half of 2026 to roughly 215 deals involving 315 franchised stores, with 75% of dealers expecting values to increase or hold steady over the next three years.
The numbers, taken on their own, tell a tough story. The average U.S. franchised dealership posted an 11.8% drop in net pretax profit year over year in Q2 2026, according to the Presidio-NCM Average Dealership Performance Benchmark. The data, which aggregates financial results from more than 4,000 franchised dealerships across the country, also showed that gross profit per new vehicle retailed fell 13.5% year over year to $1,840. While, used vehicle gross profit dropped 10.0% to $1,409 per unit.
However, in context, these numbers aren’t as scary as they look on paper.
Why the Year-Over-Year Numbers Mislead a Bit
Q2 2025 was an outlier quarter. Tariff-related pull-ahead demand drove a 27.1% surge in dealership net pretax profit — a figure no one seriously expected to repeat. The prior year’s comparison was further skewed by CDK Global’s cyberattack, which affected operations across thousands of stores in Q2 2024 and compressed that baseline. Stacking Q2 2026 against those conditions makes the current decline look sharper than the underlying business performance warrants.
Strip away the year-over-year noise and a steadier picture emerges. Q1 2026 saw an 11.2% profit decline from last year. Q2 came in at 11.8%. The consistency of those figures is important. The sky isn’t falling; it’s just regulating from a rollercoaster last 18 months.
“Looking beyond the year-over-year comparison reveals an industry continuing to adapt as new-vehicle margins fluctuate,” said George Karolis, president of The Presidio Group. “Used-vehicle grosses are improving sequentially, F&I reached a new record, and fixed operations delivered another quarter of healthy growth. While inflation continues to pressure expenses, technology innovation and operating process improvement should eventually offer dealers a new frontier for productivity gains.”
Quarterly trends reinforce that. New vehicle gross profit improved 3.3% from Q1 to Q2. Used vehicle gross profit rose for a second straight quarter, returning to levels consistent with the multiyear average before the pandemic. Total front-end yield — combining new vehicle, used vehicle and F&I income — improved by $165 per vehicle from Q1 to Q2, a 5% sequential gain.
Fixed Ops and F&I Pick Up the Slack
Fixed operations — the service, parts and body shop departments — generated 52.8% of total dealership gross profit in Q2, up from 50.1% a year earlier. Full-quarter fixed ops gross profit grew 5.2% year-over-year, accelerating sharply from the 1.4% growth rate recorded in Q1.
Finance and insurance delivered even more striking results. F&I income per retail unit climbed 4.8% to $1,769 — the highest quarterly figure in Presidio-NCM tracking history.
“As vehicle margins tighten, the conversation should shift to execution,” said Paul Faletti, CEO of NCM Associates. “The dealerships performing best are the ones that understand where their profits are coming from and are intentional about protecting those profit streams while watching costs. Whether it’s improving vehicle acquisition efforts and service-lane retention or creating a better customer experience, dealers have many opportunities to strengthen their results.”
M&A Activity Accelerates Despite Profit Pressures
Declining per-unit margins have done little to dampen transaction numbers so far in 2026. The Presidio Group estimates 215 buy-sell transactions involving approximately 315 dealerships closed in the first half of 2026 — a 23% increase over the same period last year.
The seller pool is expanding. The share of dealers showing interest in selling within the next year rose to 18%, the highest reading since Presidio launched its survey in 2023. At the same time, 64% of respondents said they intend to buy a store in the coming year, sustaining a supply-demand imbalance that continues to favor sellers of premium assets.
Brand-level divergence is also widening. Lexus, Toyota, BMW, Honda and Chevrolet are drawing elevated multiples and competitive bidding. Brands with weaker volume or uncertain product futures face more scrutiny — and in some cases, Presidio has pulled blue-sky guidance entirely.
“Dealers are looking much harder at the full picture of ownership — the brand, the market, facility requirements and the long-term earnings outlook,” Karolis said. “With that scrutiny driving both acquisitions and divestitures and supported by robust liquidity, Presidio expects an M&A flywheel effect to continue where more activity begets more activity.”
Long-Term Outlook Holds
Despite the immediate pressure, dealer sentiment on the future stays fairly positive. In Presidio’s Midyear 2026 Dealer Direction Survey, 64% of respondents said they expect earnings to increase or remain the same over the next three years. Seventy-five percent expect dealership values to increase or hold steady.
That optimism is grounded in data that predates the pandemic disruption. Even at current levels, average franchised dealership profitability remains way above 2019 baselines. The industry is not in crisis; it has not been for a few years now. It is recalibrating, shedding the artificial inflation of the tariff and chip-shortage era and settling into what Presidio described as “a more normalized post-pandemic operating environment.”
The market is not collapsing. It is correcting — and the early evidence suggests the correction may be nearing its end.
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