As we enter 2026, dealers are adopting a stance of “optimistic realism.” According to the Year-End 2025 Dealer Direction Survey released by The Presidio Group, the industry is bracing for continued headwind around vehicle affordability while simultaneously positioning for long-term growth. The survey, which aggregated responses from 222 dealers representing over 3,100 franchised stores, reveals a sector returning to fundamentals: prioritizing fixed operations, scrutinizing brand partnerships, and accelerating technology adoption.
Despite a complex economic backdrop, confidence remains resilient. More than 68% of survey respondents expect profits to remain steady or increase in the coming year. Looking further out, that optimism strengthens, with 75% forecasting steady or improved profits over the next three years. This marks a shift from the midyear 2025 survey; while near-term expectations have weakened due to immediate market pressures, the long-term outlook has improved, suggesting dealers believe they have weathered the worst of post-pandemic volatility.
“Dealers have adjusted to multiple disruptive cycles in recent years and have built operational discipline,” said George Karolis, president of The Presidio Group. “While challenges remain — from regulatory and tariff policy, to cost and affordability concerns — most are positioning for measured growth and remain attentive to factors that could affect both day-to-day profitability and long-term value.”
Back to Basics: Fixed Ops and Affordability Concerns
The “easy money” era is officially over, and dealers are responding by refocusing on the bedrock of the business model: parts and service. An overwhelming 85% of respondents identified parts and service as the primary driver of their business in 2026. “I believe fixed-operation profits will continue to carry the dealerships,” one dealer noted in the survey.
This retreat to stable revenue streams is driven largely by growing anxiety over consumer purchasing power. Vehicle affordability was the top near-term issue for 67% of respondents—the highest level in the survey’s history. With average transaction prices hovering above $50,000, dealers are acutely aware that a significant portion of the population is being priced out of the new car market. Consequently, nearly half of the dealers surveyed (48%) expect their used-vehicle departments to play a larger role in 2026, aided by an influx of off-lease inventory.
Cost-cutting, while still a factor, has taken a backseat to productivity improvements. Only 31% of dealers see cost reductions as a main driver for 2026, down from 34% a year ago. Instead, 44% are banking on employee productivity and technology implementation to protect margins.
The “Magnificent Seven” and a Flight to Quality
The survey’s Brand Desirability Ranking highlights a clear “flight to quality” as dealers assess their portfolios. Presidio’s “Magnificent Seven”—the brands dealers most want to own—has reunited with the return of Porsche to the top tier. Porsche climbed ahead of Kia to reclaim the No. 7 spot, easing past concerns regarding tariffs.
Toyota and Lexus continue their dominance, holding the No. 1 and No. 2 spots for the sixth consecutive survey. They are joined in the top tier by Honda, Subaru, Mercedes-Benz, and BMW. Notably, Mercedes-Benz overtook BMW, reflecting renewed dealer confidence in its leadership and strategic direction.
Meanwhile, a significant shift occurred in the domestic rankings. Ford broke into the top 10 for the first time in the survey’s history, landing at No. 9. This rise is attributed to improved dealer relations and a strategic pivot away from aggressive, mandate-heavy electric vehicle pursuits. Conversely, Hyundai slipped out of the top 10 to No. 11, with dealers citing declining profitability and high production levels as points of friction.
Dealers are increasingly selective, favoring brands with strong product pipelines and collaborative franchise relations over volume-chasers.
The Tech “Arms Race”
Perhaps the most aggressive shift identified in the report is the rapid adoption of technology. A staggering 93% of dealers have expanded or plan to expand their use of software tools, including Artificial Intelligence (AI).
The focus is squarely on efficiency and customer experience. The most widely adopted tools are in service scheduling and repair order management (76%), followed by automated call answering (57%). Dealers report that these investments are paying off, with 62% citing enhanced customer experience and 60% noting productivity improvements as the top benefits.
“Dealers are actively expanding their tech stacks and exploring new tools, especially in the area of artificial intelligence,” said Brodie Cobb, CEO of The Presidio Group. “While most report early success, this technology is still developing and gaining new capabilities by the day. Dealers are taking a practical approach — adopting software where it adds real operational value and keeping a close eye on how these platforms evolve in the years ahead.”
Looking Ahead
As 2026 begins, interest in buy-sell activity remains robust, with 59% of dealers interested in acquiring stores, particularly high-quality brands in growth markets. Valuations are expected to stabilize, with nearly 50% of dealers predicting values will hold steady in the next year.
While the last 12 months may have been more of a rollercoaster than anyone was expecting, the survey suggests that smart, disciplined operators—those leveraging tech, maximizing fixed ops, and aligning with the right brands—are well-positioned to thrive in the new normal.
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