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The Q2 results showed signs of improvement and continued dealer resilience as the Optimum Composite Group ROS improved 10% to 2.2% for the year. Average dealer net profit (BBIT) grew over $61k to $571k through June 2025. These profits were led by strong growth in pre-owned, service and parts while total operating expenses dipped slightly.
The unprofitable dealer count in our data set continued its decline from the first Quarter and fell by 12% from 22.2% to 19.6% for the year. This reflects the overall ability of the dealerships to adapt quickly to numerous market headwinds including tariffs and vehicle supply fluctuations.
The service absorption metrics continued to exhibit improvement on a quarterly basis, thereby supporting dealership profitability through back-end operations. This upward trend is evident in the 6% increase from 65.3% to 69.1%.
NWC of the dealers also grew in Q2, rising from $12.9 million to $13.9 million. This positive trend will help support operational expenses and the demands of an ever-changing business environment.
Overall, dealerships have adapted well to the difficult and continually changing market conditions by focusing on profit margins, pre-owned, F&I income and controlling operating expenses. Along with the steady growth in fixed operations, they were able to generate stronger net profits as a result.
For Q2 2025, new vehicle sales remain flat year-over-year, with an average of 283 units sold per dealer. While the average sales price of a new vehicle rose 2% to a near record level $45,772, average front end GPNVR declined a staggering 68% or $304 from a year ago to just $142. The Average dealership GPNVR, including Bonus Monies, fell 24% or $372 to $1,189 for the year adding to the overall pressure on new vehicle profitability. Sales volume likely played a significant role here.
Following last quarter's positive trend, F&I income GPNVR delivered a notable 11% increase or $151 to $1506. F&I Income remains an essential part of the new vehicle strategy to achieve favorable gross profits to help overcome the intense competition in the new car arena. Strong growth in protection product sales will be the focus in the F&I department for the balance of ‘25.
Average dealership new vehicle day supply jumped from 80 days to 88 days through June ‘25. As the days supply continues to grow, dealers will be faced with the task of improving sales volume, inventory turn and preserving front-end gross profit all while floorplan costs continue to rise due to higher rates. Dealership net floor plan expense rose 39%, or an incremental $139 per unit, evidence of the growing days supply and interest expense that continue to erode margins.
In Q2 2025, advertising on a PNVR stayed flat at $608 per unit. Manufacturer advertising support declined across the board by 23% to $279 per vehicle.
Average dealership pre-owned sales jumped an impressive 13% through June 25 as sales increased from 337 to 381. The average sales price dropped 13% to $22,413 while days’ supply dropped below 50 as dealers had difficulty replenishing inventory at the end of Q2. Average GPUVR fell 8% or $133, from $1,763 to $1,630 while recon cost rose a modest $61 per vehicle. Unlike the new car department, F&I GPUVR fell 7% or $52 to $735 likely due to a dip in product sales.
Unfortunately, the decline in Certified Pre-Owned (CPO) sales persists, with a 9% drop from 84 to 77 units in Q2. This resulted in CPO days' supply rising to 41 days from 35 a year ago. Still, CPO inventory remains relatively light considering its excellent gross profit contribution to the department. Dealerships should aim to build CPO inventory (CORE) through more aggressive purchases and trades to provide this lucrative pre-owned option to more customers.
Despite the sales drop, CPO front end PUVR continues to significantly outperform non-CPO by an impressive $358 per vehicle. This doesn't include the fact that these CPO sales also have a much better turn and generate significantly more aftersales gross profits than non-CPO. To reverse this negative sales trend (despite the strong GPUVR results) GMs will need to do a better job engaging in the CPO brand by revisiting how it benefits overall dealership profitability.
Service and parts operations continued their upward trend as fixed absorption grew to 69.1% for June. For the year, total ROs grew a modest 3% from 5,113 to 5,244 due in large part to warranty and pre-paid maintenance growth. Customer Pay ROs fell 2% through June indicating these clients are leaving the dealerships likely due to pricing, scheduling, or a combination of both.
Total Service Gross Profit per Repair Order grew 9% year-over-year from $201 to $218, likely driven by a slightly higher effective labor rate (ELR) and a 12% uptick in labor hours per RO which grew from 1.9 to 2.1.
Customer Pay Gross Profit per Repair Order grew 8% from $212 to $230. This trend is not so positive as customers today are likely to pay 8% more for the same work as ELRs continue to climb. All this while Customer Pay hours per RO remain unchanged at 2.0 and Customer Pay RO count is declining. Dealerships will need to focus on these two areas by improving the MPI process and bringing older MY clientele back to the dealership.
Warranty Gross Profit per RO showed a strong uptick with a 15% year-over-year increase to $224 contributing sharply to the aftersales total gross profit and absorption calculation.
For the first time, Customer Pay Sales per Technician experienced a 4% YOY decline from $71,817 to $68,902 is significant since the total technician count dropped 10% during this time as well.
Total Parts Sales per Repair Order increased 1% from $347 to $350. Customer Pay Parts sales per Repair Order and Warranty Parts sales per RO increased 3% and 2%, respectively. Customer Pay Parts sales climbed from $235 to $243, while Warranty Parts sales rose from $296 to $302. Total Parts Gross Profit per Repair Order increased 4% to $108.
Below are key trends from our AMOS composite from all brands in US that Optimum continues to monitor closely:
Recommendations:
Overall, the dealers in our data set have adopted a proactive approach to addressing the many challenges facing them in the marketplace. Growing their business while at the same time keeping a healthy gross profit margin and reducing operating expenses is paying off in improved profits. According to the average composite, the dealerships are continuing to prioritize fixed operations, used vehicles and F&I. Given the escalating economic instability, tariff threats, and fluctuations in new vehicle inventory, achieving a balance in these areas will be essential in the coming months.
Note: All numbers mentioned above, except the ones specifically referenced, are based on a composite of all brands in the US using Optimum Info’s AMOS system (Audi, Hyundai, Kia, Mitsubishi, Volkswagen, and Volvo). The gathered data has been meticulously analyzed to provide accurate and comprehensive insights for the purpose of this article.
Linda is a Business Management and Financial Analysis expert with experience in the Automotive Industry working for renowned OEMs.
Mark has devoted an entire career in the Automotive Industry with both OEMs and dealers thanks to an unmatched passion for cars.
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