Welcome to another edition of Inside Automotive. Joining us on today’s episode from the Dave Cantin Group are Daniel Pilger, Vice President of Business Analysis, and Brian Traugott, Partner and Chief of Staff, to break down some of the biggest themes emerging from recent public dealer earnings, including the used-car market, fixed ops performance, and luxury vehicle sales.
While public dealer earnings are showing growing opportunities and pressures across used vehicles, fixed operations, and luxury sales, experts from the Dave Cantin Group say disciplined execution, smart sourcing, and operational efficiency will separate winners from laggards in the current market.
Used vehicles
According to Pilger, used vehicles now account for roughly twice the volume of new cars and remain a critical affordability solution for consumers priced out by rising new-vehicle MSRPs. He notes that used EV sales are climbing, up 35% year over year, even as new EV momentum slowed by 38%, signaling demand at lower price points.
“Currently used vehicles are selling at about double that number of new vehicles.” - Daniel Pilger
Additionally, he alludes that lease returns are projected to surge from 120,000 units in 2025 to nearly 650,000 by 2027. However, Traugott believes that more inventory creates opportunity but also puts pressure on prices, requiring dealers to be disciplined in sourcing, pricing, and vehicle turns. “The winners will be operators who use market intelligence, consumer sourcing strategies, and tight inventory discipline to protect margins and grow profitability,” Traugott said.
Fixed ops
Traugott also alludes that fixed operations are increasingly central to dealer profitability, contributing more than 45% of total gross profit across public dealer groups. With front-end margins under pressure, parts and service now stabilize earnings while driving growth.
Therefore, the duo believes that achieving success in fixed operations requires disciplined investment in people, technology, processes, and facilities to enhance customer experience, throughput, and service efficiency. Pilger emphasizes that data-driven insights are essential for quantifying ROI on operational investments.
Luxury vehicles
Luxury sales declined 10% year-over-year in Q4, but Traugott said this is likely a timing distortion rather than a true erosion of demand. Notably, pull-ahead demand, tariff uncertainty, and EV incentives had inflated earlier sales.
“Luxury demand remains strong,” Traugott said. Q4 still ranked among the strongest luxury quarters in recent years. Dealers must focus on staying insulated as inventory normalizes and margin pressure grows, particularly in a K-shaped economy.
"It's great that we're going to have a lot more cars available... but it's about having the right cars, the right price, with the right turn profile to meet your customers needs." - Brian Traugott
Across used, fixed ops, and luxury segments, the common thread is disciplined execution. Dealers must manage inventory and margins for used vehicles, optimize fixed-ops profits, and strategically navigate luxury cycles. Leveraging scale, data, and operational discipline will be essential for growth and value maximization, especially for those considering M&A opportunities.
Pilger concluded, “Dealers should stay focused on the fundamentals.” Those combining strong market intelligence with operational discipline will outperform in the current environment.
