By Jonah Gjertson, Senior Consultant at Blue & Co.
Starting Point
In 2025, retail automotive dealership groups navigated through macroeconomic uncertainty and tightening consumer affordability. The public retail automotive dealership groups sampled (Lithia Automotive, Penske Automotive, Sonic Automotive, Asbury Automotive, AutoNation) experienced an average and median decrease in new-vehicle profit per vehicle retailed (nPVR) of 8.0 percent and 8.3 percent, respectively. The average and median used-vehicle profit per vehicle retailed (uPVR) increase by 4.4 percent and 7.3 percent, respectively. The average and median finance and insurance (F&I) profit per vehicle retailed (fPVR) increase by 1.0 percent and 0.8 percent, respectively.
Tariff Update
In February 2026, the United States Supreme Court ruled in a 6-3 decision that the widespread tariffs implemented by the Trump Administration were illegal. What does this mean for auto manufacturers and their dealers? While the tariffs affected a widespread sample of imported goods, tariffs on steel, aluminum, and imported vehicles will remain in place.
In Sonic Automotive’s Q4 2025 investor call, Jeff Dyke, President, anticipates that manufacturers may lower the expected margin for dealers. Jeff notes that, in 2025, manufacturers absorbed billions in tariff-related expenses, and that it likely won’t continue through 2026. If the manufacturer incentives and modeled margin are compressed, the price elasticity of new vehicles will be tested as some dealers attempt to maintain front-end gross on nPVR.
PVRs and Expectations
New – In our Fall Automotive update, we predicted that nPVR would not experience the Q4 seasonal bump due to the pull-forward demand for luxury-priced vehicles, due to the expiration of the Federal Tax credit for EVs in Q3 2025. For 2026, we anticipate PVRs will continue to compress due to automotive tariffs and rising consumer price pressures.
Used – For 2026, we were holding our forecast for uPVR to remain in the high $1,000 range as the average transaction price for new vehicles bolsters the attractiveness of used vehicles (+), high BEV lease penetration leading to used vehicle acquisitions (+), and an ongoing concern with subprime lending and affordability (-).
F&I – We anticipate fPVRs will remain flat at $2,000 in our forecast.
Closing
In 2026, dealership groups face a landscape defined by tightening consumer affordability and evolving regulatory pressures. While new-vehicle margins softened and used-vehicle and F&I performance provided stability, the recent changes in tariff policies introduce new changes for manufacturers and retailers alike.
Against this backdrop, dealership groups will need to refine their operational strategies, strengthen their used-vehicle sourcing strategy, and sustain disciplined F&I performance to protect total variable operations gross.
Data
Blue & Co. brings a combination of financial expertise, operational insight, and industry-specific advisory services to help dealerships navigate exactly the kind of market conditions described in this article. Our approach centers on understanding a dealership’s unique pressures and opportunities, then building tailored strategies that strengthen both day-to-day performance and long-term resilience. Contact a Blue & Co. advisor today.
About Us
Jonah Gjertson, Senior Consultant with Blue & Co., is a seasoned professional with a background in corporate development and business valuation. From 2022 to 2025, he served as a Corporate Development Analyst at Gee Automotive Companies, where he contributed to strategic growth initiatives within the retail automotive sector. His experience spans equity evaluation, financial modeling, and strategic consulting, and he has been praised for his analytical rigor and collaborative leadership in both academic and professional settings.
Sources:
- Various companies. Investor Relations Materials and Earnings Calls. 2025. Public filings of General Motors, Ford Motor Company, Lithia Automotive, Sonic Automotive, Asbury Automotive, AutoNations and Penske Automotive.
