The numbers come first. Dealership service and parts sales reached $164.6 billion last year — a 48% jump over five years — according to the National Automobile Dealers Association. That surge is not accidental. It is the direct market response to compressed margins on new-car sales as inventory normalizes and competition between sellers intensifies.
The pandemic windfall is over. Average pretax profit per public dealership more than tripled to $6.8 million in 2022 from $1.9 million in 2018, according to a study of publicly traded dealership groups by Kerrigan Advisers cited by CNBC. By 2025, that figure had retreated to roughly $3.9 million. The supply squeeze that let dealers command premium prices — and minimal discounts — has given way to a market where U.S. dealers held about 2.73 million new vehicles in early August, according to Cox Automotive, essentially flat from a year earlier.
Tim Pohanka, executive vice president and chief operating officer of Pohanka Nissan Hyundai in Fredericksburg, Va., told Fortune that compressed car-sale margins have made service 'the biggest opportunity.' His dealerships now offer walk-in appointments, financing options on services, and a video update showing the full vehicle inspection — moves designed to compete directly with independent chains.
That competition is real. A 2025 report by consulting firm Ducker Carlisle found that 42% of Americans named an independent chain — Jiffy Lube, Meineke, or even Walmart — as their 'primary service provider,' up sharply from 20% in 2020. Dealerships spent years ceding that ground; they are now fighting to reclaim it.
The structural case for service is reinforced by one additional data point: the average age of a passenger car on U.S. roads reached 14.5 years last year, up from 11.5 years a decade prior, according to the Bureau of Transportation Statistics. Older vehicles need more maintenance, and every additional year a consumer holds a car extends the revenue window for whoever services it.
Meanwhile, new vehicles are not getting cheaper. The average new-vehicle listing price stood at $49,249 at the end of July, with the average transaction price reaching $49,855 — up 1.9% from a year earlier, per Kelley Blue Book. Pohanka noted that high sticker prices sharpen consumer sensitivity to service costs, making it harder for dealerships to retain customers who already view them as expensive.
CEO Times take: This is free enterprise doing exactly what it is supposed to do. When one revenue stream tightens, capital and management attention rotate toward the next opportunity. Dealerships that spent the pandemic years collecting windfall margins are now being forced to earn loyalty the old-fashioned way — through competitive pricing, transparent service, and customer retention. The market has already voted: independent chains captured nearly half of American drivers as primary service customers in five years. Dealerships that adapt by competing on value rather than relying on captive supply will survive; those that do not will find that $164.6 billion in industry service revenue flows to whoever earns it. Regulation and government rescue are not on the table here — only execution.
