ECONOMY STUDIOAutoNation, one of the largest U.S. dealer groups, sold $27,631.4 million in 2025, and cars were most of it1. New and used vehicles were about $77 of every $100 it sold, but only about $23 of every $100 of its gross profit2.
The back of the building is the other way round. Parts and service plus finance and insurance were about $23 of every $100 of sales and about $77 of every $100 of gross profit2. Gross profit is the money left after paying for what was sold, before wages, rent, advertising and interest2.
Four rooms, ranked by what they keep
Of every $100 of AutoNation’s gross profit in 2025, new cars gave about $13, used cars about $9, finance and insurance about $30 and the service bay about $482.
Per $100 you spend in each room, the difference is just as sharp. On a new car, about $95 goes to pay for the car and $4.92 is left for the dealer3. The used lot keeps 5.8%, and parts and service keeps 48.7%3.
A new car also leaves less than it did. AutoNation’s gross profit per new vehicle was $3,045 in 2024, $2,564 in 2025 and $2,176 in the third quarter of 20263,4.
As an illustration, a $45,000 new car at AutoNation’s 2025 margin leaves about $2,200, while an average $494 repair order at its parts and service margin leaves about $2405. That is our arithmetic, mixing an industry average with one company’s margin5.
The room that makes the loan
The finance office earned AutoNation $1,464.4 million of gross profit in 2025, and the line has no cost of sales because it consists of commissions1. Per vehicle sold, finance and insurance made $2,769, more than the $2,564 of a new car3.
The company says it arranges loans through third-party lenders and receives a commission from the lender6. It also sells protection products, such as extended service contracts, maintenance programs and GAP, which covers the shortfall between a loan balance and an insurance payoff6. Those are sold on commission, and the company also shares in future underwriting profit on some of them6.
The Consumer Financial Protection Bureau described a practice called dealer markup in 2013: the lender tells the dealer the rate it will accept, the dealer may charge the customer a costlier rate and the lender shares part of the extra interest with the dealer7. Congress voided that guidance in a resolution signed on May 21, 20188. Lithia says its commissions on third-party contracts are preset, and that a rise in its finance profit came from a higher finance reserve paid per unit by third-party lenders9.
The bay that keeps the lights on
Service is the steady part. AutoNation’s parts and service gross profit reached a record $616.6 million in the third quarter of 20264. The company says the business has historically been less sensitive to the economy than car sales6. Lithia calls its aftersales business the largest contributor to its overall profitability10.
At Lithia in 2025, cars were 85% of revenue but 33% of gross profit, while finance and aftersales were 15% of revenue and 67%11. Its gross margin was 6.3% on new cars and 57.7% on aftersales11.
Why dealers are becoming lenders
Both companies now keep some of the loans themselves. AutoNation Finance’s income was $15.4 million in the third quarter of 2026, against $1.5 million a year earlier, and the loans it holds grew from $1,953.9 million to $2,783.6 million4.
When a dealer keeps the loan, the commission becomes interest earned over the life of the loan, AutoNation’s quarterly report explains12. In the quarter it originated about $3.9 billion of customer financing across 93,000 units, a finance penetration of about 73%, and kept about $500 million of those loans13. At Lithia, the chief executive said a loan it keeps is about three times more profitable over its lifetime, and its lending arm wrote $937 million of loans in the quarter14.
What it means at the signing desk
All of this sits on top of record loan sizes. Edmunds reported that the average amount financed for a new vehicle reached $44,664 in the third quarter of 2026, with a record average payment of $787 a month and $9,938 of interest over the loan15. Loans of 84 months or longer were 25.5% of financed new-car purchases, up from 21.8% a year earlier15.
Edmunds also reported that 29.6% of trade-ins toward new cars carried negative equity, averaging $6,884, and buyers who rolled it into a new loan paid an average of $944 a month16.
The New York Fed counted $1.71 trillion of auto loan balances in the second quarter of 202617. The share of balances moving into serious delinquency was 3.00%, against 2.93% a year earlier17.
The rules
In 2024 the Federal Trade Commission adopted a rule that would have banned selling an add-on product that confers no benefit to the consumer18. The Fifth Circuit vacated it on January 27, 2025 on procedural grounds, and the FTC formally withdrew it on February 12, 202618.
What to take from it
This explains how the business works and does not say what to buy. A dealer’s showroom is where it finds customers. The profit is made in the rooms behind it: the finance office, which arranges the loan and the add-ons, and the service bay, which collects year after year. That is why AutoNation could report that its new-car profit per vehicle fell while parts and service reached a record4.
