U.S. Car Dealerships Pivot to Service to Offset Sales Slump

U.S. car dealerships are shifting their business models toward vehicle service and parts to offset compressing profit margins on new car sales. During the pandemic, limited supplies allowed dealers to command high prices, but the return of normalized inventory levels and increased competition has reduced those gains. Cox Automotive Mobility Solutions, Inc. reported that dealers had approximately 2.73 million new vehicles available in early August.

Tim Pohanka, Executive Vice President and Chief Operating Officer of Pohanka Nissan Hyundai, identified vehicle service as the primary opportunity for dealerships facing these financial pressures. To compete with independent chains like Walmart and Jiffy Lube, dealerships are introducing walk-in appointments, financing options, and video updates for customers. This shift is supported by a trend of consumers keeping cars longer, with the average passenger vehicle age now reaching 14.5 years.

The National Automobile Dealers Association reported that total service and parts sales grew 48% over the last five years, reaching $164.6 billion. However, the industry faces stiff competition; Ducker Carlisle reported that 42% of Americans relied on independent service chains as their primary provider in 2025.