Car Dealerships Nearly Double Profitability in First Quarter

Car dealerships in Spain have seen a significant increase in profitability during the first quarter of 2025.

A report presented by Faconauto, the sector's trade association, and prepared by Snap-on Business Solutions (SBS), reveals that the average profitability on turnover reached 1.19%, nearly double the 0.66% recorded in the same period last year.

This progress is attributed to a combination of key factors: robust revenue growth across all business areas and more efficient management of operating expenses, according to the document.

The New Vehicle (NV) sector has been the main driver of this improvement, increasing its share to 67.1% of total dealership turnover and contributing 42.8% to the result. Its profitability was not based on a higher operating margin, but rather on a growth rate of departmental costs lower than that of revenues.

Meanwhile, the Used Vehicle (UV) sector accounted for 17.2% of turnover and 11.1% of the result. In this segment, expense control has been aligned with the evolution of turnover, allowing the department to maintain profitability alongside a good performance in margins and revenues.

As for after-sales, the mechanical workshop stood out for a notable increase in billed hours, benefiting from the seasonal effect of Easter. This resulted in a substantial increase in gross margin and an adjustment in expenses, significantly improving the department's profitability. The workshop contributed 5% to total turnover and 13.7% to the result. The bodywork area, although stable, showed slight negative adjustments in its margins.

The spare parts sector also recorded an increase in activity, although its profitability slightly declined, impacted by a lower contribution from the wholesale channel and sales to bodywork workshops. Nevertheless, this area accounted for 10.8% of turnover and contributed 32.3% to the result.

A key factor in the overall improvement has been the containment of expenses. General expenses were reduced to 4.1% of sales, compared to 4.6% the previous year, thanks to a more moderate evolution of its components.

The average absorption, which measures the percentage of fixed costs covered by workshop and spare parts income, stood at a solid 58.1%. Additionally, the liquidity index reached 1.27, demonstrating the good financial health of dealership networks.

The report also sheds a positive light on the situation of companies: the percentage of dealerships in losses has decreased from 36% to 32.7% year-on-year. Although this improvement is significant, the figure remains high, highlighting the continued effort of a significant part of the sector to adapt to the dynamic market context.

Faconauto has emphasized that these results reflect the growing professionalism of channel operators and their ability to adapt to a complex environment, marked by the energy transition, pressure on margins, and the constant evolution of vehicle demand.

The organization concludes that the main challenge for the coming quarters will be to consolidate this positive trend, maintaining a focus on cost containment, business diversification, and anticipation of regulatory and technological changes, especially regarding the implementation of electric vehicles.