There’s a certain kind of paralysis that sets in when everything feels like it’s falling apart—like when your phone pings with a “low storage” warning and your accountant texts, “Can we talk?” So I almost didn’t write this post. It felt indulgent, like rearranging throw pillows during a house fire.
But then, a few things happened this week—little moments, like overhearing a dealer mutter, “I think we’re fine,” in the tone of someone trying to convince both me and himself. Or watching a Controller flinch at the phrase “bank reconciliation,” as if it were a slap across the face. And I thought: Maybe it’s not just me. Maybe the Universe (who, let’s be honest, has been a little dramatic lately) is nudging me to speak up.
So, let’s talk about it.
What exactly are ‘financial worries’ for car dealers these days?
It’s not just about missing the mark on your monthly statement. It’s the sense that, ever since the pandemic took the world, shook it like a snow globe, and then handed it back with a shrug, we’ve all been a bit unmoored. Fundamentals? Left in the dust. Systems? Loosely held together by good intentions and duct tape.
Yes, revenue is the lifeblood of a dealership. We all know this. But if that revenue doesn’t get booked properly—or worse, turns out to be less than what you’ve been confidently telling yourself all month—it quickly morphs from lifeblood to slow bleed. And suddenly, you’re standing in your office, staring at the financial statement like it’s a magic eye test, hoping if you squint just right, the numbers will align and your panic will recede.
So in the spirit of sharing (and maybe self-soothing), I’ve put together a list:
Ten of the top financial worries car dealers face right now.
Not because I have all the answers but because sometimes just naming the monsters under the bed makes them feel a little less powerful. And who knows? Maybe you’ll spot a hole in your boat before it fills with water.
Or at least find someone else bailing beside you.
1. Controlling expenses
Managing expenses isn’t just a box to check—it’s one of the most pressing challenges dealership leaders face. In today’s market, where margins are tighter and volatility feels like the norm, controlling costs is essential to staying profitable. But knowing how to do that? That’s where things get tricky.
It all starts with strong financial literacy.
For General Managers and Controllers, understanding the financials isn’t optional. It’s what keeps decisions grounded in data instead of wishful thinking. It’s what prevents late-night spreadsheets, frantic emails, and those emergency meetings where everyone’s just hoping the numbers magically improve.
The truth is, poor financial literacy quietly erodes profitability. And the hidden cost of not knowing your numbers can be far greater than most realize.
Here’s how it shows up:
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Inadequate Expense Management
Many GMs and Controllers simply don’t have the financial training to spot excessive or unnecessary spending. As a result, costs balloon—even during periods of strong sales—and eat into what should be healthy profits. -
Misaligned Expenses and Gross Profit
Without a clear grasp of key financial KPIs, it’s difficult to align spending with revenue. Dealers often miss manufacturer benchmarks for expense-to-gross ratios, putting their financial stability at risk without even realizing it.
The bottom line?
Strong sales don’t guarantee strong profits. It’s the financial know-how behind the scenes that makes or breaks a dealership’s success. And in a business where every dollar matters, understanding the numbers isn’t just helpful—it’s mission-critical.
2. High interest rates and financing costs
- Floor Plan Financing
Elevated borrowing costs for inventory financing (floor plans) require dealers to adopt more strategic inventory management to minimize carrying costs. - Consumer Financing
Interest rates for auto loans remain high, limiting affordability for buyers. This has led to an increase in cash purchases, which reduces dealer profits from financing vehicles.
3. Shortage of experienced controllers + accounting office staff
A lack of experience in dealership accounting roles isn’t just a staffing issue—it’s a business risk. From daily operations to big-picture strategy, the impact of undertrained or inexperienced personnel can be felt in every corner of the dealership. Here’s how that risk shows up:
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Increased Errors and Financial Misstatements
Dealership accounting is complex and challenging. Inexperienced staff are more likely to make errors, which can lead to inaccurate financial statements and costly corrections down the line. -
Slower, Less Efficient Processes
Without a solid understanding of dealership-specific practices—like reconciling schedules or adhering to Dealer Generally Accepted Accounting Principles (DGAAP)—routine tasks become slow, clunky, and mistake-prone. -
Compliance and Regulatory Risks
Lack of experience increases the likelihood of missing key compliance requirements, opening the door to audits, legal consequences, and financial penalties. -
Missed Profit and Cost-Saving Opportunities
Inexperience can blind staff to inefficiencies, unnecessary expenses, or overlooked cost-saving opportunities—quietly eating away at dealership profitability. -
Strain on Experienced Team Members
This one doesn’t get enough attention. Senior staff often end up training junior employees while still trying to keep up with their own work. The result? Burnout, delayed deadlines, and lost focus on high-priority initiatives. -
Poor Strategic Decision-Making
Leadership depends on timely, accurate financial reporting to make informed business decisions. When data is flawed or delayed, strategy suffers. -
Higher Turnover and Burnout
When employees are placed in roles they’re not equipped to handle, stress and frustration follow—leading to higher turnover and the loss of hard-to-replace institutional knowledge. -
Greater Risk of Fraud
Inexperienced staff often fail to recognize warning signs of fraudulent activities, leaving the dealership more vulnerable to both internal and external fraud. -
Mishandled Incentives and Chargebacks
Manufacturer programs are complex. If not managed carefully, they can result in missed claims, unresolved chargebacks, and unnecessary revenue loss.
In short, underestimating the importance of financial experience in the accounting office can cost far more than just a few training hours. It can quietly chip away at profits, performance, and peace of mind.
4. Cash flow management
Poor cash flow at a dealership isn’t just a financial problem—it’s a full-body experience. For those who’ve never experienced poor dealership cash flow, let me tell you—it’s not a situation you ever want to be in.
What does it look like?
- Falling behind on flooring payoffs
- Struggling to make payroll
- Delaying payments to even your most trusted vendors
- Customers calling weeks after a trade-in, furious that their payoff wasn’t made and demanding reimbursement for an auto-deducted payment
- Paying penalties and interest for missing sales tax or other regulatory deadlines
And those are just the symptoms.
The real damage goes deeper. Poor cash flow strangles momentum. It drains energy from the showroom and adds pressure to every decision. Instead of focusing on growth or performance, the whole store shifts into survival mode.
It replaces a thriving, high-energy store with a heavy, relentless stress that weighs on everyone. Even the most seasoned car professionals feel the toll.
Managing cash flow isn’t just about staying afloat. It’s about protecting the heartbeat of your store.
5. Tariffs
The recent implementation of 25% tariffs on imports from Mexico and Canada, apparently effective April 2, 2025, has created substantial concerns within the automotive industry.
As of this writing, these concerns are manifesting in several ways:
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Price increases: Dealers anticipate that the tariffs will lead to significant price hikes for new vehicles. Estimates suggest that most North American-assembled models could increase by $4,000 to $10,000 per vehicle.
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Impact on sales: Adam Lee, chair of Lee Auto Malls in Maine, reported that his dealership had its worst February in terms of net profit since 2009, attributing this partly to economic uncertainty caused by tariff discussions.
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Supply chain disruptions: The complex, cross-border automotive supply chain means that almost no “American-made” car is 100% produced on U.S. soil, making it difficult for dealers to avoid the impact of tariffs.
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Consumer behavior changes: Some dealers are seeing a rush of buyers trying to purchase vehicles before tariff-related price increases take effect. This surge in pre-tariff buying would likely lead to inventory challenges for dealers.
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Long-term industry concerns: There are worries about the potential long-term effects on the auto industry, with some economists suggesting it could become too expensive for some dealerships to stay open if the situation persists.
These concerns are compounded by the fact that the Federal Reserve has recently held interest rates steady, which is considered bad news for car shoppers and, by extension, for dealers.
6. Finance and Insurance (F&I) profits
F&I profits, which surged during the pandemic, are normalizing. High financing costs and affordability challenges make it harder to sell protection products and service contracts.
7. Rising auto loan delinquency rates
Data from the New York Fed shows nearly all borrower groups have seen delinquency rates rise beyond their pre-pandemic levels. In the fourth quarter of 2024, the share of auto loans among all borrowers that transitioned into serious delinquency — 90 days or more past due — rose to 2.96%, the highest level since 2010.
8. Marketing + Advertising
Marketing and advertising make up one of the largest expenses on a dealership’s income statement—yet ironically, it’s one of the least scrutinized. A wise client of mine once summed it up perfectly:
I know half my marketing is working. I just don’t know which half.
That kind of uncertainty is expensive.
As market dynamics shift, it’s crucial to be more intentional about where their advertising dollars go. A $15,000 spend on Google or Facebook ads might be justified—but only if someone can clearly explain why and how it’s delivering results. Taking advertising vendors at face value isn’t a strategy.
This is where both leadership and accounting need to lock arms.
The accounting office should be tracking marketing expenses closely—ensuring each month’s charges match approved campaigns and that vendors are being paid accurately. It’s not just about cutting checks; it’s about accountability.
And yes, I’m still a believer in the good old-fashioned purchase order (P.O.) system. Every time the GM approves new advertising, a P.O. should be created. It’s a small habit that creates big visibility—and it ensures everyone’s on the same page when the bills come due.
Advertising and marketing may be a creative endeavor, but how you pay for it should be all business.
9. Customer loyalty
Declining customer loyalty is a significant concern in 2025 due to several evolving trends and challenges.
Eroding brand loyalty
- Brand loyalty remains barely above 50%, meaning half of return-to-market (RTM) shoppers are likely to switch brands. This is especially problematic in the luxury sector, where loyalty has only exceeded 50% for two quarters since 2021.
- The pandemic disrupted shopping behaviors, with nearly 40% of consumers leaving trusted brands for new ones. Dealers have struggled to regain this trust.
Shifting Consumer Preferences
- Demand is shifting away from sedans (loyalty at 37%) toward utility vehicles, which have a much higher loyalty rate (75%). Dealers must adapt their inventory and marketing strategies to align with these preferences.
- Hybrid and electric vehicles are gaining traction, offering opportunities to attract customers loyal to fuel types rather than specific brands.
Service Satisfaction Challenges
- Poor service experiences, such as repairs not completed correctly on the first visit (12% of cases), drive customers to independent shops and car repair chain stores. Only 50% of dissatisfied customers return to the dealership for unresolved issues.
- Younger generations, particularly Gen Z, express lower trust in dealer service compared to older generations.
Declining Lease Activity
- Leasing customers exhibit 15% higher brand loyalty than buyers, but lease returns are projected to decline by 41% in the first half of 2025, potentially removing nearly 1 million vehicles from the industry.
Competitive Pressures
- Aftermarket servicing outlets are expanding their offerings, drawing customers away from dealerships for maintenance and repairs.
10. Declining profits
Yes, car dealers are increasingly worried about declining profits as they enter 2025. Several factors contribute to this concern:
- Profit decline trends: Publicly owned dealerships reported an average pre-tax income of $1.0M per store in Q3 2024, a 7% decrease from Q2 2024. Over the last twelve months, average pre-tax income fell to $4.1M per store, a 22.8% drop compared to the same period in 2023.
- Pessimistic outlook: 43% of dealers expect profits to decline in 2025, the highest level in four years. Only 14% expect a rise in earnings, slightly lower than 2023 dealer sentiment. (Kerrigan Advisors)
- EV challenges: 68% of dealers expect electric vehicle sales to negatively impact dealership profitability in 2025. Only 5% anticipate a positive impact from EV sales.
Wrapping it all up
Let’s be honest: if you work in the car business, you were probably born with a worry gene. It’s in our DNA—right next to the one that makes us flinch every time someone says, “Heat customer.”
We definitely don’t need more reasons to lose sleep. We have plenty already: floorplan audits, open repair order lists, the CSI rollercoaster, and that one sales manager who insists the numbers are wrong because “they just feel off.”
But here’s the thing—tucked somewhere between the panic and the paperwork—is another trait we all share: resilience. Stubborn, scrappy, occasionally-caffeinated resilience. It’s what gets us through the chaos, keeps the lights on, and convinces us—somehow—that we can do it all again tomorrow.
And we will.
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