Margins in automotive retail are under more pressure than ever. Inventory costs fluctuate, advertising continues to evolve, compliance requirements increase, and customer expectations remain high. Yet one of the most persistent profit drains in dealerships is also one of the least discussed.
It’s not flooring.
It’s not staffing.
And it’s not marketing.
It’s operational expenses that dealerships continue to absorb simply because “that’s how it’s always been done.”
The Cost That Rarely Gets Line-Item Attention
In many dealerships, these expenses are treated as unavoidable. Over time, they become normalized, quietly baked into the cost of doing business without regular scrutiny.
The challenge is that these costs don’t stay static. As transaction volumes increase and payment behavior changes, what once felt manageable becomes a meaningful hit to the bottom line. The problem isn’t just the cost itself. It’s the lack of visibility around it. Some OEM statements don’t even include a line item for this Top 5 dealership expense.
When costs are absorbed without regular review, they rarely trigger action.
Why This Issue Is Growing in 2026
Dealership operations are becoming more complex, not less. Digital payments are more common. Customer expectations around convenience continue to rise. At the same time, regulatory scrutiny and compliance standards are tightening.
All of this creates an environment where certain expenses increase faster than revenue, especially when processes remain unchanged. The dealerships that protect margins most effectively aren’t necessarily selling more cars. They’re identifying where money is leaving the operation unnecessarily and fixing it without disrupting the customer experience.
The Real Risk Isn’t Change, It’s Inaction
Many dealers hesitate to revisit long-standing operational decisions because change often feels risky. New vendors, new systems, and new workflows can create friction if not implemented thoughtfully.
But the greater risk is ignoring costs that quietly compound month after month.
The most successful dealerships are asking better questions:
- What costs are we absorbing today that we didn’t absorb five years ago?
- Which costs have grown without a corresponding benefit?
- Where do we lack transparency in our own operations?
These are the conversations happening more frequently across the industry.
Why Dealers Are Talking About This More Openly
Historically, some operational topics were treated as “back office” issues, discussed only within accounting teams. That’s changing.
Dealer principals, general managers, and controllers are increasingly aligned around one reality: protecting margin requires visibility, not just volume. This shift is one reason these conversations are becoming more prominent at major industry gatherings like the NADA Show. Dealers want practical solutions, not theory.
A Smarter Way Forward
Addressing hidden costs doesn’t require reinventing operations. In many cases, it simply requires awareness, transparency, and the willingness to evaluate long-standing assumptions.
Dealers who do this well often discover opportunities to improve cash flow without changing how they sell, service, or support customers.
Those conversations tend to start with education, not sales pitches.
And they’re increasingly happening face-to-face among peers.
Dealers attending the NADA Show will be discussing this topic and practical solutions throughout the show.
Dealer Merchant Services | NADA Show booth #6112N