What Is My Car Dealership Worth?

Car dealerships are complex businesses to value — the combination of new and used inventory, service departments, franchise agreements, and often real estate creates multiple layers of value. But the market for dealership acquisitions is active, driven by consolidation and generational transitions.

Typical Valuation Ranges

Most independent used car dealerships sell for 2.5x to 4x SDE. Franchise dealerships are valued differently — often based on a blue sky formula that factors in the franchise's brand value, market area, and throughput.

Factors that push toward the higher end:

• Franchise affiliation (Toyota, Honda, and luxury brands command premiums)
• Strong service and parts department (high-margin, recurring revenue)
• Desirable market territory
• Modern facility and owned real estate
• Diversified revenue (sales, service, F&I, body shop)
• Consistent unit volume growth

Factors that push toward the lower end:

• Independent used-only lot without service
• Owner handles all sales personally
• Thin margins on vehicle sales
• Short remaining lease on facility
• Heavy floor plan (inventory financing) dependence
• Declining unit volume

Key Metrics Buyers Evaluate

Service Department Absorption

What percentage of the dealership's total fixed costs (rent, utilities, salaries) are covered by service and parts gross profit? 80%+ absorption indicates a strong, profitable service operation that provides stability regardless of vehicle sales.

Gross Profit Per Unit

The average gross profit per vehicle sold (front-end plus back-end). Strong dealerships target $3,000–$5,000+ per unit when including F&I products.

F&I Performance

Finance and insurance income per retail unit is a key profit center. Well-run F&I departments generate $1,500–$2,500+ per unit.

Inventory Turns

How many times per year does your used inventory turn? 8–12 turns annually indicates healthy demand and smart buying. Aging inventory ties up capital and signals problems.

How to Increase Your Dealership's Value

1. Build your service department. Service and parts revenue is recurring, high-margin, and valued by buyers at a premium over vehicle sales.
2. Improve F&I. Strong F&I performance adds significant per-unit profit. Invest in training and product selection.
3. Manage inventory age. Turn used inventory aggressively. Aging units compress margins and signal operational issues.
4. Clean up your books. Dealership accounting is notoriously complex. Work with a dealership-specialized CPA.
5. Secure your facility. Long-term lease or owned real estate removes a major buyer concern.

Ready to Find Out What Your Dealership Is Worth?

Browse the valuation multiples guide for current industry data, or schedule a free call for a confidential valuation.