It’s a “back-to-basics” year for many dealers in 2026.

Dealers and dealership managers are converging on Las Vegas for the NADA Show 2026, which takes place from Feb. 3 to Feb. 6, and for the number of conferences on its sidelines. The show comes at a timely moment for automotive retailers, after a year of global volatility that led to roller-coaster sales forecasts. Conference sessions are meeting the moment with a heavy emphasis on operational efficiency, with sessions ranging from fixed operations, finance & insurance, and how to better leverage used car sales.

In a way, those topics reflect a theme WardsAuto has heard from experts over the past few weeks: dealerships in 2026 are laser-focused on profitability, and will be turning to operational improvements to achieve it.

Dealers turn to fixed operations for profitability

Daryl Kenningham, president and CEO of Houston-based Group 1 Automotive, said in a Jan. 29 earnings call that the group plans to grow profits in 2026 on the back end, especially through parts and service, and through efficiency gains at existing dealerships.

“We want to build on 2025. We want to grow,” Kenningham said. Group 1 reported record revenues of $22.6 billion for 2025, a 13.2% increase over 2024.

CFO Daniel McHenry said in the call that Group 1 remains interested in dealership acquisitions, but they will be selective.

“In terms of capital allocation, we really want to grow the company and continue to grow the company through acquisition. We are not going to, however, buy stores that aren’t instantly accretive to us as a company in terms of EPS [earnings per share], and we’re not going to overpay for acquisitions,” McHenry said.

In a recent dealer survey, dealers were “optimistic but realistic about their profitability prospects” heading into 2026, said George Karolis, president of The Presidio Group. Presidio is an investment banking firm based in Atlanta and Denver, with a specialty in dealership mergers and acquisitions.

“There’s not going to be the boom of new-car gross anymore,” Karolis said in a phone interview. Nevertheless, he said new-car gross profits are still higher than they were before the pandemic.

Presidio’s Year-End 2025 Dealer Direction Survey found 85% of respondents said they expect parts and service to be the biggest driver of their business in 2026, Karolis said.

“I believe fixed-operation profits will continue to carry the dealerships,” one dealer wrote in the anonymized survey.

“2026 will reward dealers who run tight operations, focus on fixed ops and don’t chase volume at the expense of gross,” another respondent wrote in the survey. “It’s a back-to-basics year.”

The year-end 2025 survey, conducted from mid-November to mid-December, aggregated responses from 222 dealers and dealership group executives, representing more than 3,100 franchised dealerships, Presidio said.

After a roller-coaster year, dealers focus on what they can control

Auto industry analysts often use the term “roller-coaster” to describe the difficulty of forecasting U.S. auto sales in 2025.

Fear of tariff-related price increases pulled a lot of sales ahead early in 2025. A lull in demand followed. Then demand picked up again in the third quarter, before the $7,500 federal tax incentive on battery-electric vehicles expired, followed by another lull at year-end.

After all the drama, U.S. auto sales in 2025 were about what forecasters expected at the beginning of 2025: around 16.3 million light vehicles, an increase of just 2.6% from 2024, according to Omdia Automotive data (formerly WardsIntelligence).

“Quarterly, it was very noisy in 2025,” Kevin Tynan, director of research for The Presidio Group, said in a separate webinar on Jan. 28. “If ever there was a year you could smooth over quarterly results and look at the full year, it’s 2025,” he said.

Tynan suggested that in 2026, sales might not be quite so choppy, now that tariffs are no longer a new phenomenon and the EV tax credit is dead.

“We are very excited for a productive 2026,” Erin Kerrigan, founder and managing director of Kerrigan Advisors, Incline Village, Nev., said in a Jan. 20 webinar hosted by the American International Automobile Dealers Association.

According to a recent annual Kerrigan dealer survey with 525-plus respondents, more dealers now predict an increase rather than a decrease in profits for 2026. In the 2025 survey, about 32% of respondents said they expected higher profits in 2026, up from just 14% in the 2024 survey, Erin Kerrigan said.

To put that in context, in the 2021 Kerrigan Dealer Survey, 79% of the respondents said profits would go higher – which they did, in 2022, she said. “Today’s more optimistic outlook bodes well for 2026,” Kerrigan said in the webinar.

An increase in off-lease returns is expected to help dealers increase used-vehicle sales in 2026, analysts said.

One thing is for sure: Dealers in 2026 will have to lean harder on profit centers other than new-vehicle margins, such as F&I, said Rick Kurtz, senior vice president and chief distribution officer for dealership F&I provider Protective Asset Protection of St. Louis.

“Those front-end grosses of 2022-2023 are long gone,” he said in a phone interview.