Australia’s car dealers are turning over a lot of money, but the latest industry data from the Australian Automotive Dealer Association (AADA) shows many are operating on far slimmer margins than most buyers would assume.
Released as part of today’s AADA event, where Australian Prime Minister Anthony Albanese promised dealer protection reforms would be delivered this year, the association’s Dealernomics 2026 figures show why the sector is pushing so hard on unfair trading practices, unfair contract terms, and supplier indemnification.
The topline numbers are big enough. According to the AADA, Australia has 3868 dealerships, 64,045 dealer employees and 7508 apprentices. The sector contributes $21.5 billion in economic activity, generates $91.3 billion in sales and turnover, pays $8.2 billion in tax and duty, and another $8.2 billion in dealer wages.
But those headline numbers hide how little is left once the bills are paid. Based on the AADA’s benchmark $100 million dealership, gross profit is $14.0 million. Finance and insurance contributes $1.65 million, while other income adds $2.65 million. Total expenses come in at $14.8 million.
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The result is a net profit of $3.50 million, or 3.5 per cent of turnover.
That matters because it shows why dealers keep focusing on issues that may sound abstract outside the industry, but can make a real difference inside the business.
Employee costs alone account for 56 per cent of gross profit, or $7.8 million based on the AADA’s benchmark model. Floorplan interest is 8.0 per cent, or $1.1 million. Rent is 13 per cent, or $1.8 million. Advertising is another 5.0 per cent.
Just as important is where the money actually comes from. New vehicles account for 72 per cent of turnover, used retail is 12 per cent and used wholesale is 2.0 per cent. Put together, front-end sales account for 86 per cent of dealership revenue. Parts and service make up the remaining 14 per cent.
But the gross profit split tells a different story. New vehicles account for 43 per cent of total gross profit and used vehicles 10 per cent, meaning front-end operations contribute 53 per cent of gross profit. Parts contribute 13 per cent and servicing 34 per cent, leaving back-end operations responsible for 47 per cent of total gross profit.
In other words, parts and service do far more heavy-lifting than their share of revenue suggests.
That is why the political fight over warranty reimbursements, audit clawbacks and consumer-guarantee costs has become such a big deal for dealers. If the workshop and parts department are carrying nearly half the gross profit load, disputes over who pays when something goes wrong hit harder than many outside the industry might realise.
Mr Albanese made that point directly in his speech.
“A dealer should not suffer a financial loss for doing the right thing by the customer.”
He also said: “We know that in order to protect consumers from unfair practices, we have to protect dealers as well, and it starts with unfair trading practices.”
The timing of that argument is not accidental, because the customer backdrop is getting tougher too.
The AADA’s electric vehicle (EV) consumer sentiment survey found 65 per cent of respondents expect to keep their current car for longer due to cost-of-living pressures. Another 65 per cent said their next purchase will be an SUV or a ute.
Just 38 per cent said they were open to buying an EV for their next main vehicle. Broken down further, 13 per cent said they were very likely to buy an EV as their main car, while 25 per cent said they were quite likely. At the other end, 17 per cent said they were not very likely and 21 per cent said they were not at all likely.
There is another telling number in the survey: the average price premium consumers said they would pay for an EV was 2.0 per cent. At the same time, 60 per cent said governments should be incentivising customers more to transition to EVs.
The reasons buyers gave for not considering an EV were also familiar. Fifty-three per cent said EVs still cost too much. Another 43 per cent said they don’t have the right home charging setup, while 43 per cent pointed to a lack of public charging stations or infrastructure.
Driving range was cited by 36 per cent, recharge times by 33 per cent and repair costs by 32 per cent. Another 27 per cent said EV resale values won’t hold up, while 26 per cent said the cost of insuring an EV is too high.
That reluctance is also showing up in the used-car market. According to the AADA, a total of 2,316,208 used vehicles were sold in 2025, down 0.37 per cent nationally. Of those, 51.4 per cent were private sales and 48.6 per cent were dealer sales.
Petrol vehicles made up 1,422,518 of those used car sales, or 61.4 per cent of the market. Diesels accounted for 725,203 sales, or 31.3 per cent. Hybrids reached 128,914 sales, or 5.6 per cent.
Used EVs accounted for just 33,610 sales, or 1.5 per cent of the market. PHEVs notched up 2950 sales, or 0.1 per cent.
That helps explain why Australia’s vehicle fleet is still ageing. The AADA data shows there were 20.9 million registered vehicles nationally in 2025, up from 20.4 million in 2024. That equates to 764 vehicles per 1000 of population, up from 757 the year before.
The average age of passenger vehicles rose to 11.3 years nationally, up from 11.2 years in 2024. The average age of light-commercial vehicles rose from 11.4 to to 11.6 years.
This suggests the industry is being asked to absorb more complexity at a time when buyers are holding onto cars longer, the national fleet is getting older, used EVs remain a tiny part of the second-hand market, and much of a dealership’s real profit still sits in the service lane rather than the showroom.
AADA chief executive James Voortman made that point in the association’s media release.
“As local new car dealers are squeezed, it will ultimately be Australian customers who pay the price through less investment in local jobs and reduced access for regional communities,” he said.
He also warned the growing number of auto brands in Australia has not translated into better returns for dealers.
“In the past five years, 28 brands have set up in Australia. However, an increase in the number of brands has not resulted in increased profits. If this trend continues, we certainly don’t want to end up in a situation where we’re seeing dealerships closed, and local jobs lost,” said Mr Voortman.
That is the real tension in the numbers released today.
Australia’s dealer sector is large. It is economically significant. It is still employing tens of thousands of people and training thousands of apprentices.
But it’s also a business in which a $100 million dealership only nets 3.5 per cent of turnover, where nearly half of gross profit comes from the back end, and where a customer base under living cost pressure is not moving to EVs as quickly as policymakers or auto brands might like.
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