Australia’s car dealers are turning over big bucks, but the latest industry data from the Australian Automotive Dealer Association (AADA) shows many are operating on far thinner margins than most buyers would assume.
Published as part of today’s AADA event, where Australian Prime Minister Anthony Albanese pledged that dealer protection reforms will be implemented this year, the association said Dealernomics 2026 Figures show why the industry is pushing so hard against unfair trade practices, unfair contract terms and supplier compensation.
The topline numbers are big enough. According to the AADA, there are 3868 dealers, 64,045 dealer employees and 7508 trainees in Australia. The sector contributes $21.5 billion to economic activity, generates $91.3 billion in sales and revenue, pays $8.2 billion in taxes and duties, and another $8.2 billion in merchant wages.
But these headlines obscure how little is left once the bills are paid. Based on the AADA benchmark of $100 million in merchants, gross profit is $14.0 million. Finance and insurance contribute $1.65 million, while other income contributes $2.65 million. The total cost is $14.8 million.
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The result is a net profit of $3.50 million, or 3.5 percent of sales.
This is important because it shows why traders continue to focus on issues that may sound abstract outside the industry but can make a real difference within the company.
Personnel costs alone account for 56 percent of gross profit, or $7.8 million, based on the AADA’s benchmark model. The floor plan interest rate is 8.0 percent or $1.1 million. The rent is 13 percent, or $1.8 million. Advertising is another 5.0 percent.
Just as important is where the money actually comes from. 72 percent of sales come from new vehicles, 12 percent from used dealers and 2.0 percent from used wholesalers. Combined, front-end sales account for 86 percent of dealer revenue. The remaining 14 percent comes from parts and service.
However, the gross profit breakdown tells a different story. New vehicles account for 43 percent of total gross profit and used vehicles account for 10 percent, so the front-end accounts for 53 percent of gross profit. Parts contribute 13 percent, service 34 percent, leaving back-end departments responsible for 47 percent of total gross profit.
In other words: spare parts and service do far more work than their share of sales suggests.
This is why the political battle over warranty refunds, audit clawbacks and consumer warranty costs has become such a big deal for retailers. When the shop and parts department account for nearly half of the gross profit, disputes over who pays when something goes wrong are tougher than many outside the industry realize.
Mr Albanese made this point directly in his speech.
“A retailer should not suffer a financial loss for doing the right thing by the customer.”
He also said: “We know that to protect consumers from unfair trade practices, we must also protect retailers, and that starts with unfair trade practices.”
The timing of this dispute is no coincidence, as the customer situation is becoming increasingly difficult.
The AADA Electric Vehicle (EV) Consumer Sentiment Survey found that 65 percent of respondents expect to keep their current car longer due to cost of living pressures. Another 65 percent said their next purchase will be an SUV or pickup truck.
Only 38 percent said they were willing to buy an electric vehicle for their next primary vehicle. Broken down further, 13 percent said they were very likely to buy an electric vehicle as their primary car, while 25 percent said they would definitely do so. At the other end, 17 percent said this was not very likely and 21 percent said it was not at all the case.
There’s another telling number in the survey: The average price premium consumers would pay for an electric vehicle was 2.0 percent. At the same time, 60 percent said governments should offer more incentives for customers to switch to electric vehicles.
The reasons buyers gave for not considering an electric car were also known. 53 percent said electric vehicles still cost too much. A further 43 percent said they did not have the right charging facility at home, while 43 percent cited a lack of public charging stations or infrastructure.
The range was mentioned by 36 percent, the charging times by 33 percent and the repair costs by 32 percent. Another 27 percent said the resale value of electric vehicles is not maintained, while 26 percent said the cost of insuring an electric vehicle is too high.
This reluctance is also evident in the used car market. According to the AADA, a total of 2,316,208 used vehicles were sold in 2025, a decrease of 0.37 percent nationwide. Of these, 51.4 percent were private sales and 48.6 percent were dealer sales.
Gasoline vehicles accounted for 1,422,518 of used vehicle sales, accounting for 61.4 percent of the market. Diesel accounted for 725,203 sales or 31.3 percent. Hybrids reached 128,914 sales, or 5.6 percent.
Used electric vehicles accounted for just 33,610 sales, or 1.5 percent of the market. PHEVs recorded a sales increase of 2950 or 0.1 percent.
This explains why Australia’s vehicle fleet is still aging. The AADA data shows that there were 20.9 million vehicles registered nationwide in 2025, up from 20.4 million in 2024. That equates to 764 vehicles per 1,000 residents, up from 757 the year before.
The average age of passenger vehicles nationwide increased to 11.3 years, up from 11.2 years in 2024. The average age of light commercial vehicles increased from 11.4 to 11.6 years.
This suggests the industry is being asked to manage more complexity at a time when buyers are holding on to cars longer, the national fleet is aging, used electric vehicles still make up a tiny portion of the used market and much of a dealer’s actual profit still lies in the service lane rather than the showroom floor.
AADA Managing Director James Voortman expressed this in the association’s media release.
“As local new car dealers come under pressure, it will ultimately be Australian customers who pay the price by investing less in local jobs and making access more difficult for regional communities,” he said.
He also warned that the growing number of car brands in Australia had not translated into better returns for dealers.
“In the last five years, 28 brands have set up shop in Australia. However, increasing 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 dealers close and local jobs are lost,” Mr Voortman said.
That’s the real excitement in the numbers released today.
The dealer sector in Australia is large. It is economically significant. Tens of thousands of people are still employed there and thousands of apprentices are being trained.
But it’s also a business in which a $100 million dealership generates just 3.5 percent of sales, in which nearly half of the gross profit comes from the back end, and in which a customer base facing cost-of-living pressures isn’t switching to electric vehicles as quickly as policymakers or car brands would like.
MORE: Australia’s prime minister says protections for car dealers will soon be introduced as AADA increases pressure
