Dealers see fixed operations as a major hedge against the current, tariff-related threat to new-vehicle sales – which goes a long way toward explaining why so many dealers,  when asked about tariffs, consider them just one more challenge to overcome, like online selling, the Great Recession and the COVID-19 pandemic.

“Keep throwing things at us. We’re Teflon, we can handle anything. So, and now tariffs; what the hell, who cares?” says Jeff Dyke, president of Sonic Automotive.

Dyke was only half-joking. To a conference call audience loaded with Wall Street analysts, he adds in a more serious tone: “That’s an important message to the Street, to the market: Our team, we’ve got a lot of leather on our skins. … We’ll deal with it.”

Broad Gains

As of April 25, four out of six publicly traded new-car chains have reported first-quarter results. All four report higher revenues for fixed ops in the first quarter of 2025, vs. the same quarter a year ago.

The following revenue numbers are all on a same-store basis:

Houston-based Group 1 Automotive reports U.S.-market parts and service revenue of $509.7 million for the quarter, up 5.6% vs. a year ago. That’s not counting Group 1’s dealer network in the UK, which accounted for 33% of the group’s new-vehicle sales in the first quarter.

Sonic Automotive, Charlotte, NC, reports first-quarter revenues of $461.6 million for its franchised-segment parts, service and collision repair, an increase of 5.2% vs. the first quarter of 2024. That’s excluding Sonic’s EchoPark used-only stores.

Lithia Motors Inc., Medford, OR, reports quarterly revenue of $913 million for its aftersales segment, up 2.4% vs. the first quarter of 2024.

AutoNation, Fort Lauderdale, FL, reports it had parts and service revenue of about $1.2 billion in the first quarter, up 2.1% vs. a year ago. Results for 26 AutoNation USA used-only stores are reported in a separate category.

Consumer Demand

Bryan DeBoer, Lithia president and CEO, could have been speaking for the group when he says, “We’ve thought through the aftersales repercussions of higher tariffs. We're fortunate that most customers do need to repair their cars. And whether it’s maintenance or whether it’s hardline repair, that’s a positive thing for us.”

Lithia and its rivals agree fixed operations could even provide dealerships with a silver lining to the tariff situation. That is, assuming higher prices continue to cause many consumers to postpone new- and used-car purchases. The thinking is that consumers will need to spend more in the service and parts department to maintain their older, higher-mileage cars and trucks.

“I really believe there is no big option to defer” maintenance and repairs, DeBoer says. There’s no great reason for consumers to defect to the aftermarket, provided dealerships are cost-competitive with aftermarket service providers he says. “So, I think the impact in the aftersales business from tariffs, whatever they may end up being, is pretty minimal,” DeBoer says.

Warranty Work Increases

A couple of the big retail auto chains report an uptick in warranty work, tied in part to big-volume, high-value recalls for Toyota and Honda.

Group 1 says its warranty work was up 29% in the first quarter vs. a year ago, compared to a 6% increase in higher-margin, customer-pay work. “We expect this work to continue for some time, given the nature of the repairs,” including a replace-engine recall under warranty for certain Toyota Tundras, says Daniel McHenry, chief financial officer.

Lithia’s DeBoer says Lithia management is working to squeeze in a higher mix of customer-pay work – ideally, without cutting back on warranty work. To do that, Lithia – and its competitors – are adding technicians, adding service hours and shifts, and working to schedule repair orders more efficiently, without adding a lot more brick-and-mortar in the service lanes.

Managing the Mix

“Today, I think the biggest mindset is, we’re filling our shops with warranty work, and we should be filling it with warranty and customer-pay work,” DeBoer says.

Sonic Automotive has a similar idea, says Dyke. “It’s great to have the warranty work. It certainly played a big role in our quarter from a fixed perspective. But we can do a better job in making sure that we’re balancing customer pay and … warranty the right way, and loading the shop appropriately, and we’re making those changes.”

It’s possible to do both more warranty and more customer-pay, says David Smith, Sonic chairman and CEO. “I would say it’s more – rather than saying ‘turning customers away,’ it’s more scheduling properly.”