Your next oil change is becoming a bigger part of car dealers’ business as profits cool and service departments make up the difference

As profits from selling cars during the pandemic era decline, car dealerships are increasingly focusing on service departments to maintain their bottom line. The decline in profit is partly due to compressed margins caused by the car supply moving closer to demand and increased competition among car sellers. Despite their reputation for pricey repairs and questionable value, dealers are emphasizing the customer experience to compete with independent shops like Jiffy Lube, Meineke, and Walmart.

As a result, service departments have seen a 48% increase in total sales over the past five years, amounting to $164.6 billion in 2025, according to the National Automobile Dealers Association. Dealerships are adapting to the changing market by offering walk-in appointments, financing options, and video updates of serviced vehicles to increase customer engagement.

This emphasis on service is crucial as customers now hold onto their vehicles for longer periods, extending the window for service and generating recurring revenue. Furthermore, customers who already receive service from a dealership are more likely to purchase another car from the same dealership. While the average new-vehicle price remains high, the market may be moving towards a healthier balance between inventory and demand, which could help stabilize the industry.