In an era in which profit margins from selling new cars are no longer negligible, and in which competition and price wars are escalating, a fundamental question arises: Where are the real profits concentrated in the automotive sector today?
The answer, which is beginning to crystallize as an indisputable fact, is that the major profit equation is no longer limited to manufacturing and assembly lines, but has shifted heavily to maintenance centers and after-sales services.
This structural shift is reshaping the priorities of manufacturers and the choices of consumers alike.
Manufacturing margin versus services profitability
In recent years, the automotive manufacturing industry has witnessed a significant erosion in profitability margins, at a time when raw material and energy costs continue to rise.
In China, the largest automobile market in the world, the profitability ratio of the automobile industry fell to only 4.1% during the year 2025, which is its lowest level in a whole decade and a noticeable decline from the average profitability ratio in other manufacturing industries, which reached 5.0%.
In terms of numbers, the Chinese auto industry achieved total profits of 461 billion yuan (about 67.8 billion dollars) during the past year (a dollar equals about 6.8 yuan), while revenues amounted to 11.18 trillion yuan (about 1.64 trillion dollars), a number that reflects the fact that every car sold achieves only a very small profit margin.
On the other side of the Atlantic, the picture was no better. Last year, the giant Stellantis Group, one of the largest car manufacturing companies in the world, announced operating losses amounting to 842 million euros (about 909.4 million dollars), which prompted it to stop distributing profits to shareholders completely.
Many other European companies also find themselves on the defensive, having to cut production and restructure their networks to maintain a minimum level of profitability.
On the other hand, sector data shows that after-sales services constitute 80% of the total revenues of car dealerships in many markets, while new car sales represent only 20%, which means that dealers can sell the car at a loss or with a zero profit margin provided that they guarantee the customer’s return for maintenance at their centers.
The hidden economics of after-sales services
But what makes service centers so profitable? The answer lies in a smart combination of pricing strategies and software engineering that ensures a regular flow of money, through several interrelated factors:
- Price gap between agents and independent centers: Reports issued in early 2026 revealed that maintenance prices at dealer centers are between 30% and 50% higher than independent workshops. Hourly wages in agencies range between $100 and $200, compared to $75 to $125 in independent centers.
- Monopoly of original spare parts and digital calibration: The biggest margins lie in replacement parts, especially for complex electronic systems that require specialized software calibration that only agencies have.
Despite customs restrictions, Chinese spare parts are invading the markets, as Chinese companies today own more than 60 companies that supply parts in the United States, and have acquired ownership stakes in about 10,000 local suppliers. - Sales engineering within maintenance centers: A study conducted by Cox Automotive demonstrated that using photos and videos in multipoint service inspections increases the average repair bill by $230. Also, booking the customer’s first maintenance appointment the moment he receives the new car doubles the likelihood of him returning to the center in the future.
Reliability and warranty: the beating heart of customer loyalty
In this context, “reliability” has emerged as a decisive factor in shaping consumer choices, as recent data confirms that brands that combine fewer breakdowns and lower maintenance costs not only top customer satisfaction lists, but also ensure sustainable profit flows for their service centers in the long term.
This was clearly evident in the British market for the year 2025, as Lexus topped the list of the most reliable brands with a percentage of warranty claims that did not exceed 5.79%, followed by Toyota in second place with a rate of 8.78%, then Suzuki in third place with a rate of 10.80%, while this percentage jumped to exceed the 17% barrier among many competitors.
This leadership was not limited to the lack of breakdowns, but rather extended to include spending efficiency, as the annual comparison of typical maintenance bills shows a huge difference in favor of Japanese technology. This digital gap in reliability and cost does not mean a decline in the dealer’s profits, but quite the opposite, as it turns into a powerful financial attraction tool. A recent study revealed that Lexus cars give dealers the highest profit potential in the after-sales stage.
Electric cars: a threat and an opportunity
Electrification represents an existential challenge to traditional business models. Electric vehicles have far fewer moving parts than internal combustion engines, require no oil changes or spark plug replacements, and have less brake wear.
With new electric vehicle registrations in Europe rising by 34% in the first half of 2025, dealers are facing increasing pressure. Analysts expect that this shift could cost dealers in America alone a loss of more than $90 billion each year in revenues associated with traditional service and tire maintenance.
In the face of this reality, service centers must innovate rapidly by finding new digital and technical sources of income, centered around: services for diagnosing and checking the health of batteries and measuring their current capacity, updating systems and software over the air, activating paid features and features, and repairing and maintaining the complex thermal systems responsible for cooling the battery.
Supply chain and customs challenges
Things do not always go in one direction, as there are many challenges facing service centers and agents. This year, global supply chains are still suffering from shocks resulting from trade wars and tariffs.
It is estimated that imposing a 25% customs duty on imported spare parts could raise spare parts costs by 10 to 15%, which in turn is reflected in vehicle service contract (VSC) costs.
Additionally, the sector suffers from a severe shortage of skilled technicians, with TechForce estimating that the industry needs more than 470,000 new technicians by 2028 to fill the gap.
All of these factors increase operating costs and put pressure on available profit margins, making it extremely important to manage service operations efficiently.
In the current and future landscape of the automotive industry, real profits are no longer made on the assembly process as much as they are made in the ability of companies to build an integrated and sustainable after-sales services ecosystem. The companies that invest in reliability and ensure customer loyalty are the ones that will reap the real profits in the next decade.
Consumers, in turn, have become more aware, and have come to realize that the low price of a new car is just a veneer, and that maintenance costs, availability of spare parts, and quality of technical support are what determine the true cost of ownership in the long term.
With the acceleration of digital and electrical transformation, service centers have become the decisive battleground where the next chapters of competition will be written.
