# Car Dealership Model See how vehicle demand, inventory, finance income, and after-sales service shape a dealership. - Canonical: https://finamodel.com/templates/car-dealership - Excel download: https://finamodel.com/templates/car-dealership.xlsx - Category: Consumer - Model type: Operating model - Difficulty: Intermediate - Audiences: Investors & analysts, Founders & operators, Private equity associates, Dealer group CFOs, Auto retail analysts, Acquisition lenders, Auto-retail and dealer-group CFOs, Equity and credit analysts, PE associates and partners, M&A bankers - Tags: car dealership, auto retail, finance and insurance, operating-model, dcf, fixed operations ## Overview This model helps you understand a car dealership across new and used vehicle sales, financing and insurance products, servicing, and parts. It brings sales volume and inventory investment together with the sales, service, and overhead costs that support the business. Use it to assess an acquisition, a new franchise, or a growth plan. Test demand, pricing, used-car mix, and service activity to see their impact on profitability, cash flow, and value. ## What's included - Store inputs: Year-1 stores, new stores per year, new units per store, same-store unit growth, used-to-new ratio - Fixed-ops inputs: repair orders per store, RO growth, days supply of new inventory - Pricing: new and used vehicle ASP, F&I income per unit, revenue per repair order, price escalation - Gross margins by department: new vehicle, used vehicle, finance & insurance, parts & service - Cost structure: SG&A lines as a percentage of gross profit, depreciation, tax - Capital and working capital: maintenance capex, build-out cost per store, NWC, base-year revenue - Valuation: WACC, terminal growth, net debt, shares outstanding - Throughput sheet: store roll-forward, new and used units, repair orders, average new-inventory schedule - Revenue sheet: new and used vehicle sales, F&I income, parts & service, total revenue - P&L sheet: department cost of sales, gross profit, SG&A as % of gross, EBITDA, depreciation, EBIT, tax, net income, identity check - FCF sheet: NOPAT, depreciation add-back, capex, change in NWC, unlevered FCF, discount factor, PV - Valuation sheet: sum of PV, terminal value, enterprise value, equity value, value per share, implied EV/EBITDA - Dashboard with stores, units retailed, gross margin, F&I per unit, SG&A as % of gross, EBITDA margin, EV, per share, revenue mix - Pricing: new and used vehicle ASP, F&I income per unit (PVR), revenue per repair order, price escalation - Cost structure: SG&A lines as a percentage of gross profit (personnel, advertising, rent & occupancy, other), depreciation, tax - Capital and working capital: maintenance capex %, build-out cost per store, NWC % of revenue growth, base-year revenue - Throughput sheet: store roll-forward, new and used units retailed, repair orders, average new-inventory schedule - P&L sheet: department cost of sales, gross profit, SG&A as % of gross, EBITDA, depreciation, EBIT, tax, net income, margins, identity check - Dashboard with stores, units retailed, gross margin, F&I per unit, SG&A as % of gross, EBITDA margin, EV, per share, and revenue mix - Store roll-forward (opening + new = closing) driving units retailed and service throughput - Throughput build: new and used units, used-to-new ratio, repair orders, and a days-supply inventory schedule - Department revenue build: new vehicle, used vehicle, F&I income per unit retailed, and fixed operations / parts & service - Department-gross-margin P&L to EBITDA with SG&A expressed as a percentage of gross profit - Unlevered free-cash-flow bridge (NOPAT + depreciation - capex - change in working capital) discounted at WACC - DCF valuation to enterprise value, equity value and value per share, plus a one-page dashboard ## Car Dealership Financial Model: How the Operating Model and DCF Work This car dealership financial model is a seven-year operating forecast and unlevered DCF for a franchised automotive retailer. It builds throughput from stores and units, translates that into department revenue and gross profit, and flows to free cash flow and enterprise value. The structure makes the gross-profit pyramid explicit. ### Operating drivers that shape the dealership forecast The model begins with a store roll-forward and a units-retailed build. Opening stores plus new stores determine closing stores. - New units equal closing stores times new units per store times same-store growth. Used units are new units multiplied by a used-to-new ratio, giving total units retailed. - Separately, service repair orders are closing stores times repair orders per store times RO growth. An average new-inventory schedule links days supply to the throughput plan. Pricing, F&I per unit, revenue per repair order and price escalation convert these volumes into revenue, while gross margins and SG&A percentages shape profitability. ### From throughput to department revenue and gross profit Revenue is built by department: new vehicle sales, used vehicle sales, finance and insurance income per unit retailed, and fixed operations (parts and service) at revenue per repair order. Each line is escalated at a price assumption. - The P&L then deducts cost of sales by department, using one minus the gross margin, to show gross profit. Because new vehicles carry thin front-end margins while F&I and fixed operations earn much higher margins, total gross profit—not revenue—drives the business. - SG&A is expressed as a percentage of gross profit, highlighting operating leverage as the department mix changes. ### Free cash flow and valuation outputs The free-cash-flow engine starts with EBIT, applies the tax rate to get NOPAT, adds back depreciation, subtracts capital expenditure and the change in working capital. Floorplan financing is treated as a working-capital item within the favourable NWC assumption, keeping the DCF unlevered. - The resulting unlevered free cash flows are discounted at WACC and summed. A Gordon-growth terminal value is also discounted and added to give enterprise value. - Net debt is deducted to arrive at equity value and value per share. ### Assessing acquisitions, growth plans and department mix The model is suited to evaluating an acquisition, a new franchise, or a growth plan. - By flexing the acquisition pipeline, the used-to-new ratio, F&I penetration per unit, or fixed-ops growth, you can observe how enterprise value, the EBITDA margin and the gross-profit pyramid respond together. - The one-page dashboard summarises stores, units retailed, gross margin, F&I per unit, SG&A as a percentage of gross, revenue, EBITDA, EBITDA margin, enterprise value and value per share. - The public download is a values-only preview; the underlying model captures these calculations but does not automatically recalculate in that file. ## The gross-profit pyramid drives the model New-vehicle sales are the largest revenue line but carry razor-thin front-end margins, while finance & insurance and the fixed-operations parts-and-service business earn far higher margins on a fraction of the revenue. The model builds cost of sales department by department at one-minus-gross-margin, so total gross profit, not revenue, flows into the P&L and is what the SG&A stack is measured against. ## Designed for one-edit responsiveness Every input, the store estate, units per store, the gross-margin stack, SG&A as a percentage of gross, capex, working capital, and the WACC, is a named-range cell. Edit one and the throughput build, revenue, P&L, free-cash-flow bridge, valuation, and dashboard all recompute. No formula rewrites are needed to test a pricing, mix, or expansion scenario. ## An unlevered DCF, not an EBITDA shortcut Floorplan funds the bulk of new-vehicle inventory, so working capital is favourable and is captured in the NWC assumption rather than as a separate interest line, keeping the valuation unlevered. The model bridges to unlevered free cash flow and discounts it at a WACC with a Gordon-growth terminal value. Enterprise value bridges through net debt to equity value and a per-share figure, and the implied EV/EBITDA falls out as a sanity check against the mid-single to high-single-digit sector range. ## Workbook structure ### Cover Workbook overview, sheet legend, units, and tab-colour key. - Title and scope framing - Sheet-by-sheet purpose summary - Units and tab-colour legend ### Assumptions Every driver in one sheet: stores, units, pricing, gross, costs, capital, valuation. - Year-1 stores, new stores per year, new units per store, same-store growth, used-to-new ratio - Repair orders per store, RO growth, days supply - New and used ASP, F&I per unit, revenue per RO, price escalation - Gross margins by department - SG&A lines as a percentage of gross, depreciation, tax - Maintenance capex, build-out per store, NWC, base-year revenue - WACC, terminal growth, net debt, shares ### Throughput Stores, units retailed, repair orders, inventory. - Opening plus new stores equals closing stores - New units equal closing stores times units per store times same-store growth - Used units equal new units times the used-to-new ratio - Total units retailed - Service repair orders from stores and RO growth - Average new-inventory units and value from days supply ### Revenue Revenue by department. - New vehicle sales equal new units times ASP times escalation - Used vehicle sales equal used units times used ASP times escalation - F&I income equals total units retailed times per-unit PVR - Parts & service equals repair orders times revenue per RO - Total revenue ### P&L Revenue to net income. - Total revenue from the Revenue sheet - Cost of sales by department at one-minus-gross-margin - Gross profit equals revenue less cost of sales - SG&A lines as a percentage of gross profit - EBITDA, depreciation, EBIT, tax on positive EBIT, net income - Margins, SG&A-to-gross ratio, identity check ### FCF Unlevered free cash flow bridge. - EBIT and unlevered tax from the P&L - NOPAT equals EBIT less unlevered tax - Add back depreciation - Maintenance capex on revenue and growth capex on new stores - Change in net working capital on revenue growth - Unlevered free cash flow - Discount factor and PV of UFCF ### Valuation Discounted cash flow. - Sum of PV of explicit UFCF - Gordon-growth terminal value and its PV - Enterprise value - Less net debt to equity value - Shares outstanding and value per share - Implied EV/EBITDA ### Dashboard Headline metrics and revenue mix. - Stores, units retailed, gross margin, F&I per unit - SG&A as a percentage of gross, revenue, EBITDA - EBITDA margin - Enterprise value and value per share - Revenue mix across vehicles, F&I, and parts & service ## Features - **The gross-profit pyramid drives the model:** New-vehicle sales are the largest revenue line but carry razor-thin front-end margins, while finance & insurance and the fixed-operations parts-and-service business earn far higher margins on a fraction of the revenue. The model builds cost of sales department by department at one-minus-gross-margin, so total gross profit, not revenue, is what flows into the P&L and what the SG&A stack is measured against. - **SG&A as a percentage of gross, not revenue:** Auto retailers run their cost base against gross profit, the way operators actually manage the business: personnel, advertising, rent and occupancy, and other SG&A are each a percentage of gross. The SG&A-to-gross ratio is a headline operating-leverage metric, and EBITDA falls out as gross profit less the SG&A stack. - **An unlevered DCF, not an EBITDA shortcut:** Floorplan funds the bulk of new-vehicle inventory, so working capital is favourable and is captured in the NWC assumption rather than as a separate interest line, keeping the valuation unlevered. The model bridges EBITDA to cash through NOPAT, depreciation, maintenance and growth capex, and the change in working capital, then discounts the unlevered free-cash-flow stream at a WACC with a Gordon-growth terminal value. - **The gross-profit pyramid, made explicit:** New-vehicle sales are the biggest revenue line at razor-thin margin; F&I and fixed operations earn far more on a fraction of revenue. Total gross profit, not revenue, drives the P&L. - **SG&A as a percentage of gross:** Operating leverage is measured the way dealer groups measure it - SG&A against gross profit - so the personnel, advertising and occupancy load is visible at a glance. - **Floorplan handled as working capital:** Floorplan financing funds the bulk of new-vehicle inventory, so it is captured in the favourable net-working-capital assumption rather than as a separate interest line, keeping the DCF unlevered and clean. ## Use cases - **Intrinsic valuation:** Set the store estate, units per store, the gross-margin stack, SG&A as a percentage of gross, and a WACC, and read enterprise value, equity value, value per share, and implied EV/EBITDA. Sense-check the multiple against the mid-single to high-single-digit range listed dealer groups trade at. - **Roll-up and acquisition planning:** Flex new stores per year and the build-out (acquisition) cost per store to see how the deal pipeline consumes cash and lifts units retailed, gross profit, and EBITDA as the estate scales. - **Department-mix and margin stress test:** Move the used-to-new ratio, F&I per unit, fixed-ops growth, or the new-vehicle gross margin to model a tighter new-car market, stronger F&I attach, or a fixed-ops push, and read the EBITDA-margin and valuation impact as the gross pyramid shifts. - **Platform and acquisition underwriting:** Flex the store pipeline, used-to-new ratio, F&I penetration and fixed-ops growth and watch enterprise value, the EBITDA margin and the gross pyramid move together. - **Department mix analysis:** Test how a shift toward used, F&I or service changes blended gross margin and EBITDA without rebuilding the model. - **Board and investor reviews:** Hand the dashboard to a board or investment committee as a single-page snapshot of stores, units retailed, gross margin, F&I per unit, EBITDA and value per share. ## Frequently asked questions ### What is a car dealership model? A car dealership model captures the seven-year operating economics and intrinsic value of a franchised automotive retailer. It rolls a store count forward, converts stores into new and used units retailed and service repair orders, builds revenue by department, runs a department-gross-margin P&L to EBITDA and net income, and discounts an unlevered free-cash-flow stream to enterprise value, equity value, and value per share. It is how a private-equity associate, dealer-group CFO, or lender values an auto retailer. ### Why is gross profit, not revenue, the key metric? New-vehicle sales dominate revenue but earn razor-thin front-end margins, while F&I and fixed operations earn far higher margins on much less revenue. Total gross profit is a better measure of the business than revenue, and the model builds cost of sales department by department so the gross pyramid is explicit and SG&A can be measured as a percentage of gross. ### Why is SG&A expressed as a percentage of gross? Dealer groups manage their cost base against gross profit rather than revenue, because revenue is inflated by low-margin new-vehicle sales. The model runs personnel, advertising, rent and occupancy, and other SG&A as a percentage of gross profit and reports the SG&A-to-gross ratio, the headline operating-leverage metric for the sector. ### Where is floorplan financing in the model? Floorplan funds the bulk of new-vehicle inventory, so it is treated as a working-capital item and captured in the favourable NWC assumption rather than as a separate interest line, which keeps the DCF unlevered. An average new-inventory schedule from a days-supply input sits on the Throughput sheet for context, and a financing layer can be added on top for a levered view. ### Can I make it a levered or single-store model? The template is a single-entity unlevered DCF. For an equity-IRR view, add a debt schedule including floorplan interest and bridge to levered free cash flow; for a single rooftop, set the estate to one store and size units, F&I, and fixed-ops throughput to that location. The net-debt line already bridges enterprise value to equity value, so a financing layer slots in cleanly. ## Related templates - [Car Rental Economics Model](https://finamodel.com/templates/car-rental-economics-model) - [Car Wash Roll-Up Model](https://finamodel.com/templates/car-wash) - [Unit Economics Dashboard](https://finamodel.com/templates/unit-economics-model) - [DCF Model](https://finamodel.com/templates/dcf-model)