Car Dealership Break-Even Analysis: About $88K/Month

Fixed costs $22.0K Month 1 base

Contribution margin 84% After variable costs

Break-even revenue $26.2K Monthly target

Break-even timing Month 2 Forecast crossover

Break-even calculator

Test monthly revenue against variable expenses and fixed costs to see when the dealership clears break-even.

Lean Base Full

Monthly revenue Use the monthly sales run rate; more revenue leaves more margin for fixed costs. $ Low sales High sales Variable expenses These are costs that rise with each sale, like reconditioning, prep, marketing, and provider fees. $ Lower cost Higher cost

Money available to cover fixed costs $270,000 $321,000 revenue - $51,000 variable expenses

Margin ratio

84%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly overhead the dealership has to cover before profit starts. $ Lean overhead Higher overhead

Break-even chart Revenue Total costs

Which car dealership expenses are fixed and which move with sales?

Cost classification

Break-even is reliable only if fixed overhead stays separate from per-sale deductions. In the first year, start with $25,100 of listed monthly overhead, then deduct 16% variable selling and delivery charges before covering payroll.

Expense	Cost	Break-Even Treatment	Common Mistake
Facility Lease	Fixed	Add $15,000 per month to fixed overhead.	Allocating rent per vehicle sold.
Utilities	Semi-fixed	Use $2,500 per month until hours or service capacity step up.	Treating the full bill as variable per sale.
DMS & CRM Software	Fixed	Add $3,000 per month to fixed overhead.	Scaling software expense with visitor count.
Sales Associate Payroll	Semi-fixed	Use $15,000 per month in Year 1, then step up with headcount.	Modeling all sales labor as variable commission.
Management and Administrative Payroll	Semi-fixed	Include current FTE salaries in fixed overhead, then add staffing steps.	Spreading annual salaries across each vehicle sold.
Vehicle Reconditioning Costs	Variable	Deduct 3% of revenue before calculating contribution margin.	Burying reconditioning inside fixed overhead.
Dealer Prep & Logistics Fees	Variable	Deduct 2% of revenue as a per-sale charge.	Ignoring prep and delivery leakage in gross margin.
Marketing & Digital Advertising	Variable	Deduct 7% of revenue in the first-year break-even model.	Treating all ad spend like rent.

How does break-even change as the dealership moves from lean opening traffic to a full-year run rate?

Scenario table

Higher traffic and conversion push revenue up faster than fixed payroll and facility costs, so each step adds more cushion. The lean case is already past break-even, and the full case has the widest gap.

Planning figures only; they reflect model assumptions, and real cash needs can be higher because vehicle acquisition principal and floor plan interest are excluded.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean opening case	$1.47M	$236K	$74K	84%	$1.16M	Monthly break-even is about $88K, so the cushion is wide.
Base year case	$3.36M	$470K	$86K	86%	$2.80M	Monthly break-even is about $100K, and sales stay far above it.
Full-year case	$6.28M	$754K	$107K	88%	$5.42M	Monthly break-even is about $122K, with the widest cushion.

What pushes this dealership past break-even?

Stress test

Year 1 revenue is about $1.32M a month, while fixed overhead is about $74K. That leaves a wide cushion, but discounting, reconditioning above 3%, ads above 7%, or hiring and inventory financing costs before turns improve can tighten it fast.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$88.4K	$1.23M cushion	Base case clears break-even comfortably.
Revenue shortfall	Revenue falls 10% to about $1.18M a month.	$88.4K	$1.10M cushion	Lower sales cut cushion, but the model still clears break-even.
Fixed-cost pressure	Fixed overhead rises 10% to about $81K a month.	$97.3K	$1.22M cushion	Extra payroll or facility cost raises the monthly hurdle.
Margin pressure	Variable expenses rise from 16% to 20%.	$92.8K	$1.22M cushion	Discounting or higher reconditioning squeezes contribution.
Combined pressure	Revenue falls 10%, variable expenses rise to 20%, and fixed costs rise 10%.	$102.1K	$1.08M cushion	Still above break-even, but the cushion shrinks fast.

Can you verify the cash, license path, and operating load before you sign the dealership lease?

Founder checklist

Before you sign the lease or stock the lot, test the cash, license path, and operating load against the break-even model. This plan needs about $749K of minimum cash by Month 2 and $503K of capex, so a delay in any one step can push the launch past payback.

1Cash cushion$749K by Month 2

Verify you can fund the full opening build and early burn, because minimum cash drops to about $749K in Month 2.

2License pathBefore lease

Verify the state dealer license path and title/DMV process before you commit to the site, or the lease starts before you can legally turn inventory.

3Fixed load$74.3K/mo

Lock the lease and overhead into a monthly base you can live with: $15K rent, $10.1K other non-payroll fixed costs, and about $49.2K of Year 1 payroll before commissions.

4Margin stack88.0% CM

Check that reconditioning, prep/logistics, marketing, and F&I fees still leave enough spread; on this mix, variable costs are about 12.0% of revenue.

5Inventory flow45 units/mo

Verify sourcing and reconditioning can keep pace with the target volume before you assume 45 monthly units, because weak inventory flow stalls revenue fast.

6Traffic ramp41 buyers/mo

At the Year 1 visitor plan and 4% conversion, you get about 41 buyers a month, so keep marketing near 7% of revenue and hold sales hiring until traffic supports it.