New Car Dealership Break-Even Analysis: Month 1 Viability

Fixed costs $144.6K/mo Base overhead

Contribution margin 80% After variable costs

Break-even revenue $180.0K/mo Zero-EBITDA point

Break-even timing Month 1 Launch month

Break-even calculator

Use this to test monthly revenue, variable expenses, and fixed costs against break-even for a new car dealership.

Lean Base Full

Monthly revenue More revenue gives you more room to cover fixed overhead. $ Low sales High sales Variable expenses These are direct costs that rise as sales and service volume grow. $ Tight costs Heavy costs

Money available to cover fixed costs $2,873,333 $3,479,375 revenue - $606,042 variable expenses

Margin ratio

83%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly cost base your margin has to cover. $ Lean overhead Heavy overhead

Break-even chart Revenue Total costs

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

Cost classification

Break-even gets unreliable when showroom overhead, payroll steps, and unit-linked charges sit in one bucket. Classify each expense by behavior, so Month 1 break-even reflects real operating pressure.

Expense	Cost	Break-Even Treatment	Common Mistake
Facility Lease/Mortgage ($45,000 monthly)	Fixed	Carry as monthly overhead from Month 1 through Month 60.	Tying the payment to vehicle unit sales.
Utilities ($5,000 monthly)	Semi-variable	Model a base bill, then flex usage as service hours rise.	Treating shop usage like pure fixed rent.
Insurance & Property Tax ($7,500 monthly)	Fixed	Keep stable within the monthly planning range.	Linking it to monthly traffic or sales volume.
Base Marketing & Branding ($7,000 monthly)	Semi-fixed	Hold the base spend, then step it up when scale requires it.	Making every marketing dollar move with each sale.
Salaries ($835,000 in Year 1)	Semi-fixed	Use planned full-time equivalents, then add staff in steps.	Modeling payroll as a flat percent of revenue.
Sales Commissions & Bonuses (3.0% in Year 1)	Variable	Apply directly to sales volume in the break-even math.	Putting commissions in fixed payroll.
Vehicle Acquisition Cost (12.0% in Year 1)	Variable	Match the charge to vehicles sold and related revenue.	Mixing inventory-linked charges with showroom overhead.
Parts Inventory Cost (2.0% in Year 1)	Variable	Link directly to parts sales in the operating model.	Spreading parts charges across vehicle sales.

How does break-even change across lean, base, and full dealership volume?

Scenario table

At lean volume, fixed costs still eat a big share, but the store stays well above break-even. As volume rises, the same overhead gets spread across more revenue, so break-even pressure eases and the cushion widens.

Planning assumptions only; floorplan interest and debt service are excluded, so these break-even points are directional, not guarantees.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean opening year	$1.52M	$288.6K	$144.6K	81.0%	$1.09M	Break-even is covered, but the cushion is tightest here.
Base year 3 run rate	$3.48M	$584.6K	$170.4K	83.2%	$2.72M	Higher volume spreads overhead better, so break-even risk drops.
Full year 5 run rate	$5.60M	$817.7K	$175.4K	85.4%	$4.61M	This gives the widest cushion and the lowest break-even risk.

What breaks the break-even plan at a new car dealership?

Stress test

Year 1 has a wide cushion: about $1.519M in monthly revenue versus about $144.6K of fixed overhead, so break-even sits near $178.5K a month. The risk is slower sales, weaker F&I attach, or floorplan interest (inventory financing).

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$178,496	$1,340,254 cushion	Base case clears fixed cost easily.
Revenue shortfall	Monthly revenue falls 10%.	$178,496	$1,188,379 cushion	Slower traffic still leaves room.
Fixed-cost pressure	Fixed overhead rises 20%.	$214,198	$1,304,552 cushion	Rent or payroll creep lifts the hurdle.
Margin pressure	Variable expenses rise 3 percentage points.	$185,363	$1,333,387 cushion	A 3-point cost squeeze matters more than volume.
Combined pressure	Revenue falls 20%, margin drops to 78%, and fixed overhead rises 20%.	$222,436	$992,564 cushion	Stacked pressure still leaves room, but floorplan interest could erase it.

Is this dealership ready to break even before you sign the lease and order the buildout?

Founder checklist

Before you sign the lease or order equipment, confirm the store can absorb the $75,000 monthly fixed load, the $835,000 Year 1 payroll, and the $948,000 Month 1 cash need. This is operating break-even, not lender covenants or taxes.

1Demand proof300 / 150

Verify manufacturer approval before facility spend and confirm Year 1 volume still supports 300 new and 150 used vehicles.

2Fixed costs$75.0K/mo

Check the $45,000 lease and the $7,000 base marketing line, because the rest of fixed overhead lifts monthly burn to about $75,000.

3Gross spread83.0%

On new-car sales, the 12.0% vehicle cost plus 3.0% commissions and 2.0% prep still leave about 83.0% before overhead, so the mix has to hold.

4Payroll ramp$835K/yr

Confirm the Year 1 payroll of $835,000 before hiring the full team, because that load has to fit the first-year sales and service pace.

5Cash reserve$948K

Hold at least the $948,000 minimum cash need in Month 1, since capex and working capital hit before the store matures.

6Launch buildout$920K

Make sure the $920,000 planned capex is fully funded and the bay layout can support 3,000 annual service hours before opening.