Commercial Vehicle Dealership Running Costs: $63k Base

Commercial Vehicle Dealership Running Costs

Running a Commercial Vehicle Dealership requires significant fixed overhead combined with high variable costs tied directly to sales volume Your minimum monthly fixed operating expenses, including rent and software, start around $23,800 Payroll adds another $39,167 per month in 2026, totaling base operating costs near $63,000 monthly However, the largest costs are variable: Sales Commissions (60%) and Marketing (40%) drive the total variable rate to 115% of revenue Given the high unit prices of commercial vehicles, this structure leads to rapid profitability The model shows a breakeven in just 1 month and projects Year 1 EBITDA of $162 million, but you must secure $1145 million in minimum cash early on to cover initial inventory and CapEx

7 Operational Expenses to Run Commercial Vehicle Dealership

#	Operating Expense	Expense Category	Description	Min Monthly Amount	Max Monthly Amount
1	Dealership Rent	Fixed Overhead	The fixed monthly rent expense is $15,000, which anchors your base operating overhead.	$15,000	$15,000
2	Personnel Wages	Fixed Overhead	Base payroll for 6 FTEs in 2026 totals $39,167 monthly, excluding sales commissions.	$39,167	$39,167
3	Sales Commissions	Variable Cost	Sales commissions represent a significant variable cost, starting at 60% of total revenue in 2026.	$0	$0
4	Marketing & Advertising	Variable Cost	Customer acquisition costs are budgeted at 40% of revenue, declining to 30% by 2030 as scale improves.	$0	$0
5	Utilities	Fixed Overhead	Monthly utilities, covering electricity, water, and gas for the large facility, are budgeted at $2,500.	$2,500	$2,500
6	Dealership Insurance	Fixed Overhead	Comprehensive dealership insurance, covering inventory and liability, is a fixed cost of $1,800 monthly.	$1,800	$1,800
7	Software & DMS	Fixed Overhead	Subscriptions for the Customer Relationship Management (CRM) and Dealership Management System (DMS) are $1,200 per month.	$1,200	$1,200
	Total	All Operating Expenses		$59,667	$59,667

What is the total minimum monthly operating budget required before the first sale?

The minimum monthly operating budget required before the first sale for your Commercial Vehicle Dealership is $62,967, derived from fixed overhead plus baseline payroll. Before calculating this burn, Have You Considered The Necessary Licenses And Permits To Launch Your Commercial Vehicle Dealership? This initial cash requirement funds the operations needed to get your first deal done.

Minimum Monthly Burn Components

Fixed overhead totals $23,800 monthly.
Baseline payroll commitment is $39,167.
Total minimum monthly burn rate is $62,967.
You need this capital secured to cover costs defintely before revenue starts.

Cash Runway Context

Payroll covers essential staff for sales and operations setup.
Fixed costs include rent, utilities, and required insurance premiums.
This budget assumes zero Cost of Goods Sold (COGS) expenses.
Sales must exceed this $62,967 quickly to achieve profitability.

Which recurring cost categories will consume the largest percentage of gross revenue?

The primary recurring costs crushing profitability for the Commercial Vehicle Dealership are Sales Commissions at 60% and Marketing spend at 40% of revenue, meaning nearly all gross profit is consumed by these two variable buckets before fixed overhead is even considered. If you're planning your initial outlay, you should review What Is The Estimated Cost To Open Your Commercial Vehicle Dealership Business? to see how these operational expenses factor in. Honestly, managing these two areas is defintely the key to survival.

Sales Commission Drag

Commissions eat 60% of gross revenue.
This is a pure variable cost tied to sales volume.
High commission structure incentivizes volume over margin.
Review compensation plans now to avoid margin erosion.

Marketing's 40% Hit

Marketing consumes 40% of revenue directly.
Combined with commissions, 100% of gross profit is gone.
This leaves zero room for inventory holding costs.
Focus marketing spend on high-intent, low-CAC leads.

How much working capital is needed to cover the inventory float and initial capital expenditures?

You need $1,145,000 in initial funding to cover the inventory float and capital expenditures required to keep the Commercial Vehicle Dealership running until cash flow turns positive, which is a critical first step you can explore further in What Is The Estimated Cost To Open Your Commercial Vehicle Dealership Business?

Minimum Cash Requirement

Total minimum cash needed to launch and stabilize operations is $1,145,000.
This funding covers the initial inventory float for new and pre-owned commercial vehicles.
It accounts for upfront costs related to securing the first curated selection of trucks and vans.
This figure must sustain the business until consistent sales and leasing revenue stabilizes.

Key Capital Deployment

Initial capital expenditures (CapEx) include facility setup and necessary service bay equipment.
The working capital must buffer fixed overhead like payroll during the ramp-up period.
Budgeting must account for initial marketing spend targeting logistics and skilled trades.
This cash buffer prevents forced liquidation of high-value assets before financing clears.

If sales volume drops by 30%, how will we adjust the variable cost structure to maintain profitability?

When sales volume for the Commercial Vehicle Dealership drops 30%, you must defintely pull levers on discretionary spending, primarily marketing, and renegotiate sales commissions to protect your gross margin structure. This aggressive cost adjustment is essential to offset the revenue shock, which is why understanding your cost structure now is critical, especially when reviewing whether the Commercial Vehicle Dealership is achieving consistent profitability Is The Commercial Vehicle Dealership Currently Achieving Consistent Profitability?

Marketing Spend Reduction

Marketing spend is 40% of your controllable variable costs.
If volume drops 30%, you can’t wait to cut this spend.
Target a 50% reduction in discretionary marketing spend immediately.
Shift remaining funds to performance-based channels only.

Commission Structure Review

Sales commissions make up 60% of the variable cost base.
This is your largest lever that isn't tied to inventory cost.
Renegotiate variable compensation tiers for the next 90 days.
Aim to lower the commission rate by at least 10% per unit sold.

Key Takeaways

The minimum required monthly operating budget before any sales is approximately $63,000, combining fixed overhead and baseline payroll costs.
Sales commissions (60%) and marketing (40%) are the largest recurring expenses, driving variable costs to 115% of revenue.
The high unit price structure allows for a rapid financial turnaround, projecting the dealership will reach breakeven in just one month.
Securing a minimum of $1.145 million in initial cash is crucial to cover inventory float and necessary capital expenditures before stabilizing cash flow.

Running Cost 1 : Dealership Rent

Rent Anchor

Your fixed monthly rent expense is $15,000, which anchors your base operating overhead for this commercial vehicle dealership. You must generate enough gross profit just to cover this facility cost before accounting for payroll or sales commissions.

Facility Cost Breakdown

This $15,000 covers the physical footprint required for vehicle inventory staging, customer showrooms, and administrative offices. To budget this, you need the signed lease agreement amount and the facility square footage. It’s a significant input compared to the $1,800 monthly insurance premium.

Fixed cost, independent of sales volume
Requires 12-month lease commitment minimum
High impact on initial capital requirements

Managing Fixed Space

Focus on lease structure to manage this overhead. If you sign a five-year lease, ensure there are clear exit clauses or options to reduce required square footage after year three. Avoid signing for more showroom space than you need for the first 18 months of operation.

Negotiate landlord build-out contributions
Phase in facility expansion slowly
Avoid signing long-term leases early

Break-Even Dependency

This $15,000 rent is the floor for your monthly operating expense. If your average gross profit per vehicle transaction is $3,000, you must sell a minimum of five units monthly just to cover rent, excluding the $39,167 personnel cost. That's a serious hurdle.

Running Cost 2 : Personnel Wages

Fixed Payroll Baseline

Your 2026 base payroll commitment for 6 full-time employees (FTEs) is $39,167 per month. This figure covers core salaries but explicitly excludes any variable sales commissions tied directly to unit sales or leases. This is a critical fixed labor baseline you must cover monthly.

Calculating Fixed Labor

This $39,167 monthly expense represents the necessary fixed salaries for your initial team of 6 FTEs, likely covering sales support, finance, and operations staff. To verify this, you need the specific salary quotes for each role and multiply by 12 months to annualize the cost. It’s a non-negotiable overhead floor.

Inputs: 6 FTE salary quotes.
Excludes: Variable sales commissions.
Context: Fixed payroll component.

Controlling Wage Spend

Managing this cost means controlling headcount growth until revenue stabilizes. Avoid over-hiring early; use contractors for specialized, short-term needs instead of permanent staff. Remember, if onboarding takes 14+ days, churn risk rises, increasing replacement costs defintely. Keep initial spans of control wide.

Delay hiring non-revenue roles.
Use contractors initially.
Benchmark salaries against local dealership rates.

Wages vs. Overhead

When modeling, compare this fixed wage base against other overhead. Personnel wages at $39,167 are significantly larger than Rent ($15,000) and dwarf Utilities ($2,500). This high fixed labor cost means you need substantial gross profit margin to cover payroll before accounting for the 60% sales commission rate.

Running Cost 3 : Sales Commissions

Commission Shock

Sales commissions are your biggest variable expense, hitting 60% of revenue in 2026. This high rate demands tight control over sales incentives to maintain gross margin on vehicle sales and leases.

Cost Calculation

This cost covers payments to sales staff for closing new or pre-owned vehicle deals and securing leases. It’s calculated as 60% of total revenue recognized from unit sales or lease payments in 2026. If revenue hits $1 million, commissions are $600,000.

Commission base: Total revenue.
Rate for 2026: 60 percent.
Impacts gross margin directly.

Managing Payouts

Since 60% is extremely high, structure incentives to reward profitability, not just volume. Consider tiered payouts or caps based on vehicle margin. Avoid paying full commission on heavily discounted or low-margin lease deals.

Tie payouts to net profit.
Review commission structures quarterly.
Benchmark against industry standards.

Margin Reality

Given that fixed costs are $20,500 monthly (Rent, Utilities, Insurance, Software), you need significant revenue just to cover base operations before commissions hit. Every dollar of revenue carries a 60 cent variable cost burden, defintely making margin management critical.

Running Cost 4 : Marketing & Advertising

CAC Trajectory

Your initial customer acquisition cost (CAC) is set high at 40% of revenue to aggressively capture market share in commercial sales. The financial plan relies on achieving scale to bring this cost down to 30% by 2030. This means early revenue must be strong enough to cover this significant marketing drag.

Cost Inputs

This 40% allocation covers all marketing spend necessary to generate leads for new and pre-owned fleet sales. To estimate this cost, you must project total revenue and apply the 40% factor. For example, if 2026 revenue hits $10 million, you must budget $4 million for customer acquisition alone. This is a major component of your variable operating expenses.

Calculate spend based on gross revenue.
Track cost per qualified fleet lead.
Factor in sales commission structure.

Optimization Levers

To hit the 30% target, focus on channels that deliver high-intent buyers, like construction trade associations or logistics firm outreach. Broad digital campaigns are usually too expensive here. You need direct engagement. If onboarding takes 14+ days, churn risk rises defintely because fleet managers hate waiting for assets.

Prioritize direct B2B outreach.
Incentivize strong client referrals.
Measure ROI per marketing channel.

Margin Risk

A 40% CAC is only sustainable if your gross margin on vehicle sales and leasing is robust. If margins are thin, high acquisition costs quickly erode the contribution margin needed to cover fixed overhead like the $15,000 rent. You must aggressively convert marketing-qualified leads into closed deals.

Running Cost 5 : Utilities

Fixed Facility Bills

Utilities are a fixed $2,500 monthly expense covering power, water, and gas for the large facility. This cost is essential overhead, not directly tied to unit sales volume. It must be covered before sales commissions or marketing spend are factored in.

Facility Power Costs

This $2,500 budget covers all utilities for the commercial vehicle dealership's large physical footprint. Inputs needed are historical usage data from the intended location to validate this estimate. It sits below major fixed costs like rent ($15,000) and payroll ($39,167). Anyway, this is a stable, predictable monthly drain.

Covers electricity, water, and gas.
Applies to the entire large facility.
A necessary, non-negotiable overhead component.

Managing Facility Spend

Managing this cost involves energy efficiency upgrades for the service bays, which might require initial capital. A common mistake is ignoring consumption spikes during peak service times. You could save 10% to 15% by switching to LED lighting across the lot and shop areas defintely.

Audit HVAC systems immediately.
Negotiate fixed-rate gas contracts.
Monitor usage against the $2,500 target.

Utility Risk Check

If the facility is significantly larger than anticipated, this $2,500 estimate will be too low, impacting contribution margin. Always secure multi-year utility contracts to lock in rates, especially given volatility in energy markets.

Running Cost 6 : Dealership Insurance

Insurance Fixed Cost

Your comprehensive dealership insurance covering inventory and liability is a necessary fixed operating expense. This baseline cost is set at $1,800 per month. This coverage protects your primary assets and shields the business from significant liability claims arising from sales or service operations.

Insurance Inputs

This $1,800 monthly premium is fixed, but it scales if your inventory value changes significantly. You need quotes based on the total value of commercial trucks and vans on the lot and the liability limits required by your state regulators. This cost is budgeted alongside rent ($15k) and payroll ($39,167).

Covers vehicle inventory risk.
Includes general liability protection.
Fixed at $1,800 baseline.

Managing Premiums

Don't just accept the first quote; shop annually across specialized commercial auto brokers. Reducing your overall inventory holding time lowers the exposure component of the policy. Bundling this with your property insurance, if possible, often yields savings. Avoid lapses in coverage, as those spike future rates defintely.

Shop specialized brokers yearly.
Improve lot security measures.
Bundle policies for discounts.

Risk of Underinsuring

Treating this as optional is a fatal error for a dealership holding high-value commercial assets. A single major accident involving an uninsured vehicle or a slip-and-fall injury on the lot can wipe out your initial capital. This $1,800 is non-negotiable protection for your $15,000 rent base.

Running Cost 7 : Software & DMS

Software Cost Anchor

Your core Customer Relationship Management (CRM) and Dealership Management System (DMS) subscriptions total $1,200 per month. This fixed cost is mandatory for managing sales pipelines and tracking vehicle inventory and service schedules across your operations.

Budgeting the Stack

This $1,200 covers the essential digital tools needed to run a modern dealership, supporting your 6 FTEs. It is a fixed operating expense that sits below rent and payroll in the expense hierarchy but must be paid regardless of sales volume. Here’s the quick math:

Monthly fixed cost: $1,200.
Covers sales tracking and operations.
Essential for tracking vehicle life cycles.

Cutting Software Spend

Managing this cost means aggressively auditing user seats every quarter. Many businesses overpay by keeping licenses active for staff who have moved on. You should defintely negotiate annual pricing instead of month-to-month to secure a 5% to 10% discount on this recurring bill. Avoid adding non-essential modules now.

Audit licenses every 90 days.
Never pay for unused seats.
Negotiate multi-year commitments.

Cost Context

Compared to your $15,000 Dealership Rent and $39,167 in base Personnel Wages, the $1,200 software cost is minor overhead. However, if you onboard a large sales team, per-seat pricing structures mean this line item can quickly escalate past $3,000 monthly.