Which car business is most profitable?

nick

·September 17, 2025

·14 min read

If you want to know which car business makes the most money, look at luxury car makers like Ferrari. Ferrari is the top with an operating margin of 28.95%. Toyota comes next with 13.35%. Porsche is after that with 8.75%.

Brand	Operating Margin
Ferrari	28.95%
Toyota	13.35%
Porsche	8.75%

People measure how much money a car business makes by looking at net profit margin, return on assets, and return on equity. Ferrari earns more than €136,000 profit for each car. This shows that a business with a strong brand and high demand does very well. The average net profit margin is 7.3%. When you see these numbers, you can understand why many people want to join this business. Even a portable tire compressor business can do well if it focuses on being efficient and giving good value.

Key Takeaways

Luxury car makers like Ferrari make a lot of money. Their strong brand and high demand help them earn more.
Used car dealerships often make more money than new car sales. This makes them a good choice for new business owners.
Being efficient is very important. Keeping costs low and offering extra services can help you earn more money in the car business.
Knowing what people want and what is popular helps businesses do well. This helps them change and grow in the car industry.
Starting a mobile mechanic service or selling car parts online does not cost much. These are good ways to start in the car business and make money.

Profit Metrics

Measuring Margins

You can check how well a car business does by looking at its operating margin. This number tells you how much money the company keeps after paying for costs. In cars, operating margin helps you compare makers, dealers, and service shops.

Department	Profit Metrics Description
New Car	Rarely shows net profit; designed to generate future service revenue.
Used Vehicle	Comprises 25% – 40% of total gross sales; higher front-end gross margin than new vehicles.
Fixed Operations	Most profitable department; contributes 45% – 50% of total gross profits despite lower sales percentages.

New car sales usually have a low operating margin, between 1% and 3%. Used car sales have higher margins, about 5% to 10%. Service and parts departments can reach operating margins from 20% to 50%. These numbers show why service businesses often make more money than new car sales.

Profit per vehicle is also important. You find it by taking away costs from the money made for each car sold. Gross vehicle margin is the difference between the selling price and the cost of goods sold. Operating vehicle margin includes operating expenses and gives a better idea of how much money is made.

ROI in Automobile Industry

Return on investment (ROI) helps you know if a car business is worth your money. In cars, ROI measures how much profit you get compared to what you first spent. The usual ROI formula is:

Traditional ROI Formula: ROI = [(Net Profit – Initial Investment) / Initial Investment] × 100

You can watch ROI in cars by seeing how ads turn into sales. Dealers want to see if online ads lead to people buying cars in stores. Digital marketing makes it easier to count web visits and sales, but figuring out ROI and return on ad spend can be hard.

Industry numbers show supplier operating margins stayed around 6% in early 2025. Chinese suppliers reached 5.7%. European and South Korean suppliers stayed near 3.5%. OEM operating margins dropped to 5.4% in Q1 2025, much lower than their 2020 peak. These numbers help you see how the car industry changes over time.

Most Profitable Car Manufacturers

Toyota and Global Leaders

When you look at the most profitable car manufacturers, you see that toyota stands out as a global leader. In 2023, toyota sold 8.57 million vehicles. This number made toyota the best-selling car brand in the world. You can compare toyota’s performance to other top car brands by checking the table below.

Manufacturer	Units Sold (2023)	Percentage of Global Sales	Growth from 2022
Toyota	8.57 million	11.18%	+3.47%
Volkswagen	4.97 million	N/A	N/A
BYD	2.68 million	N/A	+47.46%
Tesla	1.77 million	N/A	+31.91%

Bar chart comparing 2023 global car sales for Toyota, Volkswagen, BYD, and Tesla

You can see that toyota leads in both sales and growth. Volkswagen follows with 4.97 million units. Tesla and BYD show strong growth, but their total sales remain lower than toyota and volkswagen. General motors does not appear in this chart, but it remains a major player in the industry. When you look at 2020 profits, toyota reported strong financial results, which helped it keep its top spot. Volkswagen also posted high 2020 profits, but not as much as toyota.

You might wonder why toyota keeps its lead. The answer comes from its focus on quality, reliability, and efficient production. These factors help toyota keep costs low and profits high. The company’s combined profit from different regions also supports its global strength. You can see why toyota is often called the best-selling car brand and one of the top car brands in the world.

Ferrari, Porsche, and High Margins

If you want to know which companies have the highest profit margins, you should look at luxury brands. Ferrari and Porsche lead this group. Ferrari achieved a total revenue of €5.09 billion and a net profit of €1.22 billion. This gives ferrari a profit margin of 24%. Porsche also shows strong numbers, with an operating margin of 18%. The table below shows how these brands compare.

Brand	Operating Margin	Profit per Unit (2023)	Profit per Unit (2022)
Ferrari	27%	118,000 euro	92,400 euro
Porsche	18%	22,800 euro	N/A

You can see that ferrari earns much more profit per car than any other brand. Porsche also makes a high profit per unit. These numbers are much higher than mass-market brands like toyota or volkswagen. Tesla has also joined the group of most profitable car manufacturers. Tesla’s operating margin increased from 12.1% in 2021 to 16.8% in 2022. This makes tesla the second most profitable car manufacturer after ferrari.

Luxury brands like ferrari and porsche reach high profits for several reasons:

Lower production costs help increase profit margins.
Premium pricing strategies allow these brands to charge more for each car.
Strong brand reputation lets them keep prices high.
High market demand means they can sell cars at higher prices.
Higher sales volume can make up for lower profit margins per vehicle.

You should also know that the least profitable car company often struggles with high costs, low demand, or weak brand value. General motors, for example, has faced challenges in some years, especially when compared to toyota or volkswagen. In 2020, profits for luxury brands stayed strong, while some mass-market brands saw lower returns.

When you look at the financial results for 2020, you see that ferrari, porsche, and tesla outperformed many other brands. Their focus on brand value, pricing, and efficiency helped them reach the highest profit margins in the industry.

Dealerships and Sales

Brand Name Dealerships

Brand name dealerships often make more money than others. If you open a dealership with a strong brand like toyota, you get more customers. People trust toyota because it is known for quality and reliability. This trust helps you sell more cars and make more money.

Brand name dealerships earn good profits, especially with luxury cars. The table below shows the average gross margin and profit per car:

Vehicle Category	Average Gross Margin %	Profit per Unit
New Vehicles	5% - 7%	$1,959 - $2,337
Luxury New Vehicles	8% - 12%	$5,200 - $12,000
Certified Pre-Owned	15% - 18%	$3,000 - $6,300
Trade-In Resales	20% - 25%	$4,000 - $7,500

Luxury and certified pre-owned cars bring in more profit. If you focus on these, you can earn more money. Copart is a company that does well by selling trade-in and resale cars.

Tip: Where you open your dealership matters. Your income and costs change based on your location. City dealerships may sell cars differently than those in the country.

Used Car Dealerships

Used car dealerships are also a good way to make money. These shops usually have higher profit margins than new car dealerships. Used cars often have a gross profit margin of 12-15%. New cars have a margin of 7-10%. If you own a used car shop, you can make $2,337 to $5,000 for each car you sell.

Used car dealerships usually make more profit than new car dealerships.
How many cars you sell can change if costs go up or people spend less.
New car dealerships sometimes offer deals to get more buyers.

Starting a dealership has some challenges. You need to use new technology, keep track of your cars, and make sure customers are happy. But there are also many chances to do well. Using digital tools can help you grow your business and find more buyers.

If you choose toyota for your dealership, you get a strong brand and steady sales. This makes your business safer and more profitable. No matter if you sell new or used cars, you can do well if you know your market and use smart ideas.

Service-Based Automobile Businesses

Mobile Mechanic Services

You can start a mobile mechanic service if you want to work with cars. This business lets you go to customers’ homes or jobs to fix cars. You do not need a big shop, so you save money. Many people like mobile mechanic services because they do not have to wait at a shop.

The average yearly money made is $0, but you can keep about 90% of what you earn.
Most mobile repair businesses keep between 10% and 20% of their money after costs.

You get to keep more money because you do not pay for a big building or many workers. You can also offer extra things, like a mobile car wash, to get more customers. If you add car wash services, your business can grow and stand out. You help people keep their cars clean and working well without leaving home.

Tip: Always be on time and finish jobs fast. People trust you more when you are reliable.

Automotive Repair Shops

Automotive repair shops are important in the car business. You can open a shop to fix cars, do maintenance, and wash cars. Making money depends on how you set your prices and control your costs. If you charge too little, you will not make enough money. If you charge too much, people may not come back.

Profit margins show if your business is healthy. You need to make good choices in every part of your shop.
Labor profitability means you must balance worker pay and service prices.
Checking your money records often helps you find ways to do better.

You can add a car wash to your repair shop to make more money. Many people want their cars cleaned after repairs. You give full service and make your shop more popular. This helps you build trust and get repeat customers for both repairs and car washes.

Note: Set goals you can reach and check your progress often. This helps you see what works and change things if needed.

Factors for Increase in Profits

Market Demand

Market demand affects how much money car companies make. When more people want cars, companies like toyota earn more. Sometimes, things outside the company change how many cars get sold. For example, if tariffs or interest rates go up, cars cost more. This can make profits go down for some businesses. The table below shows how these trends change the car industry:

Trend	Impact on Profitability
Tariffs	Higher costs make cars more expensive and can lower sales.
Interest Rates	More expensive loans make people buy fewer new cars.
Inflation	Materials cost more, so cars get pricier and people buy less.
Changing Consumer Behavior	People want more protection products when car costs rise.

You should pay attention to these trends to help your business grow. Companies like toyota change quickly when demand goes up or down. This helps them stay ahead of others.

Operational Efficiency

Operational efficiency helps car businesses do better than others. If you use your resources wisely, you spend less and make more money. Many dealerships, like toyota, use smart ways to improve profits:

Offer services like finance and insurance to earn more.
Sell used cars because they often make more profit per car.
Manage inventory well to avoid extra costs and unsold cars.
Use data to guess what customers want and stock the right cars.
Work closely with suppliers to get good deals and better payment plans.

Tip: If you run your business well, you can make between $500,000 and $2 million each year. This depends on your market and how you manage your business.

Brand Value

Brand value helps car businesses stand out. When people trust a brand, they buy from it more often. Toyota is a good example. Many people pick toyota because they know it is reliable and high quality. This trust means more sales and steady profits.

If you build a strong brand, you can charge more and keep customers coming back. A good reputation helps your business during hard times. When sales slow down, trusted brands like toyota still get buyers. You should work on your brand if you want your car business to last.

Other Profitable Automobile Ideas

Portable Tire Compressor Business

You can begin a portable tire compressor business with little money. Many drivers want an easy way to fill their tires fast. This business works well with other car businesses because it solves a real problem. In 2024, the automotive segment made up 22% of revenue share. This shows that people want portable tire compressors. As more people buy cars, the business will grow, especially in new places.

The portable tire compressor business gets bigger as more cars are on the road.
Aftermarket services and regular checkups keep people buying.
The tire inflator market will grow by 6.5% each year from 2023 to 2028.
More people care about tire safety, so they buy portable tire compressors for emergencies.

You can sell portable tire compressors online or in stores. Many car owners like to keep one in their trunk. This business is a smart idea if you want to join the car industry.

Car Parts and Accessories

Car parts and accessories are another good choice for a car business. You can open a store or sell online. The average profit margin for car accessories is between 20% and 45%. This means you can make good money if you run your business well. Shops like these often make $200,000 to $800,000 each year. Where your shop is and how big it is will change your results.

You can sell things like seat covers, floor mats, and phone holders. Many drivers want to make their cars better, so they buy these products. The car parts and accessories business often makes more money than other car businesses. You can also offer installation services to earn more.

Tip: Always keep popular items ready and be nice to customers. This helps people come back to buy again.

Financing and Insurance

Financing and insurance are important in the car business. You can help people get loans or protect their cars with insurance. The average gross profit margin for the auto and truck industry is 12.45%. Insurance companies have different profit margins:

Life insurance companies: 3.22% net profit margin
Property and casualty insurance: 16.33% net profit margin
Accident and health insurance: 4.99% net profit margin

You can work with banks or insurance companies to offer these services. Many car buyers need help with loans or want extra protection. This business can give you steady money and help you make strong relationships with customers.

Industry Trends

Electric Vehicles

Electric vehicles are changing the car industry in many ways. In the last five years, more people have bought electric cars. This happened because governments helped and batteries got better. Many companies now make more electric cars to follow new rules and meet what customers want. In some places, like Europe, sales slowed down. This is because they stopped giving money to help buyers. Fewer people bought electric cars there, but most places still see more sales.

Profit margins for electric vehicles are facing new problems. Tariffs and more competition, especially from Chinese companies, make profits lower. Tariffs can make a car cost about $3,000 more. Car companies need to find ways to spend less and work better. New ideas help with this. Companies use things like AI and 3D printing to build cars faster and cheaper. These changes help car businesses keep making money when things change.

Electric vehicle sales went up because of government help and better batteries.
Some places sold fewer cars after cutting money for buyers.
Tariffs and competition make profits harder to keep.
New technology helps companies stay strong.

Consumer Preferences

You help decide what happens in the car market. More people want electric cars because they save money and help the environment. Learning about how cars affect the earth makes you pick electric cars. When you choose electric cars, you feel good about helping the planet.

A study found that 52% of people who want to buy a car pick electric vehicles. This means car companies must change what they sell to match what you want. If a company listens to you and uses new technology, it can earn more money. As you and other buyers look for cleaner and smarter cars, car companies must keep up with these changes to stay successful.

Statistic	Value
Consumers intending to buy a car who prefer EVs	52%

Luxury car makers like Ferrari make the most money. Dealerships with strong brands and service businesses also do well. Big profits come from brand value and working efficiently. Meeting what customers want helps too. If you want to join the car business, ask owners for advice. Get some work experience and take classes about the industry. Think about what makes businesses earn more money. Try to come up with ideas to make things better. Make sure the business matches your skills and how you live before you spend money.

FAQ

What is the most profitable car business for beginners?

You can start a used car dealership or a mobile mechanic service. These options need less money at first. You can grow your business as you learn more about the market.

How do you increase profits in your car business?

You should focus on customer service and keep your costs low. Offer extra services like car washes or financing. Use digital tools to track sales and manage your business better.

Do luxury car brands always make more money?

Luxury brands often have higher profit margins. You can earn more per sale with these brands. However, running this type of business needs more money and strong brand knowledge.

Can you run a car business from home?

Yes, you can start some car businesses from home. Mobile mechanic services and selling car parts online work well. You save money on rent and reach more customers.

What skills help you succeed in the car business?

You need good sales skills and basic car knowledge. You should also learn about customer service and digital marketing. These skills help you grow your business and keep customers happy.