How Much Should a Dealership Spend on Advertising? 2026 Benchmarks and a Better Way to Set the Number

Short answer: the average franchised dealership in the U.S. spent $586,246 on advertising in 2025, which works out to $739 per new vehicle retailed and 0.77% of total dealership revenue, according to NADA Data 2025. A store selling 100 new and 80 used units a month is in the neighborhood of $50,000 to $60,000 a month if it spends like the average. But the average is a poor place to stop, because it is set by what other dealers did last year, not by what your market will give you next year. The better method is to size the budget from the share you intend to take and the cost of an incremental sale in your market. Both are covered below.

What the benchmarks say

NADA publishes the most reliable numbers because they come from dealer financial statements, not surveys. The last three years look like this:

Sources: NADA Data 2023, 2024, and 2025 annual financial profiles, as reported by Digital Dealer, Inside Radio, and Dealership Guy.

Three things stand out. Total spend hit a record in 2025 and grew 8% in a year when new-vehicle volume grew about 2.5%. Per-unit spend rose 4.8% after two flat years. And advertising as a share of revenue has fallen from 1.00% in 2015 to 0.77% in 2025, which means dealers are spending more dollars against a much larger revenue base, driven mostly by higher transaction prices (average new retail price was $48,205 in 2025) and fixed operations.

A second benchmark comes from Presidio-NCM, which tracks about 4,000 dealers through 20-group financial statements. Its Q2 2026 report put advertising at $406 per vehicle retailed, new and used combined, up 2.8% year over year. That figure is useful because it spreads the budget across all retail units rather than new only.

What the benchmarks leave out

Averages hide the spread. A Toyota store in a growing Sun Belt suburb and a Chrysler store in a flat Rust Belt county both feed the NADA average, and neither should spend at it.

The per-unit figure is also backward-looking. Dividing last year's spend by last year's units tells you what a sale cost to support, not what the next sale will cost. If the store is already at its natural share in its market, the marginal dollar buys much less than the average dollar did.

And the benchmark says nothing about mix. NADA's 2025 breakdown shows the average store put 21.1% of its budget into search, 20.0% into third-party listing sites, 19.5% into SEO and website, 14.2% into social, 10.5% into TV, 6.9% into radio, 5.6% into direct mail, and 2.1% into newspaper. That mix is a description of the industry, not a recommendation for a store. We cover allocation in a separate piece: dealership advertising budget allocation by channel.

A better way to set the number: start from share

Every dealership is measured by its manufacturer on sales effectiveness, which is actual sales divided by expected sales in the assigned market area. Expected sales are the brand's regional share applied to the registrations in your territory. That is the number your budget should be built around, because it is the number that decides whether the franchise is secure and whether the store is growing.

Here is the method, with example figures.

Step 1: Size the market. Count the annual vehicle transactions in your trade area. If you have registration data from your OEM report or a market analysis, use it. If you do not, our free Market Area Snapshot estimates it from Census vehicle counts. Say it comes to 24,000 dealer transactions a year across all brands, and your brand's share of the market is 6%, or 1,440 units.

Step 2: Set the share goal. If your store sells 1,200 of those 1,440 brand units, you hold an 83% sales effectiveness score. Taking the store to 100% means 240 more units a year. Taking overall market share from 5% to 6% means 240 more units too.

Step 3: Price an incremental unit. This is the number most budgets skip. An incremental unit is a sale that would not have happened without the advertising. It is not a lead, and it is not an attributed sale. The only clean way to find it is a holdout test, which we explain in incrementality testing for car dealers. Until you have run one, use a conservative planning range of $1,500 to $2,500 per incremental unit for a franchised store with a healthy website and CRM process. Treat that range as an assumption to be replaced, not a fact.

Step 4: Check it against gross. Presidio-NCM's Q2 2026 average was $1,840 gross per new vehicle and $1,409 per used, with $1,769 in F&I per retail unit. Front and back together, an incremental new unit is worth roughly $3,600 in gross before the service relationship. If an incremental unit costs $2,000 to buy with advertising, the math works. If it costs $4,000, it does not, and the problem is usually conversion, not media.

Step 5: Build the budget. 240 incremental units at $2,000 each is $480,000 of growth spending, on top of the maintenance spend that holds current volume. For most stores, maintenance is the brand search, listing sites, SEO, and retention email that keep the existing pipeline full. Growth spending goes to the channels that reach people who are not already shopping you: connected TV, conquest social, direct mail into competitor ZIPs, and the like.

The result is a budget with a reason attached to every dollar. When the dealer principal asks why the number went up, the answer is 240 units and a share goal, not a percentage of last year.

Adjust for the calendar

A flat monthly budget wastes money. Mercer Capital's analysis of a decade of monthly sales data shows November and December are consistently the strongest period, January and February the weakest, with a spring lift tied to tax refunds (the average federal refund topped $3,700 in 2026, per Cox Automotive) and a late-summer push around Labor Day and model-year closeouts. Used-vehicle retail sales in February 2026 ran 5.5% ahead of the prior year on refund money alone.

Move media ahead of demand, not with it. Tax-season used spending should be live in late January. Model-year closeout spending should start in August. And when inventory swings, the budget should swing with it; a store sitting on 90 days of a slow model needs a different plan than the same store at 35 days.

Questions dealers ask

What percentage of gross profit should a dealership spend on advertising?

There is no published NADA standard for advertising as a percent of gross. The commonly cited industry figure is advertising at 0.77% of total revenue (NADA Data 2025). Because gross margins vary widely by brand and department, we recommend budgeting per incremental unit and per share point instead of as a percent of gross.

How much does the average dealership spend on advertising per month?

About $48,850 a month in 2025, based on NADA's average of $586,246 a year per franchised dealership. Large-volume stores in major metros spend several times that; small rural points spend a fraction of it.

Is $739 per new car a good target for ad spend per unit?

It is the 2025 industry average, not a target. Stores that convert well and hold strong share can run below it. Stores in a growth phase or a conquest market should expect to run above it for the incremental units they are buying, then see the blended number fall as volume rises.

Should used-vehicle advertising come out of the same budget?

Yes, and it should be tracked separately. Presidio-NCM's $406 per retail unit figure (Q2 2026) blends new and used. Used advertising is usually more efficient per unit because the inventory is unique and listing sites carry much of the reach, so most stores should measure the two departments against different cost-per-unit targets.

Sources

• NADA Data 2025, Annual Financial Profile of America's Franchised New-Car Dealerships, via Dealership Guy and Inside Radio
• NADA Data 2024 via Inside Radio; NADA Data 2023 via Digital Dealer
• Presidio-NCM Average Dealership Performance Benchmark, Q2 2026
• Mercer Capital, Understanding Seasonality in the Auto Industry, January 2026
• Cox Automotive, Used-Vehicle Inventory and Sales, February 2026