Service profits are carrying the car lot
- ABG sells new and used vehicles, but the profit story is moving toward Parts & Service.
- In Q1 2026, Parts & Service was 50.2% of gross profit, up from 47.3% a year earlier.
- New vehicle same-store gross profit per unit fell 10% year over year, showing that pandemic-era margins are still fading.
- The Herb Chambers acquisition gives ABG a bigger base for TCA products, but it also raises integration risk.
- Finn’s score is middling because service strength is real, while margin pressure, debt-like deal risk, and legal risk still matter.
Service is the shock absorber
ABG’s current story is simple. The easy money in new vehicles is going away, but repair and service work is taking a larger share of profit. In Q1 2026, same-store new vehicle gross profit per unit fell 10% from last year. At the same time, Parts & Service rose to 50.2% of total gross profit, from 47.3% a year ago.
That mix shift is the bull case. People still need oil changes, repairs, warranty work, parts, and collision repair after they buy a car. Those jobs usually carry better margins than selling the car itself. Used vehicle profit also helped, with same-store gross profit per used vehicle retailed up 12% year over year despite weaker volumes.
The harder part is execution. ABG is integrating Herb Chambers, its largest acquisition, and plans to roll out more Total Care Auto products across that store base in 2026. TCA can lift the long-term profit pool from finance and insurance products, but it hurts reported F&I revenue at first because more revenue is deferred instead of booked right away.
The bear case has not gone away. New vehicle margins are still normalizing. Same-store F&I revenue fell 11% in Q1 2026, even if the reason is partly accounting. The FTC case over add-on product sales also remains a watch item. FTC materials show the administrative hearing has been stayed and continued, which may push the main courtroom moment beyond the August 2026 date still reflected in the internal thesis.
Dealerships with a service tail
Asbury owns franchised auto dealerships. A customer can buy a new vehicle, trade in or buy a used one, arrange financing, buy insurance-like protection products, and come back for repair work. The same store can touch the customer many times over the life of the car.
Revenue mostly comes from selling vehicles. Profit is more balanced. In Q1 2026 gross profit mix, Parts & Service was the largest piece, followed by F&I, new vehicles, and used vehicles. That matters because vehicle sales are cyclical, while service work can be steadier.
TCA, or Total Care Auto, is ABG’s internal provider of finance and insurance products. It sells items like extended service contracts, GAP debt cancellation, prepaid maintenance, and other protection products through ABG dealerships. Owning more of that product chain can improve economics, but the rollout changes revenue timing and draws legal attention because the FTC case focuses on add-on product sales practices.
ABG’s moat comes from scale, brand relationships, local franchise laws, and service capacity. As of December 31, 2025, the company had 223 new vehicle franchises, 36 brands, 171 dealership locations, and 39 collision centers. Those same advantages can become problems if manufacturers push harder, buyers pull back, or a large acquisition takes longer than planned to absorb.
What ABG sells
New vehicles
ABG sells new cars, trucks, and SUVs from luxury, import, and domestic brands. This drives traffic and revenue, but gross profit per unit is falling as supply normalizes.
Used vehicles
ABG sells used vehicles at retail and wholesale. Q1 2026 same-store gross profit per used vehicle retailed rose 12% year over year, showing better pricing even with lower volumes.
Parts & Service
This includes maintenance, repair, warranty work, collision repair, and parts. It made up 50.2% of Q1 2026 gross profit, making it the core profit buffer.
Finance & Insurance
ABG arranges customer financing and sells add-on protection products. It is profitable, but also exposed to revenue deferral from TCA and scrutiny from regulators.
Total Care Auto
TCA is ABG’s in-house F&I product provider. In Q1 2026, it generated $25.2 million of revenue and $13.1 million of gross profit after dealership eliminations.
Profit mix, not just sales mix
The segment shares shown here use ABG’s Q1 2026 Dealerships gross profit mix, not revenue. TCA is a separate reporting segment, but its products also flow through the F&I line and are not shown as a separate share here.
What could go wrong
New vehicle margins keep falling
High impact · High oddsABG is still giving back the high new vehicle margins it earned when inventory was tight. Same-store new vehicle gross profit per unit fell 10% in Q1 2026. If this drop keeps going, Parts & Service must grow just to hold profit steady.
Parts & Service loses momentum
High impact · Medium oddsThe bull case depends on service work staying strong. Parts & Service was 50.2% of Q1 2026 gross profit, but the internal thesis flags a negative 1% same-store performance in Q1 as an open question. If that becomes a trend, ABG loses its main cushion against weaker vehicle sales margins.
Herb Chambers integration disappoints
High impact · Medium oddsABG completed the Herb Chambers acquisition in 2025, making integration the next test. The company must bring stores, people, systems, and TCA products onto its platform without hurting operations. Large auto retail deals can look good on paper but miss if local execution slips.
TCA accounting masks near-term profit
Medium impact · High oddsAs ABG sells more TCA products, some revenue is recognized over time instead of booked right away. Management said same-store F&I revenue fell 11% in Q1 2026 partly because of this deferral. The long-term goal may be better margins, but investors may see lower reported F&I revenue first.
FTC case changes F&I economics
High impact · Medium oddsThe FTC proceeding focuses on add-on product sales practices, including claims tied to hidden fees and unauthorized products. An adverse outcome could mean fines, operating changes, or lower F&I attach rates. FTC timeline materials show the case has been stayed and continued, so the timing may have moved, but the overhang remains.
In one breath
How does Asbury Automotive make money?
ABG sells new and used vehicles, repairs vehicles, sells parts, arranges financing, and sells protection products. Vehicle sales bring in a lot of revenue, but Parts & Service and F&I are key profit drivers.
Why is Parts & Service so important for ABG?
Service work can repeat for years after a car is sold and often carries better margins than selling the car. In Q1 2026, Parts & Service made up 50.2% of gross profit.
What is TCA at Asbury Automotive?
TCA stands for Total Care Auto. It is ABG’s in-house provider of products like extended service contracts, GAP debt cancellation, and prepaid maintenance.
What is the biggest risk for ABG stock?
The biggest business risk is that new vehicle margins keep falling while service growth slows. Investors should also watch the Herb Chambers integration and the FTC case tied to add-on product sales.