The Myth of More OEM Lines = More Profit: Why Sometimes Less Is More

It’s a belief that seems to make perfect sense:

“If we add more OEM lines, we’ll sell more vehicles, more parts, and more service — and keep customers from going elsewhere.”

On paper, that logic sounds bulletproof. In practice, though, many dealers discover that more brands can actually mean less profit.

That’s exactly what one dealership learned after adding a value-priced off-road vehicle line that seemed like a smart complement to its existing premium brands. The results looked great at first — until the data revealed what was really happening.

A Quick Recap: The Growth That Backfired

At the start of the new line’s launch, one dealership’s Parts Department was thriving.

• Quarterly parts and accessories sales jumped 10%, climbing from $625,000 to $687,500.
  
  
• The gross profit margin stayed strong at 34%.
  
  
• Traffic was up, and the department even hired another full-time Parts & Accessories salesperson to handle the new business.
  
  

Everything appeared to be trending in the right direction.

But after just three months, the General Manager noticed something alarming.
The net operating profit for the department had fallen from $35,000 to $10,000 for the quarter — a $25,000 loss despite higher sales and steady margins.

If left unchecked, that decline would have equaled a $100,000 loss over the course of a year.

The Hidden Cost of Complexity

The culprit wasn’t poor sales performance or weak margins — it was complexity.

Adding the new OEM line brought with it:

• A larger, more diverse parts inventory, up $50,000 within the first three months.
  
  
• A cash flow reduction of $75,000, as working capital got tied up in slower-moving inventory.
  
  
• Reduced display space and staff focus on the dealership’s core OEM accessories — the products that historically produced higher attachment rates and faster turns.
  
  

In other words, what was intended to expand opportunity actually diluted the focus on what was already working well.

The dealership didn’t just add more parts — it added more moving pieces, more labor, and more operational drag. The data from the DealerHero KPI Benchmark Composite made that complexity visible before it was too late.

Why More Brands Don’t Always Mean More Business

Adding a new line can absolutely make sense — if there’s a real market opportunity that creates incremental growth.
But in many cases, dealers underestimate the cost of complexity that comes with every new OEM added to the business.

Here’s what often happens:

1. More Inventory, Slower Turns
   Each line requires its own parts and accessories mix, tying up capital and space.
   
   
2. More Labor, Lower Efficiency
   New brands often require more training, separate systems, or even new staff — all of which reduce gross profit per labor hour.
   
   
3. More Focus Spread, Lower Attachment Rates
   When display space and sales attention shift toward new brands, established product lines suffer.
   
   
4. More Administrative Load
   Managing multiple OEMs means more communication, reporting, and coordination — leaving less time for selling and optimizing operations.
   
   

The lesson? Without significant incremental market demand, adding another line can easily cannibalize existing business.

What the KPI Data Revealed

The DealerHero benchmark analysis helped this dealership isolate the real problem:

• Gross Profit per Hour Worked had fallen from $107 to $93, a clear signal that labor and operational efficiency were suffering.
  
  
• Accessory attachment rates for the core OEM dropped as display and sales focus shifted.
  
  
• And the extra salesperson added at launch drove up payroll costs without improving profitability.
  
  

Once the dealership recognized these inefficiencies, it made swift adjustments — rebalancing displays, tightening inventory, and reinforcing core sales habits. Within two months, Gross Profit per Hour Worked improved to $108, and cash flow began to normalize.

The department didn’t just recover — it became more focused and profitable than before.

When Adding a Line Makes Sense

Expansion isn’t always the wrong move. But it needs to pass three tests before it becomes a smart one:

1. Incremental Opportunity
   Does this brand reach a new audience or just overlap your current customer base?
   
   
2. Operational Readiness
   Do you have the people, space, and systems to manage another product line without sacrificing efficiency?
   
   
3. Profit Benchmark Discipline
   Will it increase or decrease your Gross Profit per Hour Worked and Return on Inventory?
   
   

If a new line doesn’t move the needle in those areas, it might not be adding as much value as it appears.

The Moral of the Story: Sometimes Less Is More

In this case, more wasn’t better — it was just more complicated.

Once the dealership refocused on its core brands, profitability returned. The takeaway is simple but powerful:

“You don’t need more lines to grow — you need more focus on the right ones.”

The most profitable dealerships aren’t always the biggest or the busiest. They’re the ones that understand their market, optimize their mix, and track performance through clear, actionable KPIs.

Because efficiency, not expansion, is what drives sustained profitability.

Final Thought

Every new line added to a dealership introduces risk, complexity, and cost — along with opportunity.
The key is knowing which lines create incremental growth and which ones simply cannibalize your core.

As the DealerHero benchmark data shows, growth without focus isn’t really growth at all.

Sometimes, especially in dealership operations, less truly is more.