How Much Do Car Dealerships Spend on Advertising?

Franchised car dealerships spent $9.96 billion on advertising in 2025, an average of $586,246 per store and $739 per new vehicle sold, according to NADA Data 2025. Spending is still rising: $791 per new vehicle in the first half of 2026. About three quarters of it now goes to digital, led by search ads, third party listing sites and SEO.

In short:

• The average US franchised dealership spent $586,246 on advertising in 2025, about $48,850 a month (NADA Data 2025).
• Search engine marketing was the largest line at 21.1% of the budget, followed by third party listing sites (20.0%), SEO (19.5%) and social media (14.2%). NADA puts digital at 74% of dealer ad spend.
• Advertising per new vehicle sold rose from $705 in 2024 to $739 in 2025, and reached $791 in the first half of 2026 (NADA).
• Paid search media cost per car sold equals cost per lead divided by your lead to sale rate. At WordStream’s 2026 median of $44.26 per lead, that is $553 per car at an example 8% close rate and $221 at 20%.
• The right budget starts from a sales goal and your own close rate, not from a percentage of anyone else’s revenue.

This guide breaks down where that money goes, what the per car figure hides, and how to build your own budget backward from the cars you need to sell. If you would rather have an automotive advertising agency run the numbers with you, that is what we do. Clickem runs Google Ads and Meta ads for car dealerships, auto repair shops, body shops and auto lenders.

How much does the average car dealership spend on advertising?

The average franchised store spent $586,246 in 2025. That is NADA’s figure, built from dealers’ own financial statements rather than from a vendor survey.

Here is how spending has moved over the last four years, including the newest half year.

Sources: NADA Data 2025 and the NADA Data 2026 Midyear Report. What this means for you: total spend grew about 8% from 2024 to 2025, and first half 2026 spend was about 5% above the first half of 2025, so the cost of standing still is going up. If your budget is flat while the average rises, your share of voice is likely shrinking.

Two more ways to size it. The average dealership had $76.60 million in total sales in 2025, so $586,246 is about 0.77% of revenue (a Clickem calculation from NADA’s two figures). NADA does not publish advertising as a share of gross profit, so any “percent of gross” rule you hear comes from a vendor or a consultant, not from industry data.

Where does a dealership’s ad budget go?

Most of it goes to four digital lines: paid search, third party listing sites, SEO and social. TV and radio together still took 17.4% in 2025.

Source: NADA Data 2025, page 16. Monthly figures are Clickem’s division by 12. What this means for you: the average store spends almost as much on listing sites as on its own search ads. If you cannot say what each of those two lines costs per car sold, start there.

The split tracks how people shop. In Cox Automotive’s 2025 Car Buyer Journey Study, 75% of buyers used third party sites such as Kelley Blue Book, Autotrader, Cars.com and Edmunds, 59% used dealer sites and 41% used search engines. Buyers visited 4.6 websites on average and spent 7 hours 11 minutes of a roughly 14 hour purchase researching online. Only 7% bought entirely online, so the ad budget is mostly paying to win the visit and the phone call.

What does the “ad spend per new vehicle” number actually measure?

It is NADA’s metric: dealership advertising expense stated per new unit sold. The whole ad budget sits on top, and only new units sit underneath. That makes it a useful trend line and a poor scorecard for any single store.

Three things it hides:

• Used cars. Franchised dealers sold 13.1 million used vehicles in 2025, and used made up 31.8% of dealership sales dollars (NADA). Every dollar spent advertising used inventory is still divided by new units only. A store with a big used operation will look expensive per new car even when its marketing is efficient.
• Service. Service and parts brought in $164.6 billion, 13.3% of dealership sales. Fixed ops advertising also lands in the same total, which is why service deserves its own budget line and its own cost per repair order target.
• Co-op money. NADA’s midyear report defines advertising expense as “advertising and sales promotion minus advertising rebates.” Rebates are netted out, so the gross amount a store commits before co-op money comes back can be higher than the published figure.

Say a store sells 80 new and 70 used vehicles a month and spends $59,000 on advertising. Per new vehicle, that is $738, right at the NADA average. Per retail vehicle, new and used together, it is $393. Same store, same spend, two very different headlines.

One more caution. Divide NADA’s per store spend ($586,246) by its per store new unit count (955) and you get about $614, not $739. NADA does not publish how the per unit figure is calculated, so the two averages are probably built differently, for example as an average of each store’s own ratio. Quote $739 as NADA’s figure, and do not mix it with your own division of the other two.

What is the advertising cost per car sold from paid search?

Cost per car sold equals cost per lead divided by the share of leads that buy. We found no reliable published industry close rate for dealer web leads, so the honest approach is to test scenarios and then replace them with your own CRM numbers.

The starting point is WordStream’s 2026 search benchmarks: for the Automotive (For Sale) category, a median cost per lead of $44.26, up 13.9% year over year. That median comes from 13,474 US campaigns across Google Ads and Microsoft Ads, April 2025 to March 2026. The table below runs it through four example close rates. These are scenarios, not industry averages.

What this means for you: moving your close rate from 8% to 16% cuts cost per car in half, exactly as much as halving your cost per lead. It is easy to spend months fighting over CPC and no time on the half of the equation you control on the showroom floor.

Three caveats keep this honest. First, this is media cost only. Agency fees, software and the salesperson’s time are extra. Second, $44.26 is a median across many advertisers, so your own CPL can sit well above or below it, which is why the table shows a second column. Third, do not compare these figures directly with NADA’s $739. That number covers every channel and every promotion; the table covers one channel’s media.

The close rate is often a lead handling problem. In Pied Piper’s 2026 mystery shop of 3,290 dealership websites, only 51% of dealers gave a fast, complete “perfect response,” and 14% scored below 40, which Pied Piper describes as failing to personally respond. Pied Piper reports that dealers who move from under 40 to over 80 historically sell 50% more units from the same number of leads. That is the vendor’s claim, and the release publishes no methodology for it. Our car dealership lead generation guide compares what a lead from each source really costs once you get to sold.

How do you set a dealership advertising budget from a sales goal?

Work backward from units, not forward from last year’s spend. You need four inputs, and three of them should come from your own data.

1. Units you want from the channel. Not total store sales. The extra retail units you expect paid media to produce each month.
2. Your lead to sale rate by source. Pull it from the CRM: sold deals divided by leads, per source, over the last 90 days. If you cannot pull it, fix that before you raise the budget.
3. Your cost per lead by channel. Use your own. Until you have it, plan with WordStream’s 2026 medians ($44.26 for search, $35.52 for Meta lead campaigns, the latter from a small sample).
4. Seasonality. Demand is not flat across the year, so the monthly budget should not be either.

Here is a worked example with round, hypothetical inputs. Say you want 25 additional retail sales a month from paid search, and your CRM shows those leads close at 10%. You need 250 leads. At a $44.26 cost per lead, that is about $11,065 a month in search media. If your close rate is really 8%, you need about 313 leads, or roughly $13,850. The budget gap between those two close rates is roughly $2,800 a month, which is why measuring the close rate comes first.

Then sanity check from the top down. If you sell 60 new vehicles a month and spend at NADA’s 2025 average rate of $739 per new vehicle, your total ad budget across all channels is about $44,340 a month. If your bottom-up search plan already eats most of that, either the sales goal is too aggressive for one channel or the other channels need to justify their share.

Pace it to demand. Clickem’s five-year Google Trends analysis in our automotive Google Ads benchmarks shows “car dealership” searches peak in July and bottom out in November (index 113 vs 84, where 100 is an average month). “Used cars” searches peak in March and are lowest in December, and “buy here pay here” runs 26% above an average month in February, the same month tax refund searches peak. Year end may be a big sales push, but it is not when the most people are searching.

Finally, count co-op. Reimbursement rates vary by brand and fund, and more manufacturers now tie them to certified providers: Kia says certified vendors are eligible for 100% of its dealer advertising support, and Stellantis lists 1:1 reimbursement for eligible products. Our guide to Tier 1, Tier 2 and Tier 3 automotive advertising explains how co-op works and where Tier 2 and Tier 3 budgets collide on the same keywords.

How should a dealer split the budget across Search, vehicle ads, Meta and listing sites?

Fund the channels that capture existing demand first, then the ones that create it, and let measured cost per car sold move money between them every month. There is no correct universal split. NADA’s average is a description of what dealers do, not proof that it works.

Here is how each channel earns its place, and what should make you move money in or out.

What this means for you: the decision rule is marginal cost per car sold, by channel, after matching leads to deals. A channel that looks cheap per lead can be expensive per car, and the reverse.

Some specifics that change the math. On Google, vehicle ads can now run through Performance Max or Standard Shopping campaigns, and Google says the two can run together, which gives you more control over which inventory gets budget. Our Google vehicle ads guide covers the feed and VDP rules. On the keyword side, our dataset puts the median “[brand] dealership” Keyword Planner CPC estimate at $5.22 across 17 brands, against $1.86 for “used [model] for sale.” Search budgets for new car brand terms and used inventory terms behave very differently, so split them into separate campaigns with separate budgets. The Google Ads for car dealerships playbook shows the full campaign map.

On Meta, any ad that promotes auto loans or financing offers must run in the “Financial products and services” Special Ad Category in the US, which removes age, gender and ZIP targeting and expands location targets to at least a 15 mile radius. Budget inventory ads and finance offers as separate campaigns so the restriction does not choke everything.

How do NADA’s numbers compare with BIA’s dealer ad spend forecast?

They measure different things, so never add them together. NADA counts what franchised dealers record as advertising and sales promotion, net of rebates. BIA Advisory Services forecasts local media spend by tier.

Source: BIA Automotive Tiers 1, 2 and 3 Local Ad Spend Insights, February 2026. These are forecasts, not measured spend. What this means for you: nationally, Tier 2 dealer associations are forecast to spend nearly as much on local media as all new car dealers combined ($3.28 billion against $3.50 billion). If you sell a franchised brand, find out what your association is buying in your market before you bid against it on the same terms.

The digital shares differ too: 74% in NADA’s 2025 data against 66.6% for BIA’s Tier 3 forecast. NADA counts listing sites and SEO as digital; BIA counts broadcast TV and radio as traditional and measures local media only.

What should you track so the budget defends itself?

Cost per car sold by channel, every month. Everything else is a supporting metric. Four things have to be in place for that number to exist.

• Every lead tagged with its source in the CRM, including calls. In the US and Canada, Google now records ad calls by default and uses AI to decide which count as conversions. Check the setting in your account and your state’s call recording consent rules.
• Sold deals sent back to Google Ads. Google now calls classic offline conversion import “legacy” and recommends enhanced conversions for leads through Data Manager. Since June 15, 2026, API uploads go through the Data Manager API, so check that any DMS or CRM integration still works.
• Separate budgets for new, used, service and finance, so one cheap line does not hide an expensive one.
• A monthly reallocation rule written down in advance: which cost per car triggers a cut and which earns more budget.

Feeding real outcomes back into bidding matters more than most budget debates. In our UK auto finance lender case study, conversions had only been arriving by offline upload, so Smart Bidding could not learn in real time. After a rebuild from 64 campaigns to 8, cost per lead fell 41%, from £27.53 to £16.14, and conversions rose 72% while spend rose less than 1%. That was a lender, not a dealership, but the lesson about measurement carries over. Our Google Ads conversion tracking guide covers the setup.

Common questions

What percentage of revenue do car dealerships spend on advertising?

About 0.77% of total sales in 2025, by Clickem’s calculation from NADA Data 2025: $586,246 in average ad spend against $76.60 million in average dealership sales. NADA does not publish advertising as a share of gross profit, so treat any “percent of gross” rule as a consultant’s rule of thumb, not industry data.

How much should a dealership spend on Google Ads?

The average franchised store spent $123,698 on search engine marketing in 2025, about $10,300 a month (NADA). That is a description, not a target. Size your own budget from the sales you want from search, your measured lead to sale rate and your cost per lead.

What is a good advertising cost per car sold?

NADA’s all-channel average was $739 per new vehicle sold in 2025 and $791 in the first half of 2026. For a single channel, compute media cost divided by matched sales. At WordStream’s 2026 median search CPL of $44.26, paid search costs $221 to $553 per car at example close rates of 20% to 8%.

Does co-op reimbursement count in NADA’s ad spend figures?

NADA defines advertising expense as advertising and sales promotion minus advertising rebates, so reimbursements are netted out. Your gross commitment before co-op comes back is higher than the published figure. Reimbursement rates vary by manufacturer and increasingly depend on using certified providers.

How much do used car dealers spend on advertising?

BIA forecasts $318.1 million in local ad spend for used car dealers in 2026, 59.9% of it digital. There is no reliable per store figure for independents, so use the backward method: units wanted, divided by close rate, times cost per lead. Our used car dealer marketing guide covers the channels that work for independents.

Where to start

Before you change a single budget line, pull 90 days of CRM data and calculate cost per car sold for your two biggest channels. If you cannot, the gap in your tracking is costing you more than any overspend.

That is the first number we would ask to see. See how our automotive marketing services work, read about our Google Ads management, or get in touch for a straight read on whether your budget has a spending problem or a close rate problem.