The Lexus of Orlando dealership doesn't look anything like a typical shop where cars get oil changes and timing belt replacements.
Instead, it reflects how many dealerships appear these days, especially in the service area. Dealerships are revving up their offerings with fancy showrooms and lounges to entice customers.
Lexus of Orlando has a "two-story showroom with multiple lounge seating arrangements, a café, entertainment area [and] quiet lounges for visitors to have personal space, as well as open community lounges," according to Praxis3, the architecture firm that designed the dealership.
"This building is about customer convenience … designed to be convenient for purchasing, service and comfort," Praxis3 said.
From modernizing waiting rooms and vehicle drop-off areas to testing the concept of mobile mechanics, dealerships commit significant funds toward the service department. At Lithia Motors, the largest auto dealership chain in the United States, expenses for improving existing buildings rose 15% to $213.4 million in 2025, according to its annual report. Lithia Motors and other publicly traded dealerships don't provide additional details on spending for property renovations.
The need for dealers is urgent, as they have been losing service business to independent mechanics, according to a recent report by Cox Automotive, a maker of dealership software. Providing repair and maintenance is the most profitable part of a dealer's business, according to regulatory filings from publicly traded dealerships.
A significant portion of dealerships' capital allocation goes to architecture firms, and designers are relied on to make the service department as pleasant as possible for customers, said Lyle Hutson, an architect and head of the automotive studio at the firm AO.
"Service has become the financial backbone of most dealerships," Hutson told CoStar News. Hutson's Orange, California-based firm has designed buildings for Chevrolet, Kia and Mercedes-Benz dealerships, as well as other brands.
There's more than one goal in play, Hutson said. If a dealer sells a vehicle to a customer, they want that customer to make repeat visits to the service department to generate revenue. In addition, the time spent waiting on a vehicle to be serviced can be used to view cars and SUVs on display in the showroom — and maybe make a purchase.
"A significant percentage of new vehicle purchases originate from customers who first return for service," Hutson said. "When the service experience keeps customers on site, and exposes them to the showroom environment, it creates a natural opportunity for future sales."
The heightened focus on service departments should prompt dealerships to consider spending more to upgrade, expand and modernize their properties, architects said. That's because mechanics that aren't located at a dealer have been taking business away from dealerships, according to a November report by Atlanta-based Cox Automotive. Service visits at dealerships dropped 12% from 2018 to 2025, "losing most business from cars that are five years old or newer," Cox said.
The rate of spending on building renovations is likely to increase this year, Hutson said. Whenever a dealership is sold, manufacturers like Ford, Toyota and BMW typically require extensive renovations or new construction to reflect the new ownership.
The total number of dealerships sold in 2024 rose 10% from 2023 to 438 transactions, according to Kerrigan Advisors, an investment bank that brokers dealership sales. In 2025, the figure had risen to 445 transactions through the end of September, the most recent data available.
Some automotive manufacturers provide financial assistance to dealers for remodeling projects, "if facilities meet manufacturer image standards and requirements," Medford, Oregon-based Lithia Motors said in its annual report.
Much of the increased spending is directed toward the service department, since it's a leading profit driver. At Lithia Motors, gross profit from repair and maintenance services rose 10.4% to $2.36 billion in 2025 compared to 2024, according to its annual report. New vehicle sales, however, dropped 9% to $1.17 billion in the same period.
Lithia Motors works with multiple architecture firms on dealership design, including VLMK Engineering & Design and CSHQA, which designed Toyota of Missoula in Montana.
Dealers are trying to spiff up service areas to make them more appealing. Floors inside service areas can't be covered in oil, and unsightly repair equipment should be pushed out of direct view. When the service bays are cleaner, architects are more willing to create additional viewpoints.
"It used to be that you kept views of the shop away from the customers," said Garrett Womble, an architect and principal at Praxis3. "Now you are providing transparency between the lounge and the service shop. Some dealers have even installed CCTV cameras so you can see what's happening with your car," Womble told CoStar News.
Designers are also giving the service department a more prominent place. At two AO projects in San Diego and Escondido, California, for the Hyundai luxury brand Genesis, the driveway to the service bays is directly next to the front entrance.
Praxis3 is taking a similar approach for two new properties in Dallas for Park Place Dealerships, a unit of Asbury Automotive Group. The work involves constructing a two-story Porsche dealership and renovating a Volvo dealership next door.
Dealerships sometimes send a mechanic to the customer to stimulate service revenue. LaFontaine Automotive Group recently installed a kiosk at Volkswagen's U.S. headquarters in Auburn Hills, Michigan, where VW employees can check in their vehicles for service while they're at work. The kiosk connects with the nearby LaFontaine VW of Dearborn dealership, which assigns mechanics to work on the cars.
"This service saves employees time by eliminating the need to drop their vehicle off at the dealership and either wait for services to be completed or return later that day to pick up," Reynolds and Reynolds, a Dayton, Ohio-based company that developed the kiosk software, said in a June news release.
Reynolds and Reynolds also makes a smartphone app, called Service Flex, that helps dealers organize mobile mechanic service calls.
Mobile service is still limited, and it's more common for automobile owners to wait at the dealership until their cars are ready. That's why architects want to make waiting rooms look and feel more like home.
"It's a hospitality-driven approach," Womble said. "There is less furniture that looks like office cubicles and more home furnishings with wood, fabric and stone materials. There's more residential-style lighting and fewer bright lights like you're in a hospital."