Why the DMS Software Model Needs to Change for Independent Garages and Dealers
Independent garages and dealers are being squeezed from every angle right now, and it is not just a feeling.
Workshop margins typically run 7-20%, with staff costs eating 28-38% of turnover. Used car margins sit at 10-20% per vehicle, with finance and warranty commissions adding another 2-5%, real money that increasingly lives outside the vehicle sale itself. Add April 2025’s employer National Insurance rise from 13.8% to 15%, a flat cost every business absorbs regardless of size, and thin margins get thinner still.
Electrification is squeezing both sides
EVs generate roughly 40% less aftersales revenue over their lifetime than petrol or diesel, and aftersales is traditionally where independents make their margin. Add a projected shortfall of 35,000 qualified EV technicians by 2030, with only 20% of the current workforce trained, and independents are retraining and re-equipping out of their own margin, not a manufacturer’s.
On the sales side, that same shrinking service tail makes every EV harder to price and stock with confidence, right when there is less margin elsewhere to absorb a bad call.
Meanwhile, the software hasn’t moved
Most garage and dealer software still works the way it did a decade ago: a licence fee, per seat, for a place to store customers, vehicles, stock and invoices. A fixed cost every month, regardless of whether that month was good or bad. At these margins, that is a much harder cost to justify.
This mirrors a bigger shift across business software generally. Andreessen Horowitz found that platforms embedding financial products into their software can multiply revenue per customer by 2-5x, with 20-50% higher overall revenue than those charging pure software fees. The global embedded finance market is projected at roughly $156 billion in 2026. Software across construction, healthcare, field services and agriculture is moving from "pay us to use this tool" to "we make money when the tool makes you money", because it is a genuinely better model for both sides.
"Just software" isn’t a strong enough position anymore
Software that stores records, prints an invoice, and books an appointment is table stakes now, not a differentiator. So is online booking, digital job cards, photo-based health checks, stock advertising and lead management, finance quote generation, automated reminders, integrated payment links, and basic reporting. Every serious provider already does most of that, on both the sales and service side. The providers that matter over the next few years are the ones who put value back into the business, not just charge for the baseline everyone now offers.
Doing it the other way round
That is the model we built Torque DMS on: one platform for both service and sales. It is free to use, with no licence fee sitting on top of an already-squeezed margin. We make money the way the data above suggests is the more sustainable path: finance options and live pricing intelligence on the sales side, parts sourcing built into the workflow on the service side. Revenue earned alongside the business, not charged on top of it.
The clearest example is telematics. Most garage software is passive, it records what already happened. Ours can be live: real-time engine data and diagnostic fault codes flow back into the platform, so a garage can see a fault developing and book the car in before the customer notices anything is wrong. That is not a one-off fee, it is an ongoing stream of work the software itself is generating for as long as the vehicle stays connected.
The logic is the same throughout. If we only make money when we help a business sell more effectively, price stock accurately, source parts cheaply, or catch a fault early, our incentives point the same way as our customers’, whichever side of the business they are on.
Where this goes next
A sector running on these margins, facing a structural hit from electrification on both sales and aftersales, cannot keep absorbing flat software costs indefinitely. Providers still treating themselves as a line-item expense will find that line item harder to defend. The ones who become a source of revenue and efficiency, instead of a cost of doing business, are the ones independents will choose to keep.
If you are not sure what your current software gives you back beyond storage and invoicing, that is worth asking about.