Dealerships make most of their money on the "back end": service, parts, and bodyshop depts.
New Car depts aren't the actual profit center, though they do get mfr incentives, but volume is a big deal.
Insurance cos have pretty much killed bodyshop profits, and the internet has educated (and/or misinformed) car buyers.
Big chains, more beholden to insurance companies, have been buying private bodyshops for many years.
So, one of the problems small and small-town dealerships have is service & parts money.
Used cars might be more profitable than new ones nowadays, but that's also driven by volume.
Think of it like a bank or other huge institution: 2-4% of a billion dollars can work, but on less than a million, not so much.