In Microsoft Dynamics, it is not necessary to have a separate instance for each dealer. Dynamics is designed to support multiple companies and business units within a single instance, allowing you to manage multiple entities using a single database and application environment.

Instead of creating a separate instance for each dealer, you can use Dynamics to create multiple legal entities within a single instance, each with its own financial and organizational structure. This can help you to manage and consolidate your data more effectively, and reduce the complexity and cost of managing multiple instances.

In addition, Dynamics also provides features such as data partitioning and role-based security that allow you to control access to data and functionality for different users and groups within each legal entity. This can help you to ensure that each dealer has access only to the data and functionality that is relevant to their specific needs and responsibilities.