While service and sales are all part of the dealership, I don't see an issue with treating them as separate businesses. If a dealership is doing well with charging ADMs, then they will continue to do so. If not, then they won't. Same for the service department. If they have a good reputation, then they will do well. If not then they won't. I don't think many people are going to pass on a good sales deal because they don't like the service department, or vice versa.
There are two dealerships near me, one big one off the freeway, and one much older place a mile or two off the freeway. The big dealership is going to charge more to cover all their costs. The older dealership has much lower overhead since they are older, and needs to over better deals to get people out there. They just aren't that visible. The big dealership has a much bigger and well equipped service department. So I am happy to buy from the older cheaper dealership and get service done at the modern facility.
That said, I bought my son's truck at the older dealership, and my daughter's car at the newer dealership...because they didn't have any mustangs left at the older dealership (but Ford's rebates were all the same). If/when I get a new vehicle for myself, I will likely be ordering it through the old dealership.