Dealers are making changes to their fixed operations departments to keep up with the with their customers’ needs, because it’s important for dealers to keep customers in their service lanes and at their parts counters.
says average parts and service department accounts for 13% of dealer revenue, but contributes 72% of bottom line profit. Many dealers are 100% service absorbed – fixed operations covers the total cost of the dealership’s overhead.
The headwinds facing dealers are twofold. Customers are holding onto their vehicles longer. The average of vehicles on U.S. highways is 11-years. Once the vehicle is out of warranty many owners are turning to independent repair shops. Second, the economic downturn on 2008 caused owners to delay repairs or resort to making repairs themselves.
To maintain or even increase service business, dealers have lowered prices, developed fast service lanes, and offered extended hours of operations including being open on Saturdays.