Dealers Adapt To Changing Service Climate

- July 12, 2012

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.

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