The recession has forced many consumers to hold onto their cars for longer than they’d prepared, which is both a blessing and a curse for dealer service departments, says Wards Auto. Auto sales and warranty jobs are down quite a bit (also as the market for auto loans for bad credit), which has prompted dealer service departments to intensify their efforts to market their services to the public. Increases in ad spending – by as much as 30 percent for some dealers, as outlined by Wards– carry the hope that the market will begin to show a lot more good returns.
Short term gains by dealer service departments
Consumers who keep their cars for a longer time period will inevitably run into a lot more situations where auto repair and a lot more extensive vehicle maintenance are necessary. To put it simply, “If people keep their cars longer, there is business to be had,” says DriverSide CEO Jad Dunning. AutoMD explains that is likely nearly half of drivers in a recent poll have driven their current cars a lot more than 100,000 miles. The short-term added repair costs that tends to go hand-in-hand with such increased mileage is estimated to be about $ 2,500 per car owner, said AutoMD President Shane Evangelist.
But long term, dealer service departments are forecasted to lose out
J.D. Power and Associates think that dealer service departments could lose as much as 20 percent of their expected business between now and 2013, Wards reports. This is also an area dealers need to improve in: keeping their customers instead of losing them. More competitive pricing is the main tool dealerships will attempt to use to stop the bleeding. Expanding service to seven days of the week and making contact with customers more often are also some ideas. Pre-paid maintenance plans and upselling extended warranties might also be necessary.
Instead of warranty work, focus on maintenance
It pays to shift from a business model that depends on warranty work as there are fewer new auto sales today. Older cars that aren’t still covered by warranty will need frequent service and repair, thus defining a new business model for service departments. Expanding dealer service departments’ inventory to have more accessories is a goal dealers like Sid DeBoer of Medford, Oregon’s, Lithia Motors have in mind. He said to Wards he is “frustrated we don’t do better in accessories.” The exact same chain has a Sacramento, Calif., store that leads the way, so DeBoer hopes his dealership can follow suit.
Resources for the article
Wards Auto
http://wardsauto.com/home/auto_dealers_serious_100513/
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