The recession has forced numerous 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. Vehicle sales and warranty jobs are down quite a bit (as well as the market for automobile loan), 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 reported by Wards– carry the hope that the market will start to show a lot more positive returns.
Short term gains by dealer service departments
Consumers that end up keeping their cars for a longer time frame will inevitably run into a lot more situations where auto repair and more extensive vehicle maintenance are necessary. Simply put, “If people keep their cars longer, there is business to be had,” says DriverSide CEO Jad Dunning. AutoMD indicates that 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 is estimated to be about $ 2,500 per vehicle 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 indicates an additional area where dealers are seeking to improve: retaining customers, instead of losing them to non-dealer shops. Better customer service is the main tool dealerships will try to use to stop the bleeding. Contacting customers a lot more often and expanding service to seven days a week are other ideas. Upselling extended warranties and pre-paid maintenance plans may also be necessary.
Instead of warranty work, focus on maintenance
Given that there aren't as numerous new automobile sales today, it pays to shift from business models that depend on warranty work. Older cars not covered by warranty likely need service and repair, 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 same chain has a Sacramento, Calif., store that leads the way with accessory sales, so DeBoer hopes his dealership might be able to follow suit.
Sources
Wards Auto
http://wardsauto.com/home/auto_dealers_serious_100513/
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