Lowest Cost of Ownership Is Bad For Your Service and Parts Departments

With all the manufacturers competing for the lowest cost of ownership award, it’s never more important to focus on maximizing the opportunities you have in the service and parts department. But if you’re like most dealerships, you’re missing out on this opportunity.

While service revenue at dealerships is on the decline, overall service market revenue is expected to grow significantly over the next few years but that increase is coming from the aftermarket service and detailing facilities who are providing consumers what they want, where they want it.

On the other hand, consumers still harbor several important misconceptions about dealership service departments. That’s because too many dealerships are stepping over pennies and giving the guests the “wallet overhaul” every time they step into the dealer.

Meeting Consumer Expectations

Thanks to the internet, it’s easier than ever to investigate vehicle maintenance and repair options. Consumers turn to digital resources to find providers, check reviews and credentials, and seek special offers.

A big reason national chains and local repair shops are winning over consumers is that they’re marketing effectively on digital platforms while dealers tend to underutilize these venues. Among other things, this creates a lack of price transparency, leading most consumers to expect huge price ranges across different types of service providers and making them nervous that they’ll overpay for service.

Your cars like a bath

Have you ever wondered why your service department isn’t selling details?  These small items are services that are easy to add to the service ticket and provide value to the guests.  These are services that the guest can see and feel at the time of delivery and provide an advantage to the consumers by making the dealership a 1-stop shop.  It’s important that you have a solid detail process and on-time quality detailing service to add additional revenue and value to your service tickets.

I have seen service departments that have added a detail service to more than 20% of their service RO’s when priced competitively and provide a quality service.  Do that math…

Dealers Have A Huge Advantage

It’s important to note that consumers don’t shop for service exclusively on price. Despite declining service profits, dealers actually have the initial advantage for providing service over their competitors.

For one, new car shoppers are thinking about service long before they’ll need it, making the service department a much more important influence on the buying decision than you might expect. According to a recent Harris poll commissioned by Cars.com, 64 percent of in-market car shoppers indicate that a service department’s reputation is a factor when choosing where to purchase a vehicle.

At a dealership, consumers feel they’re getting service from a technician that’s an expert on their particular make and model, and they’re willing to pay a little more for that expertise. That’s especially important for out-of-warranty vehicles. That trust factor isn’t as high when a car owner visits a national chain or local independent shop

That’s why it’s crucial for dealers to take advantage of their reputation for quality. In the Harris poll, only 10% of in-market shoppers said they would not seek out service department reviews before purchasing a vehicle. Promoting your positive customer reviews, expert technicians and parts and labor warranties can help separate your dealership from local and national competitors, particularly for specialized repairs of off-warranty vehicles.

Get ahead of the Customer

For today’s car shopper, knowing how their vehicles will be serviced is part of the buying process. To reinforce their value in service and repair, dealerships need to get in front of customers when and where they’re shopping. Increasingly, that means online—both on your website and on third-party resources, which can help develop the credibility consumers need to feel confident about the value they’re receiving from your service department.

Because service customers are often repeat customers, maintaining these relationships is crucial for maximizing service department revenue.

Fight back against the lowest cost of ownership and become better…  Those who change with the times have never seen fixed operations revenue like they’re seeing right now.