Some states are still inundated with the novel coronavirus, but others are holding fast with no new cases for days. There could soon be a return to work process signals the restart of the American economy. For dealers, that means customers emerging from their makeshift home offices and replacing their matured leases, trading in their out-of-warranty cars, and buying the newest model. But we can be certain that it won’t happen immediately.

Dealers are likely to see a spike in car sales once restrictions are lifted, but that will be tempered by the economic uncertainty in the US post-pandemic. But what will continue to buoy businesses is fixed ops.

As always, fixed operations are an indicator of a dealership’s health. It’s no secret that dealers who had over 100% absorption rates prior to the economic shutdown are best positioned for recovery. Car owners need maintenance and repairs. Trade-ins need to be reconditioned. New vehicle drops require a PDI inspection. But customer work is the driving force for fixed operations, and it’s the narrow road to take for your dealership’s recovery.

How Fixed Ops Will Pull Dealers Through

Of course, the sexy part of a dealership is the showroom with the shiny paint and the un-scuffed interiors. It’s easy to push sales as a recovery mechanism with the average selling price around $37,000 in 2019. Here’s the problem though: the profit won’t be there. Moving metal is important, but dealer incentives and customer sentiment, plus the overwhelming competition from other stores, will drive that selling price down either non-existent or negative profit.

The service department, on the other hand, is always poised for profit. It’s built into the structure. The higher the volume through the department, the more money your service department will earn toward the bottom line. It’s one reason for the title fixed operations.  

Then, factor in customer sentiment. Millions upon millions of Americans have applied for unemployment in the past month alone. Affordability is a huge concern and job security is still not a given for those currently employed. It’s much easier to part with a small amount of money for car maintenance and repairs than to commit to payments on a new car for five, six, or seven years.

Keep Up With COVID-19 Strategies

Once the pandemic loosens its grip, it will be important to keep up with the policies you’ve put in place. Consider it your new benchmark. Disinfect customer vehicles. Pick up and deliver service customers’ cars. Ensure social distancing is practiced for the time being.

Differentiate Your Dealership

Find something that can make your dealership’s service department stand out from the others in your area – even in your dealer group. That could be continuing to offer discounts for essential service workers or developing a subscription-based all-inclusive maintenance agreement, priority check-in, or any other unique mechanism.

Dealers everywhere are going to take the usual route of broad discounts and giveaways. With a more focused route that makes customers feel safe and special, you’ll earn their service business.

The Sales Will Come

The vehicle sales will return, of that there’s no question. Your service customers will want replacements and new clients will inquire online and in person. Those will be the next generation of service customers that will keep the dealership alive and thriving.

My point is that chasing vehicle sales as a recovery plan post-pandemic is tossing thousands upon thousands of dollars into marketing that will result in extremely slim margins. Phase that in once the economy has recovered a little more. But use your service department as your major advantage. It’s the narrow road that will be less traveled.

Agree or disagree?