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Richard Holland

Richard Holland Managing Director

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The Perfect Storm

According to this article in last week’s Detroit Free Press, the average age of vehicles owned in the U.S. continues to be on the rise. With the average now being 11.4 years, it’s becoming more important than ever for dealerships to re-evaluate their service opportunities.

Polk anticipates that the average age will continue to grow for at least another 5 years, even while car sales are also increasing. This combination of factors presents a “Perfect Storm” scenario for your dealership.  While many dealerships are focusing on (and excited about) the increase in vehicle sales, you’d be remiss to neglect the opportunities that this increase in vehicle age brings to your fixed ops department.

Polk Vice President Mark Seng was recently quoted as saying; “Customers from independent and chain repair shops should be paying close attention to their business plans and making concerted efforts to retain business among the do-it-for-me audience, while retailers have a unique and growing opportunity with potential consumers wrenching on their own vehicles.”

That “do-it-for-me audience” and those consumers who “wrench…their own vehicles” are your customers in service and parts respectively. Don’t lay low while independent and chain repair shops revamp their business plans to take advantage of these trends. This is your fixed ops department’s revenue stream. I advise every dealer to also take Mr. Seng’s advice. Analyze your business plans with a focus on customer retention in fixed ops.

Even though cars are “more reliable than ever,” according to Seng, consumers are also increasingly financing their vehicles for longer terms . These two facts in combination are boosting  this trend.  The fact remains, however, that these older vehicles  will need servicing and you need to make sure that your dealership is doing that service.

As I’ve said many times, you have the edge in this battle. From the moment of the sale or their first visit, you control the destiny of that customer. In most cases, you’ll have sold the car and will either have serviced it from the beginning or since their first service visit to you. As vehicles age, however, a consumer will feel that it’s less important to go to a dealership for that service. This happens for many reasons: their car is out of warranty, the car is older so it’s lost a little bit of that luster, or perhaps service prices are lower at an independent or chain. Your dealership is a convenient (and affordable) place for service when their car is under warranty. If you haven’t earned loyalty from these  service customers by the end of their warranty,  you run the risk of losing them.

Ensure that your service department does everything in its power to provide a great, efficient and friendly customer experience.

You can either increase the likelihood of creating a loyal customer, or you can treat them like a number on a conveyer belt. Your service department will undoubtedly be busy. Service business will increase. However,  there is no guarantee that  it will stay that way if you don’t make an effort to capture the hearts of your customers.  

Take this opportunity to sell more cars and increase your service business at the same time. Continuous process improvements and focus on building a solid loyal customer base will ensure that your dealership is well positioned to take full advantage of this combined trend of increased vehicle age and sales.

Get out of that cellar and secure your valuables. Board up the windows. Lock the doors. Take massive action to insure that you take full advantage of these opportunities. Don’t hide in the cellar and wait for the storm to end so you can then go and see what’s left for you.

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