The recession forced many consumers to have to hold onto their cars for longer than they’d planned, which is both a blessing and a curse for dealer service departments, says Wards Auto. Car sales and warranty jobs are down (as well as the market for auto loans), which has prompted dealer service departments to intensify their efforts to market their services to the public. Increases in ad spending – by 30 percent for some dealers, according to Wards– carry the hope that the market will begin to show more positive returns.
Short term gains by dealer service departments
Consumers that end up keeping their cars for a longer period of time will inevitably run into more situations where auto repair and 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 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.
Dealer service departments are predicted to lose out in the long term
J.D. Power and Associates estimate that dealer service departments could lose as much as 20 percent of their expected business between now and 2013, Wards reports. This is another area where dealers are trying to improve, keeping customers rather than losing them to non-dealer shops. Better customer service is the main tool dealerships will attempt to use to stop the bleeding. Contacting customers more often and expanding service to seven days a week are other ideas. Pre-paid maintenance plans and upselling extended warranties might also be necessary.
Focus on maintenance, rather than warranty work
Since there aren’t as many new car sales today, it pays to shift from business models that depend on warranty work. Old cars that aren’t covered by warranty anymore will need repair and service frequently changing the 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 told 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 can follow suit.
Resources for the article
Wards Auto
http://wardsauto.com/home/auto_dealers_serious_100513/
