The recession has forced consumers to hold onto their cars for longer than they had 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 (also as the market for auto loan application), 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 begin to show a lot more optimistic returns.
Short term gains by dealer service departments
Consumers that end up keeping their cars for a longer time frame will inevitably run into 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 explains that is likely 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 that go hand-in-hand with such increased mileage is estimated to be about $ 2,500 per vehicle owner, said AutoMD President Shane Evangelist.
Dealer service departments are predicted to lose out within the long term
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 one more area where dealers are seeking to improve: retaining customers, rather than losing them to non-dealer shops. Better customer service and more competitive pricing are the primary tools dealerships will try to use to stop the bleeding. Expanding service to seven days of the week and making contact with customers a lot more often are also some ideas. It also could be necessary to upspell extended warranties and pre paid maintenance plans.
Focus on maintenance rather than warranty work
Since there aren't as numerous new vehicle sales today, it pays to shift from business models that depend on warranty work. Older cars that aren’t nevertheless covered by warranty will need frequent service and repair, thus defining a new business model for service departments. Expanding dealer service departments’ inventory to have a lot 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 can be able to follow suit.
Citations
Wards Auto
http://wardsauto.com/home/auto_dealers_serious_100513/
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