Oregon Chain



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Fighting For Business Is Dealer Service Departments

The recession has forced consumers to hold onto their cars for longer than they had planned, which is both a blessing and a curse for dealer service departments, says Wards Auto. Car sales and warranty jobs are down a lot (as well as the market for auto loans), which has prompted dealer service departments to intensify 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.

Many dealer service departments see short term gains

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. 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 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 will lose 20 percent of their expected business between now and 2013, Wards reports. This is also an area dealers need to improve in: keeping their customers instead of losing them. Better customer service is the main tool dealerships will attempt to use to stop the bleeding. In addition, expanding service to seven days per week and making more frequent contact with customers are popular ideas. Pre-paid maintenance plans and upselling extended warranties might also be necessary.

Rather than warranty work, focus on maintenance

Since there aren’t as many new car sales today, it pays to shift from business models that depend on warranty work. Older cars that are not still 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 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 follow suit.

Article Sources

Wards Auto

http://wardsauto.com/home/auto_dealers_serious_100513/

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