The Industry's Leading Source For F&I, Sales And Technology


Aging Drivers, Vehicles Threaten Service Profits

New research indicates that aftermarket service chains are nabbing the largest share of service business, and an aging fleet and customer base continue to threaten dealership service profits.

April 2012, F&I and Showroom - Feature

by NA

An aging customer base and the record age of vehicles on the road today are threatening dealership service profits, according to a new white paper released by DMEautomotive, a Daytona Beach, Fla.-based dealer marketing firm. The opposite is true for independent shops and aftermarket repair chains, the latter of which now accounts for the largest share of service business.

In “The Changing Service Loyalty Landscape,” DMEautomotive surveyed 4,000 U.S. vehicle owners and found that aftermarket chains are capturing the younger wave of customers, with about half of the segment’s most loyal customers falling into the 25-to-34 age bracket. Conversely, customers who described themselves as “loyal” to dealers were likely to be 60 years of age or older, and nearly half were 50 or older.

And with a significant percentage of the dealer segment’s core customers poised to exit the market, the company warned that its findings could have troubling implications for dealership service departments.

“The dealership service center is becoming a veritable senior center,” said Doug Van Sach, vice president of strategy and analytics for DMEautomotive. “If dealerships don’t replace their aging loyalists, and aftermarket stores are successful in retaining their loyalists as they move into their prime spending years, a share-of-wallet sea change is looming that would greatly favor aftermarket stores.”

Currently, the dealer segment’s core customer base drives 62 percent of its $78 billion service business. If dealerships lose and fail to replace their over-75 customer base, they could stand to lose $310 million in service business, according to the white paper. If the segment doesn’t replace customers over the age of 70, dealerships could be hit with a $3.4 billion loss in business.

The aging fleet of vehicles on the road today also is taking a toll on dealerships. DMEautomotive’s analysts identified a major dealership defection for “bread-and-butter” maintenance work such as brakes, battery and tires. Less than half (45 percent) of vehicle owners surveyed said they’d take their vehicle to a dealership for those core services, even within the first two years of ownership when the in-warranty dealership relationship is still strong.

And when vehicles hit three to six years of age, dealerships lose, on average, 47 percent of that initial business, with only 31 percent of owners saying they would select a dealership for core service work, the report concluded. By seven years or more, only 13 percent of customers said they’d select a dealership for those services.

“This white paper explores many serious, often surprising, shifts underway in the U.S. service market, where more than three in four customers and 42 percent of dollars are currently in play,” Van Sach said. “And the ‘graying’ dealer loyalist base and vehicle population are two distinct forces poised to further color the market-share picture.”


  1. 1. HOWELL CLARK [ May 08, 2012 @ 03:43PM ]



Your Comment

Please note that comments may be moderated. 
Leave this field empty:
Your Name:  
Your Email:  


So Here's the Deal

Ronald J. Reahard
Selling to Short-Term Owners

By Ronald J. Reahard
The magazine’s F&I pro responds to a question about how to build value in F&I protections if the customer says he plans on paying off his loan long before the term expires.

(Video) Selling High-Mileage VSC Plans

By Ronald J. Reahard
How do you sell a $3,000 VSC on an $8,000 car? Top trainer offers a four-step process to ensure every customer gets the protection they need.

Selling Warranty Compliance Plans

By Ronald J. Reahard

Handling the ‘Last Car’ Objection

By Ronald J. Reahard

Done Deal

Gregory Arroyo
Resolution Needed

By Gregory Arroyo
The editor shares some insider information regarding the industry’s efforts to get the Defense Department to reconsider last month’s interpretive rule regarding the sale of GAP and credit insurance to military consumers.

Rescinding the CFPB’s Auto Finance Guidance

By Gregory Arroyo
The editor debunks a few myths about the Consumer Financial Protection Bureau, then explains why the industry is on the brink of repealing the bureau’s auto finance guidance.

Still a Work in Progress

By Gregory Arroyo

It Is Unwise to Lower Your Defenses

By Gregory Arroyo

Mad Marv

Marv Eleazer
Chargeback Prevention

By Marv Eleazer
How do you respond to a customer who wants to cancel the F&I program you sold them? His Madness digs into four common reasons consumers give for wanting out of a protection plan.

Your F&I Backup Plan

By Marv Eleazer
Equipment failures can’t stop an F&I manager who is prepared for any contingency. His Madness lists four backup plans you can implement today.

Love It or Leave It

By Marv Eleazer


By Marv Eleazer

On the Point

Jim Ziegler
Sharpen Your Survival Skills

By Jim Ziegler
‘Da Man’ has a plan you can use to survive the collapse of the car business and remain profitable through the dealer apocalypse.

Sales Rock Stars Still Exist

By Jim Ziegler
Da Man says $40,000-a-month sales rock stars still exist. He says you’ll find them on YouTube and Facebook Live.

The New Stooges

By Jim Ziegler

Is Your Quick Lube Driving Away Business?

By Jim Ziegler