REDWOOD CITY, Calif. — Cox Automotive Inc. has released its “2018 Service Industry Survey,” a new report that documents and analyzes the results of a survey completed by 3,550 consumers and 404 franchise dealership employees. Directors said their goal was to explore the current state of the service market and help dealerships understand and capitalize on consumer patterns when it comes to their perception of the dealer service business.
NADA research indicates the service department now comprises 49% of a dealership’s gross profit. This marks a shift in the automotive industry since 2012, when service made up 45% of dealership gross profits. In addition to service’s profit driving potential, findings from the Cox study show that the service experience is integral to customer loyalty and repeat sales, as 74% of customers who visited the dealership in the last 12 months for service are likely to return to purchase their next vehicle — compared to only 35% of customers who did not visit for service.
“With dealerships seeing a near 10% increase in all U.S. service visits since 2015, fixed operations will drive profitability for the next several years,” said Jim Roche, vice president of marketing and managed services at Xtime, a Cox Automotive brand, and author of “Fast Lane: How to Accelerate Service Loyalty and Unlock Its Profit-Making Potential.”
“The opportunity is ripe for dealerships to capture more service market share, but they need a better understanding of how consumers think and act when it comes to the service department. The insights from this study will help dealerships shape their service strategies and ultimately, improve the overall customer experience which is the key to retention, loyalty, and profitable growth,” Roche added.
According to the study, dealership personnel will also need to consider enduring consumer misperceptions around the cost of dealer services. The study also provides insight into some of the challenges dealerships have on the horizon, such as capacity issues and factors impacting customer loyalty. According to the data, 86% of franchise dealerships are approaching full capacity for single shift shops, with an increasing volume of recalls complicating the task of balancing the shop schedule of manufacturer paid service work versus consumer pay service repair orders. Moreover, dealerships will need to find ways to demonstrate the value of the service department. While consumers are going ever further from home to purchase a vehicle, only one in three customers are willing to drive more than 11 miles for service, analysts found.
The complete 2018 Service Industry Study is available here.