Value Investing News

The recession forced numerous consumers to have to hold onto their cars for longer than they'd 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 (as well as the market for autoloans), 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 the market will begin to show a lot more positive 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 automobile maintenance are necessary. It was simply put, "If people keep their cars longer, there is business to be had," by DriverSide CEO Jad Dunning. AutoMD reports that 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 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 department are forecasted to lose out

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 another area where dealers are planning to improve: retaining customers, instead of losing them to non-dealer shops. A lot more competitive pricing is the main tool dealerships will try to use to stop the bleeding. Contacting customers a lot 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 instead of warranty work

As you will find fewer new car sales today, it pays to shift away from a business model that depends upon warranty work. Older cars that are not nevertheless covered by warranty will need frequent service and repair, thus defining a new business model for service departments. Also, expanding dealer service departments' inventory to contain a lot 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 do not do better in accessories." The very 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.

Article Resources

Wards Auto

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