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The Future Is Your Service Lane

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Note: This blog is a combination of information from industry experts, publicly held companies and Automotive News futurists.

“For hundreds of years, the horse was the prime mover of humans, and for the past 120 years, it has been the automobile. Now, we are approaching the end of the line for the automobile because travel will be in standardized modules.” – Bob Lutz

Dealership Structure Will Change

Experts are predicting that dealerships of the future will split into thirds over the next 10 to 20 years. One third will be for mobility services, i.e, autonomous vehicles, fleet and subscription-plan management services. According to an Automotive News article, “In the new world, some consumers want group leases on one self-driving car to share or to buy monthly subscriptions that allow them to switch from one kind of vehicle to another as their needs change day to day. In addition, large fleets have emerged offering ride-hailing services to either their members or the general public. “

Another third will come from those consumers who own a personal vehicle and either use it or monetize it by renting it out when they aren’t using it.

Refocus on Service

The final third is in service. No one can predict what the future vehicle will look like, but whether it’s autonomous, electric, ride sharing or subscription vehicles they’ll have to be serviced somewhere. If the future of the dealership is mobility centers, then upping your game in service now makes perfect sense. Service has long been the most profitable part of a dealership. In the Automotive News article “Forecasting the Future of Auto Retailing” the authors predict that “for the most part, the dealership of 2030 is fleet management and distributions centers. They have the capital to invest in new tools and training for service technicians to adapt to electric, autonomous vehicles service and maintenance requirements, as well as those of rapidly proliferating drones.”

This is a good thing. Chances are that these vehicles, because of the technology, will have strict service cadences. They’re not going to let just anyone maintain, upgrade and service these vehicles. If dealers can get past selling tangible assets such as cars and trucks and look at themselves as mobility and technology centers, the possibilities are endless.

What can you do now?

Focus on your service department now!

Offer same day/next day appointments

The aftermarket competition will tell your customers that they can bring their vehicle in “today” or “tomorrow.” So your answer has to be one day.

Optimize shop productivity 

If you are at 100 percent or higher, you need to hire technicians because you can’t reduce the wait time for your customers to come in unless you have the capacity to complete the repairs in a timely manner.

Refine your appointment process 

If you are like most dealers, 80 percent of your customer pay sales start with a telephone call to your dealership. Most of these calls go to a Service Advisor. In other cases, they go to a BDC, CDC or to an appointment coordinator.

Call “no-shows” 

Everyone has customers who do not show up for their appointments. Oftentimes, they just forgot.

Call customers on special order parts

If you walk back to your parts department you most likely will find a section of bins that your Parts Manager has designated for “Special Order Parts.”

Schedule your customer’s next appointment

Before your customers leave your dealership, you should automatically schedule their next service appointments based on time and/or mileage. Give them a card with the date and time of their next appointment.

2030

If the prognosticators are correct and the future will be here by 2030, then there is no time to waste. The sooner you get your customers trained and accustomed to coming to you for service, the better off you’ll be. Automotive News reports through a COX Automotive study that franchised dealers are snagging fewer than one-third of repair orders. The average vehicle makes 2.7 service visits a year. Quick-lube shops, tire stores and independent repair outlets account for about half of these visits; dealers take 30 percent, and the rest go elsewhere — body shops, retail stores and specialist businesses.

Equity Mine Older Vehicles in Your Service Lane

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Americans Are Keeping Their Cars Longer and Longer

Americans’ concern about the state of the U.S. economy is at its lowest level on record, according to a new survey that’s been tracking the issue for decades. Gallup research this month found just 12 percent of Americans said an issue related to the economy is the most important problem facing the country. In August, the figure was 17 percent.

Despite a robust economy, increased consumer spending, and three consecutive years in which annual auto sales topped 17 million, Americans are continuing to keep decade-old vehicles running–and they’re only getting older.

What does this mean at your dealership?

Equity Mine Older Service Lane Vehicles

The age of light-duty vehicles in the United States rose 13 percent to an average of 10.5 years, according to a 2017 survey by the U.S. Department of Transportation. While this number is off the average of 11.6 years cited by research firm IHS in 2016, all signs point to America’s fleet – and its population of more than 223 million licensed drivers – growing older.

Pickup trucks, in particular, are staying on for longer. The average pickup was 13.6 years old in 2017 as compared to 11.2 in 2009. Vans jumped to 10.9 years (up 24 percent), SUVs rose to 8.5 years (up 20 percent), and cars’ average age increased to 10.3 years (up 8 percent).

Overall, the aging of the vehicle fleet suggests many households have delayed purchasing a new vehicle or have instead purchased a used vehicle. Lower-income households were most likely to hold on to older cars. On average, those reporting annual incomes of less than $25,000 drove 13-year-old cars, while those with incomes above $100,000 had nine-year-old cars.

Older vehicles, especially those bought new and driven by the Baby Boomer generation, are usually better-taken care of, have fewer miles and are more prone to visit your service department over local repair shops.

The great thing about older vehicles as equity targets is that the owner knows it’s not going to run forever. Plus, with the massive industry shift to SUV’s, you now have an opportunity to offer customers a real change from their current vehicle.

If a customer has chosen to hang on to their current vehicle, then they probably do it for cost saving, or they really like the vehicle.  Either way, getting them physically into a new vehicle with all its features and benefits is the first step to a sale.

Leasing may be an option for these customers. Leasing avoids the sticker shock, and the vehicle trade-in could cover all of the upfront transactional costs.

How PV Mines Older Vehicles

Prospect Vision has the capability to search back 15 years.  This can help the dealer source pre-owned vehicles. Plus, even if the person owned the car for 10 years, we can still show the old loan payment. This historical data can be used to show estimate trade and estimate terms for a newer vehicle based on the previous payment range. Most people are comfortable in a certain payment range.

So, there you go. Yes, customers are keeping their cars longer, but the good news is that they’re keeping the cars they bought from you longer. Sooner than later, they are going to need a new vehicle, and by maintaining diligence in the service lane you’ll be there when they do.