Mismanaging 4th Inventory Costs Dealers Time, Money

Under-utilized auto service departments drain profits.

Jim Roche

October 8, 2015

2 Min Read
Mismanaging 4th Inventory Costs Dealers Time, Money

Close your eyes and picture your dealership service department: phones are ringing, technicians are rushing around the shop and customers are flowing in and out.

This productivity feels profitable but actually can misrepresent how your shop capacity is really being utilized. In actuality, hundreds of thousands of dollars can be slipping away. It’s up to you to get them back.

Dealerships are typically aware of three main inventories on their balance sheets: new vehicles, used vehicles and parts. But most dealers haven’t uncovered their fourth inventory, one even more closely tied to the bottom line: time.

A service technician’s time is a powerful asset for short-term time maximization with long-term customer retention strategies.

And since facility costs are the same whether you service one car or 100, every incremental dollar your service department brings in is yours to keep. Recent Xtime analysis of more than 6,000 dealerships shows business could increase 32% by effectively promoting and pre-selling service appointments as yet-unsold inventory.

But it’s not enough to know you have unused time. You need to know when you have it. If your business is slow on Thursdays around noon, you’ll want to identify customers in need of service, using special pricing or incentives to encourage service appointments during your slow periods.

Look at successful websites such as Priceline.com or Hotels.com: price elasticity is the consumer’s friend. Offering discounted goods or incentivized services is an excellent way to drive demand and change consumer behavior.

Free car washes, tire rotations or oil changes are small prices to pay for optimized shop capacity. Again, every recaptured hour of unused service time represent pure profit.

An analytical software package will help you do this, and more, by providing a window into your shop capacity, as well as customer-communication tools, such as online scheduling.

Centralizing the department’s schedule and analyzing patterns ascertains exactly when and where your time is underutilized. You are empowered to fill those empty slots.

Having customer data at your fingertips also enhances the overall vehicle ownership experience. It enables service advisers to suggest additional maintenance or repairs, book appointments in advance to allow more time with a customer’s vehicle. The customer connects with the dealer in a convenient, accessible platform.

Studies show customers favor experience over price, and even as small as a 1% increase in customer loyalty can translate into considerable revenue.

As minutes tick by, lost profit adds up. Pay more attention to your fourth inventory. You can’t afford not to.

Jim Roche is senior vice president-marketing and managed services at Xtime.

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