Getting ahead of the curve means understanding trends and speculating on how they’ll impact your business, present and future.
Many trends are updated versions of issues that have affected the auto industry for years (i.e. the economy, how long people hold onto their cars). Now, however, some trends are emerging for the first time thanks to cutting edge technology.
RevolutionParts Co-Founder & CEO Ibrahim Mesbah says an emerging issue for dealerships regards their collision-repair business. He, Owen Moon and Ed Roberts discussed fixed-ops challenges and opportunities during an AutoConverse.com program.
Tough Competition
While vehicle-collision-avoidance technology and public-safety awareness have reduced accidents, they’ve also put a dent in many dealerships’ body-shop businesses.
At the same time, Moon, Fixed Ops Digital co-founder and CEO, notes a sharp increase in collision-repair centers, especially chains.
“If you look at ABRA, Boyd, Caliber, and ServiceKing, they’ve gone from 400 total facilities to over 1,750 since 2012,” he says.
Fewer cars in need of collision service plus a more competitive market for what remains. Dealerships are feeling the squeeze from all sides.
Adapting
In response to this squeeze, it’s up to dealers to get agile. Roberts, Bozard Ford Lincoln fixed operations director, is all about flexibility. It’s a big part of his strategy to improve absorption rate, which is how much fixed operations covers overall dealership operating costs.
His motto: “100% absorption rate is 100% attainable.”
That doesn’t mean it’s easy, though. Roberts warns against trying to force customers into traditional roles. That means expanding into different services and better connecting with customers.
Online Parts Sales
Another area of fixed-operations growth is online parts sales, according to Mesbah. “Online parts sales are growing at about 12% year over year, so we’re at about $12 billion for 2019; that’s the estimated total sales online.”
With around $8 billion in parts sales through Amazon alone in 2018, there’s a booming market many dealers are missing out on.
Whether it’s to liquidate obsolescent parts or increase turnover, dealerships have an opportunity to get into the online parts industry before it’s too late.
Warranty “Test Drives”
The 2018 Cox Automotive Service Industry Study says seven out of 10 “consumers who purchased or leased from a dealer did not return for service in the past year.”
However, new vehicle warranty remains a driving factor for customer loyalty. When a vehicle is under warranty, “it’s easy for the customer to come to you,” Moon says of dealerships.
The challenge post-warranty is to keep customers from defecting to an independent auto repair shop. That means “promoting some of those late-ownership services the whole time,” he says.
The customer “test drives” the dealership’s service department during the warranty period, but it’s up to the department to sell the store’s benefits once the warranty is over.
Quality Over Quantity
Getting the right data to drive traffic to the right areas can make a difference. Boosting relevant content not only attracts users who are ready to do business, it boosts ranking through search engines organically. Content is king. Quality still is more important than quantity.
Once you’re connecting with customers, it’s time to deliver what they need.
Moon cites the importance of thinking outside traditional roles by highlighting specialty services and quality repair work.
It’s essentially a way to extend that honeymoon period customers have with dealers while the car is still under warranty. Focus on special deals and benefits dealerships offer after the warranty expires.
Ultimately, maintaining and growing a business today is about giving customers what they want and being as upfront and transparent as possible.
Modern customers are beyond savvy. They scope out a dealership online through social media and websites long before they ever set foot in the store.
But all that research doesn’t mean they always know what a dealership can offer. That’s where educating the customers and expanding services come into play.
For dealers, yes, there are fixed-ops pressures, but also opportunities, Mesbah says.
Ryan Gerardi is a 20-year industry veteran who has worked with tech startups, including HomeNet, HookLogic, and SOCIALDEALER. He heads AutoConversion, a live streaming network, and is executive producer of the AutoConverse podcast. His company website is www.autoburstmedia.com.
