Luxury car dealerships hold the one-two spots on the WardsAuto 2020 Service 150 ranking.
Lauderdale BMW of Fort Lauderdale, FL, is No.1 with total fixed operations revenue of nearly $91 million last year.
No.2 is Fletcher Jones Motorcars, a Mercedes-Benz dealership in Newport Beach, CA. Its total fixed ops revenue was $71.8 million.
The WardsAuto Service 150 is a by-revenue ranking of dealership service, parts, accessories and body shop operations. The data is drawn from the annual WardsAuto 2020 Dealer 500.
The 150 dealers on the spinoff service ranking totaled $2.3 billion in parts and accessories sales, $1.5 billion in service work and $227 million in body shop repairs.
Their fixed-ops grand total: $4 billion.
Well-run service departments are a vital part of dealerships. Profit margins in the so-called back end are higher than the margins of the vehicle sales at the front end.
In dealerships with a 100% “absorption rate,” the service department revenues cover the overhead for an entire store. In reality, few dealerships reach the nirvana of a 100% absorption rate. (But a rare few actually exceed it.)
There has been industry talk that when electric vehicles become mainstream – whenever that occurs – they will cut into service-department profits.
That prediction is based on the fact that, compared with gasoline-powered vehicles, EVs have mechanically simpler drivetrains, far fewer moving parts and fewer parts to replace overall.
But Wes Lutz, a Chrysler, Dodge, Jeep and Ram dealer in Jackson, MI, questions whether the advent of EVs will bode badly for dealership service departments.
Lutz, the 2018 chairman of the National Automobile Dealers Assn., says his main service-department revenue comes from work involving tires, brakes, suspensions, alignments and electrical systems.
“And the last time I checked, you know what EVs have?” Lutz said in a speech to auto journalists. “Tires, brakes, suspensions, steering systems and electrical systems.”
We’ll see what happens when EVs make the scene in large numbers. For now, , as the WardsAuto 2020 Service 150 revenues show, dealership back shops are major profit centers.
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