The auto industry has been working against stiff auto sales. According to J.D. Power, the average number of days a new vehicle sat on a dealer lot before being sold to a customer was 74 days through March of this year, up five days from last year. However, amid the flattening automotive retail market, dealerships are turning to fixed operations to future-proof their businesses.
Fixed operations is essentially anything outside of the sales department — it’s essentially the back end of the dealerships operations and functions as the service and parts department. For the dealership, fixed ops covers their operating expenses and the money they earn is “fixed” over the year. However, for the customer, it’s getting things like their tires rotated, oil changes, or finding parts for their vehicle.
The following guide discusses how the automotive industry can increase profitability and ROI through the dealerships fixed-ops department.
Why Is Automotive Car Sales Struggling
According to BBC News, there are five key areas that have left the auto sales industry struggling. Before we take a look into how a dealers fixed-ops can reshape the profitability of their dealership, let’s take a look at what’s contributed to the downward spiral in auto sales.
Current Auto Industry Trends:
- decreased demand
- emissions standards
- electric car challenges
- shifting ownership
- loss of jobs
Overall, sales are down 2.3 percent, with automakers like the Detroit 3 and Toyota taking the biggest hit on the fall, AutoNews reports.
How Can A Focus On Digital Fixed-Ops Services Revamp The Auto Industry
Revenue generated by the dealerships fixed-ops department has contributed to 49 percent of dealership profits according to Nada’s annual Dealer Financial Profile research. With these kind of statistics, it’s important that your dealership does not lose site of both maintaining and growing this lucrative profit center.
For seven years in a row, the United States has experienced year-over-year sales growth. As cars age and maintenance becomes inevitable, this leaves room for your dealership to boost their revenue by writing repair tickets. Experienced service managers understand what it takes to grow their business through both good and down times, but hard data can do a lot to reinforce their beliefs.
Service departments play a key role in new-vehicle sales. A Cox automotive survey of 4,400 customers on the factors that shape their decisions on where to go for maintenance and repairs showed 39 percent were influenced by their experience at the service department.
Franchise dealers are getting less than one-third of auto repairs. The truth is, the average vehicle makes 3.1 service visits a year. Oil changes, tires, and independent repair shops account for half of these visits, this leaves room for your service department to take advantage of even basic maintenance. Independent repair shops and chains like Pep Boys are taking a lot business away from dealerships. In retrospect, dealerships need to step up their game to capture the loss in sales from customers getting basic services done like oil changes at these other shops.
In fact, studies suggest that customers who purchase a new or used vehicle, and are introduced to the service department before leaving, are more likely to bring their car back within 12 months for service. Introducing a new-vehicle buyer to your dealership’s service department is an effective way to increase your fixed ops business and build customer loyalty. Unfortunately, a survey for Fixed Ops Journal suggests that most consumers never get such an introduction and the opportunity is lost. This paint a picture for a chronic problem: Departments at dealerships — fixed ops, new- and used-vehicle sales, the finance department, the marketing team — usually operate as separate silos. This disjointed approach hinders the overall profit for a dealership.
Improve Digital Fixed-Ops Marketing To Meet Consumer Demand
With most dealerships, nearly 50 percent of your revenue comes from fixed operations. However, service and parts pages generally only makes up a mere 10 percent of a dealerships website content — with very little information listed about your fixed-operations services and benefits.
Increasing the information on your service and parts pages can increase your website traffic and build customer loyalty. Your dealership must go beyond the bare minimum if it expects to capitalize on consumer demand for these services. In fact, your website should include the content consumers are after to avoid them choosing aftermarket retailers.
Focus more on what your fixed-operations service department has to offer by including oil changes, new tires, brake pads, wheel alignments, discounted services, and promotional offers on a main service menu page. Then once the main service page has been created with your top services, you should have individual service pages created so it can speak to the service in more detail to help the consumer understand why that particular service is important to get done and what they can expect. Creating optimized individual service pages will also help them rank higher in search engine results pages (SERPS). Furthermore, redefining your website content can help you attract some of the visitors that go to independent shops and chains such as Pep Boys and Jiffy Lube.
In essence, feed the needs of your maintenance and repair customers. Most customers would be more willing to take their vehicle to a dealership for maintenance if they were given upfront information about the costs, what to expect, and possible discounts. Many customers feel like they’ll be bombarded with service charges, but your transparency can help them feel otherwise.
Dealerships can take advantage of the lucrative fixed-ops industry if they can adapt to todays consumers expectations on servicing their vehicles and ordering parts online. More importantly, dealerships should understand what they’re up against. For example, technology can be seen as leading competitor for many businesses as consumers have access to more information than ever before and except convenience and transparency. Instead of allowing this technology to work against you, have it working for you. Make it easy for consumers to download service coupons and save them to their mobile wallets. Utilize friendly text message reminders when it’s time for your customers to have work done on their car. Provide transparent pricing, and make it easy for your customers (and people who haven’t purchased a vehicle from you) to know all the services you offer and how it can bring value to their lives. Don’t focus entirely on car sales and leave your customers repairs and maintenance needs undeserved.
Why Dealerships Choose OEM Interactive For Their eCommerce & Fixed-Ops
Our goal is simple, to increase your fixed-ops revenue through our comprehensive digital fixed ops marketing programs. We understand that a dealers service bay is one of the most valuable profit centers at the dealership. OEM Interactive will help increase your dealerships service absorption by making sure it’s run efficiently. We’ll help you drive traffic away from independents, improve service retention and reduce your repair orders acquisition costs to help improve the ROI generated from your service department. If you would like to schedule a consultation, you’re invited to contact us at OEM Interactive today and discover the benefits of Digital Fixed Ops Marketing.