Unlike the periodic fluctuations in the numbers and margins of new and used car sales, service lanes provide consistent opportunities for profit. But many dealerships fail to place adequate emphasis on their fixed operations departments. By focusing on hiring quality service lane employees, experimenting with alternative pricing strategies, and evaluating key performance indicators, dealerships can increase customer retention and profits from their service lanes.
Automotive News: To maximize profit from service lane labor, some dealerships are doing away with charging a fixed priced for all repairs, regardless of their complexity. By implementing a tiered rate, depending on the amount and difficulty of the work involved, dealerships can better absorb discounts and increase profits generated through labor.
Hireology: A well-run, efficient fixed ops department can have huge profit potential for a dealership. And every great fixed ops department needs great employees. By implementing an effective strategy for hiring, dealerships can bring in quality employees, increase customer loyalty, and experience long-term success.
Digital Dealer: By evaluating several key performance indicators relating to their fixed ops departments, dealerships can identify growth opportunities and see how they stack up against the competition. These indicators include an evaluation of overall shop work mix, customer-pay maintenance penetration, effective labor rate, and shop efficiency.
Dealer Marketing: Automotive service is a $350 billion-dollar industry and revenue from fixed ops makes up almost half of the average new car dealership’s total gross profits. Still, dealerships are missing out on a lot of potential profit in the service industry. Part of the problem is that dealership service visibility is low, leaving room for non-dealer providers to take a greater share of the available revenue.
AutoSuccess: Customer loyalty is becoming more and more difficult to earn. But good communication policies in the service department can help dealerships to avoid frequent customer departures. By giving employees clear insight into the service department’s brand, those employees will adopt better communication practices and do more to retain customers.
Check back next week for another Drive to Success.