Dealership Growth & Survival Hinges on its Aftersales Performance

The Service and Parts Departments have always been major revenue earners for dealerships.

Most dealerships rely on the Service and Parts departments to bring in a fixed income great enough to cover the entire dealerships operating costs; hence the term Fixed Operations.

Fixed operations will become increasingly important to dealership growth & survival as the effects of Covid-19 take hold and will be compounded by the additional impact of the envisioned Right 2 Repair.

According to recent studies carried out in the United States, on average, Fixed Operations revenue counted for 47.3% of dealership total gross profits. Meanwhile, new-vehicle sales only accounted for 27.8%, and used-car sales for 24.9%.

Overall, people will keep their vehicles longer, and when replacing are likely to buy down. As New Car sales decrease, there will be a corresponding drop off in sales of accessories and of Service/ Maintenance plan work in 10 to 12 months time, and that together with the potential threat of Right 2 Repair will further decrease the throughput through the Service Department and the corresponding loss of Parts Department revenue.  

Fixed Operations training is now more critical than ever to dealership success.

Robust Fixed Operations allow a dealership to make a profit even when new car sales, and units in service, are on the decline.

Even with fewer captive customers, well-trained Service Advisors and Technicians can raise revenue through better efficiencies, enhanced customer service, and upselling opportunities.

Remember too that even though vehicles have not been operated as prior to lockdown, vehicles still need maintenance according to their service schedules and manufacturers warranty requirements.

In addition, vehicles will still require repairs whether under warranty or for the customer’s cost.

Dealership operating costs are under pressure.

Dealership operating costs will not reduce by just holding less stock and retrenching staff. Many dealerships infrastructure are indebted, and a further problem is a critical shortage of skilled technicians whose competence and efficiency are crucial to the Service Department’s profitability.

The larger the Fixed Operations absorption rate, the better able the dealer to generate a profit.

Since Service and Parts Departments training can improve Fixed Operations absorption and is crucial in order to ensure the dealership achieve the dealership’s absorption rate target, then it is imperative to invest in up-skilling of the Service and Parts departments.

There are several ways that Fixed Operations up-skilling can lead to increased profits and a greater absorption rate.

Here are a few:

  • Operating Procedures: Ensuring that the entire Service Process from the time the customer makes a booking to the post-service follow-up call is streamlined, effective, understood, and entirely implemented by the Service Department.
  • Improved Productivity and Efficiency: Trained technicians work faster and fix cars right the first time.
  • Customer Satisfaction & Retention: The Service Advisor is the most crucial element in ensuring customer satisfaction and retention. Service Advisor selling up-skills are more important than ever when units in service and warranty work are on the decline. Proper training provides the sales tactics needed for success.
  • Parts Availability: Having the right mix of fast-moving parts to ensure a +93% pick rate.
  • Employee Retention: Recruiting and training new employees is expensive and time-consuming. Up-skilling the employees you already have, boosts their confidence.
  • Management: Up-skilling management to enforce processes, and enhance their data collection and interpretation allow the manager to focus on the core profitability of his department.

Get started today

The automotive industry is constantly evolving.

Having a well-trained Aftersales Division helps ensure your dealership is ready for whatever the future has in store.

Remember the cliché

Training is expensive, but what is the cost of not training?

Invest in training from Amatz Automotive today to prepare for tomorrow.

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  1. Pingback: Dealership Revenue Optimisation - Amatz Automotive

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