As the clock wound down on 2022, Cox Automotive released its top 10 predictions for 2023. A trend toward greater service operations volume and higher service revenues came in at No. 8 on the annual list.
Cox Automotive Chief Economist Jonathan Smoke said at the time that vehicle affordability issues have caused more owners to maintain current vehicles, leading him to predict escalating service business this year. That prediction has played out and continues as the industry rebalances after the pandemic.
“Fixed operations saw strong revenue growth in 2022 as pricing power and strong demand led to large increases in average ticket size despite total service volumes not yet recovering to 2019 levels,” Smoke said. “Retail sales are performing better than expected in 2023, but fixed operations as a profit center continue to be as important as ever.”
Given the demand, the profitability of each dealership’s parts and service lanes should center on the customer experience, says Paul Dosescu, senior national training consultant at Assurant. Customers can obviously choose where to take their vehicles for service. And after 12 years in the industry, much of which he spent as service adviser at Carl Sewell Automotive group, Dosescu says the dealerships that will win service business are those delivering an exceptional customer experience.
“There is a lot of emphasis on bringing a modern service experience to clients who are experiencing new ways of doing business for everything, from getting a new car to getting their groceries,” he says. “These business models have a get-it-yesterday business model that customers now expect everywhere.”
Today’s service client expects accessibility, personalization, innovation, and connection. When dealerships deliver on those points, Dosescu says they will reap the rewards.
Meeting lofty expectations sounds easy, but many disruptors stand in the way, cautions Chuck Lee, parts and service director for Sam Pack Five Star Ford. He says the industry faces a continued parts shortage, a new-vehicle inventory shortage, and a national technician shortage while service demands keep growing.
“It’s like a perfect storm hitting dealerships service and repair shops,” he says. “We're swamped with vehicles and their service needs because people are keeping their vehicles longer.”
Despite industry challenges, Lee and Dosescu point out that dealership service lanes can deliver a better customer experience, fostering rich experiences that develop loyal customers by monitoring and addressing a few service trends.
Address Parts Shortages
The new-vehicle shortage amid heightened demand topped the headlines last year, while a lesser known—but equally problematic—replacement parts shortage lurked in the shadows. Parts availability, while improving from pandemic-related shortages, is still an issue in some areas of the industry, due mostly to the war in Ukraine. The United Auto Workers strike in Detroit could further hinder parts production. Shortage of replacement parts is leading to lengthened service times and increasing parts costs.
“But there is also a concern with parts being of good quality,” Lee says. “We have manufacturers on their fourth, fifth or sixth vendor trying to build a part. Sometimes the parts are no longer available. I had to tell a customer recently their car was undriveable without replacing a specific part, and I cannot get it.”
Dosescu predicts that parts challenges will grow and says no manufacturer is immune to shortages. Customers will see the same issues if they have a Ford or Lexus.
“Some brands are hurting more than others, but it is still a common theme. I was in a store recently where they waited nine months for a transmission, and it arrived damaged. There is setback after setback.”
Service managers have little control over parts availability and quality. Dosescu says that fact requires them to think creatively and communicate openly with disappointed customers.
“Service advisers and service managers are not decision-makers involved in supply chains.But we have control over how we handle the situation with the client. We can navigate choppy seas in a way that is blameless if we are upfront and transparent.”
Let’s say a customer drops off a vehicle for service on a Monday. Even if there isn’t much to report, let the customer know what’s going on with their vehicle. Dosescu advises to not wait for them to call you.
“It’s easy to convince yourself that you have nothing to report, so that call is unnecessary, but it’s important to keep the client informed. We have complete control over that. Clients expect transparency, even if the news is bad.”
Dosescu adds that parts availability challenges require creativity. “It’s not OK to wait eight to nine months for parts. You could work with the sales department to trade them out of their vehicle. Or maybe you tell them you could source an after-market part but explain that it won’t have the same warranty. Go beyond giving them a loaner vehicle and letting their car sit out back for months on end.”
Tackle Technician Shortages
Add a critical shortage of automotive technicians to the parts quality and availability challenges, and customers also wait on parts and technicians to service their vehicles.
WrenchWay reports that by the new year, there will be a shortage of approximately 642,000 technicians across automotive, diesel and collision; 79% of technicians have thought about leaving the field; and 69% think they have reached some level of job burnout.
There are many reasons behind the technician shortage, but Lee suggests it stems from lower wages the workers receive.
“We have the Ford ASSET program here. It is a phenomenal training program that draws a lot of interest,” he says. “The problem arises with the wages we pay technicians. It’s not cheap to live anymore. We need to pay young people at least $20 an hour because that’s what they can get at Walmart. This means we are paying $20 an hour for someone to grow and learn. It’s a debt expense that a lot of owners are unwilling to take on for someone to learn on the job.”
He suggests dealership owners view wages and training as an investment in the future rather than an unnecessary expense.
“The interest is there, and the schools are putting a lot of time and effort into automotive technician training programs,” he says. “But someone at the dealership needs to take the time to build these kids up. Apprenticeship programs are great, but we need to ask ourselves how much we will pay apprentices as they learn. Remember, these workers can go down the street and make $20 an hour as a cashier.”
Automation, electrification and telematics are also changing the skills technicians need, according to Lee.
“More and more of our repairs are electrical,” he says. “And electrical technicians are in high demand. The grease monkey is gone. We now need technicians skilled in technical repairs.”
Make it Mobile
Then there are the many repair jobs technicians can perform in a customer’s driveway instead of the shop. Mobile repairs and pickup-and-delivery are two areas where dealerships can deliver enhanced service.
Lee says Sam Pack is going after pickup and delivery. “We are also doing mobile service.”
The dealership has taken advantage of Ford’s mobile service opportunities, which the automaker piloted in the United Kingdom in 2017. After launching a trial program with six dealers in the U.S., Ford opened the market to the 200 dealers that offer the service today.
Under the program, Sam Pack operates a large mobile fleet-service truck and a smaller Ford Transit Connect, which can fit into parking garages. The dealership also offers Saturday and Sunday mobile service for fleets. Three technicians staff the trucks through flexible scheduling that allows them to work four days a week and earn time off by working occasional weekends.
“I have one weekend tech who works Friday through Monday and two other techs that switch off,” he says.
The technicians install accessories; perform oil changes; and replace air and cabin filters, wiper blades and more. In the future Sam Pack will change and balance tires remotely.
“We can take care of every vehicle brand with my mobile service truck,” he says. “If the truck doesn’t have the needed part, I can have it delivered.”
Lee says the program is a boon to customers who can’t fit regular maintenance into their busy schedules. “We can take care of their vehicles while they are at work; do online bill pay; and communicate about everything through text messages.”
Currently, Sam Pack mobile customers have to call in to schedule service, but eventually Lee wants to add an online scheduling service.
“Eventually I want to have 10 mobile vehicles providing,” he says. “This is the future. As service becomes more mobile, I see brick-and-mortar buildings becoming smaller. COVID-19 really kick-started that mindset.”
Dig into Digital
Digital seems to rule the world today, but Dosescu sees it as a disconnect in the service department.
“Manufacturers have also created apps where customers can do all kinds of things, including service, on their schedule. But there is an online-to-offline transition that isn’t seamless as you move from online to the service department. Customers walk into the same service department they walked into 15 years ago. The technology is available, but the tablet computer sits in a corner collecting dust.”
Customers expect more, he says. Used to ordering groceries online to pick up at the store, they don’t want to enter a service department where everything they did online before they arrived is lost.
At the dealership, customer-service managers might ask the customer for a phone number and address he or she already entered online. They may not find the appointment the customer made online because the scheduling system didn’t pull over the information.
“I’m not saying they are doing anything wrong, but there is an opportunity to create a more modern service experience for the client, one that focuses on valuing the client’s time and the effort they already made online. We have to get away from asking a customer ‘What brings you in?’, then asking them to re-explain what they already reported when they made their appointment online,” he says. “It should be easier for them to do business with us. Everyone expects us to be available when and where they need us.”
Dosescu says too often leadership doesn’t support technology implementations. But successful switches to advanced technology start at the top.
“No one likes change and too often everyone wants to hold on to the old process. But when we do that, we miss the opportunity to provide the client a modern experience.”
Convenience is the Key
Convenience is one thing today’s consumer wants, Dosescu says. “What does that look like?”
Providing loaner cars help customers get to work while their vehicles are repaired, as are mobile repairs and pickup-and-drop offs. Dealerships can answer many customer concerns with technology.
“But these things are solved by open-minded service advisers willing to go above and beyond,” he says. “When someone comes in and says ‘Hey, can you do this? Is this an option? They ask because they believe it’s a possibility. We can’t automatically say no. If everyone is asking the same thing, the dealership may need to provide a version of it.”
He says that a dealership in downtown Boston may not have space for 400 loaner cars, for instance, but it can connect with a ride-share service or shuttle company to get customers where they need to go while their vehicles are repaired.
“If we just focus on how much everyone wants from us, we miss the opportunity to provide a higher level of service. The difference between great service and good service is personalization. Personalization is what will win dealerships loyal service customers."
Originally posted on F&I and Showroom