Automotive Customers are Looking to Dealers for Service Innovation – Can Manufacturers Keep Up?

This month’s loss of transportation tycoon Lee Iacocca marked more than just the loss of an entrepreneurial legend, but the beginning of an era where the automotive industry is taking its biggest turn in decades. Over the last few years, automotive customers have changed the way they look at purchasing cars. And, from Chrysler king Iacocca to Tesla creator Elon Musk, automotive innovation and ownership has evolved drastically from the original equipment manufacturers (OEM), all the way down to the dealership.

Just look at the shifting attitudes around driving: the percentage of teens with a driver’s license has dropped in the last few decades, with more young people delaying purchasing their first car – if buying one at all. The fact of the matter is: subscription-based business models are starting to take shape, and automotive businesses are in desperate need of a transformation.

But, as auto manufacturers work to transform their organizations from the inside out to prepare for a future where subscription-based business models rule, they must also remain focused on providing an excellent customer service experience at their dealers today, laying a strong foundation that will evolve and scale as new service models unfold.

A Service Experience Where the Dealer is King

The dealer service experience is complex, and successfully retaining customers is a challenge that every auto OEM faces, especially in today’s evolving landscape for automotive customers. From having the right service parts in stock to treating each customer as an individual with unique needs, brands must continuously improve their after-sales service experiences to compete with both third-party and ecommerce providers. After all, service starts at the very first interaction and continues throughout a vehicle’s lifetime.

But, in the face of these complex challenges, nearly 60% of vehicle owners say that they use their dealer for maintenance and repairs, with more than 90% describing their most recent dealer service experience positively.

And, for many automotive customers, that dealer service usage extends past warranties. Despite the fact that about 63% do not have an extended warranty or service package on their vehicle, 70% of the ones that do have guaranteed service packages indicated that they have used their dealer for maintenance and repairs outside of warranty work. The catch here is that, following that warranty expiration, only 48% plan to continue maintenance and repairs at the dealer.

Transforming the Dealer Experience

With the shift toward subscription-based revenue, coupled with evolving customer expectations, auto manufacturers are reshaping the way they do business. Today, customers are looking to their dealers for quality repairs at a fair price. Now is the time to win the hearts and minds of consumers to ensure brand loyalty for years to come as the automotive landscape shifts drastically over the next 10 to 15 years.

But, what factors could potentially drive loyal automotive customers to leave the dealer for a third-party service provider – and what can OEMs do to increase their service-related market share? According to 90% of the vehicle owners surveyed, price is the biggest factor in choosing between the dealer and a third-party service provider. Personal relationships, speed and efficiency, location and part availability definitely play roles in the decision as well, but price far outweighed the rest.

automotive customers

With a significant amount of market share to gain on the service side of the business, automotive OEMs have a huge opportunity to capitalize on customers’ rapidly changing expectations. The good news? OEMs now have access to more data and more technology to set themselves up for success not just today, but for years to come.

The era of automotive business where the Iacoccas of the world reign supreme may be gone, but something new is stepping up in its place that is transforming the industry more than ever before. As the industry shifts to a subscription-based economy, the responsibility for maintenance and repairs is moving from automotive customers to the OEM, and this shift will completely transform dealer service as we know it today.

In the coming months and years, automotive manufacturers will not only need to implement new processes, resources and technologies, but also optimize their current infrastructure to lay the foundation for a successful future.

Syncron recently set out to understand how automotive customers view the dealer service experience today and what their expectations are for the future, surveying 500 vehicle owners across the U.S. and Europe. Their responses helped shape this report, intended to inspire and motivate auto manufacturers as they navigate today’s ever-changing customer expectations and prepare their businesses for the seismic shift to the subscription economy.