While sales of new vehicles may seem like the most obvious source of revenue for auto manufacturers and dealerships, older vehicles may hold the key to unlocking a new stream of income. According to a recent Automotive News article, new car sales saw a post-recession boom starting in 2010, with sales increasing every year until 2016. Overall, more than 106 million new vehicles were sold in that period. And with most basic auto warranties lasting three years or 36,000 miles, and Americans driving 12,000 annual miles on average, most of those boom-period-vehicles are now out of warranty.
In addition to regular maintenance such as oil changes and tire rotations, older vehicles with higher mileage and more wear and tear require more maintenance. According to Automotive News, “High-profit, customer-pay repairs as a result of worn-out transmissions, leaking radiators, faulty starters and alternators, clogged fuel injectors and bad sensors will be more common in the nation’s aging vehicle fleet.”
The question is, where will car owners turn for these service needs?
Opportunity is Knocking
For auto manufacturers and dealers, servicing this huge fleet of older vehicles offers a huge revenue-driving opportunity. But to tap into it, they need to differentiate themselves from the third-party vendors that many car-owners turn to once their warranty expires – from quick lube retailers to smaller garages that service multiple makers.
According to a Cox Automotive service industry study, car dealers lose 7 out of every 10 customers to independent shops when their factory warranty expires.
So why do car owners go elsewhere when the warranty runs out? According to a recent Syncron survey, most consumers believe dealers charge more for service than independent vendors. Frederick Toney, vice president of Ford’s service division, says, “We as [automakers] have to do better and offer menu pricing that gets into the total cost of the repair and helps fight back against this image that we are too pricey, too inconvenient and not transparent.”
With this potential boom in service needs for older vehicles, now is the time for auto manufacturers to invest in sophisticated technologies that enhance the customer experience as well as improve operational and financial performance. Retaining the business of new car owners for an additional year on average, for example, would drive 25% growth for dealerships.
“If you want to be competitive as a dealer, you’ve got to make yourself competitive in the marketplace.” – Frederick Toney, Service Division Vice President, Ford Motor Co.
Increasing Operational and Financial Performance
Dealerships and OEMs need to streamline their operations so they can offer competitive pricing and standout service. And, this is where the Syncron Service Cloud shines.
Expertise in Dealer Inventory Management
We believe best-in-class service is built upon part availability and that effective service parts management acts as a significant source of revenue, profits, customer loyalty and competitive differentiation. Key benefits of Syncron InventoryTM – Retail include enhanced dealer sales and profitability, streamlined and optimized relationships between dealers and the OEM and improved market leadership.
Increase Cost Efficiencies in the Entire Value Chain
Auto manufacturers must seek ways to increase cost efficiencies throughout the entire value chain, which will ultimately transform business logic, company culture and product development strategies. Syncron PriceTM is a highly scalable, cloud-based solution that efficiently captures and analyzes massive amounts of operational and service data using Machine Learning and Artificial Intelligence. This ensures the customer has a great experience, while the manufacturer is simultaneously maximizing revenue and margins.
“Of the top five reasons customers stay away from dealerships for service, four of them have to do with price.” – Jim Roche, Vice President, Cox Automotive
Ultimately, better service is tied to future sales. According to a recent Cox study, customers who used the dealer’s service department are twice as likely to return to the dealer when shopping for a new car as customers who went elsewhere for service. All the more reason to make sure customer service is up to scratch on every level.
Get ready for tomorrow today
Consumer expectations are higher than ever, and that means organizations in every industry must rise to the occasion to meet those demands and remain competitive. Auto dealers are no exception. Although they’re brick and mortar businesses dealing with tangible, high-value products, they need to provide the kind of on-demand experience today’s consumers expect in order to win or retain their business. This means optimizing operations to offer customers more value than independent shops can provide – both in terms of the bottom line, and the overall experience. Now is the perfect time for auto manufacturers and dealers to up their service game and tap into this incredible opportunity for growth.