60% of your profit depends on your performance here.
S&P produces more than 60 percent of a dealership’s net profit, is the key to customer retention and provides a dealer’s most significant potential for growth. Because customers have so many options for auto service, improving the service lane is a critical element in any successful business plan, and you must use innovative tools and techniques to get customers coming in and coming back. Women make the decisions in most automotive purchase decisions, including maintenance and repair, so they are especially important to your service strategy.
“In addition to selling vehicles, we want to keep our customers for life. Therefore, service is the key. To provide impeccable service, we must give our professionals the tools and training to be the very best. And we’re changing the face of automotive retail in the process.”
Director — Women’s Retail Network &
Diverse Dealer Programs
Why is Fixed Ops so important to us?
SALES AND THE OTHER SALES
A dealership’s service department is often called both the “backend” and the “backbone” of the business. While Fixed and Variable Operations are located under the same roof, they are often viewed as worlds apart. NADA management instructor Bob Atwood urges owners to stop thinking of their dealerships as divided into a “sales department” and a “service department.” Atwood says the more accurate terms are a “sales department” (Variable Ops) and “another sales department” (Fixed Ops). Here’s why:
- While Fixed Operations account for 12 percent of a dealership’s total revenue, it produces more than 60 percent of the business’ net profit
- Dealerships typically gross 5 percent on new cars, 12 percent on used cars, 38 percent on parts and 70 percent in the service department
- The closing rate in Variable Operations is roughly 30 percent. However, every person walking through the service door produces revenue for the dealership
FIXED OPS FAST FACTS
- There are approximately 149,800 general automotive repair shops in the U.S.; the industry currently is valued at $29 billion. – Dun & Bradstreet
- Women request 65 percent of the service work done at dealerships. – SHE-conomy.com
- Pre-2010, the average driver used to buy 13 cars by the time he hit his 76th birthday. As of 2012, the average driver will own only 9.4 cars over the same period. – CNBC
- 60 percent of car owners report more than 100,000 miles on their current vehicles. – AutoMD.com
- The combined average age of all light vehicles on the road in the U.S. has climbed to 11.5 years. – IHS
- 66 percent of car owners plan to drive a car until it dies. – AutoMD.com
- 76 percent will use IRFs over dealerships. – AutoMD.com
- Four out of five repairs performed on cars are related to the durability of the vehicle. The average national repair costs for car is $356.04. – brandongaille.com
- Encourage your customers to opt into Dealer Maintenance Notification (DMN).
- Customers that opt in have a 60-month customer-pay service retention of 71 percent, compared to 42 percent for customers that did not renew their OnStar subscriptions.
- DMN-enrolled customers visit their preferred servicing dealer 1.8 times per year. Each visit generates an average repair order value of $189.
- Dealers in the U.S. generated $359.8 million in revenue in the last 12 months by responding to their Web site and OnStar DMN leads.
- OnStar DMN and RemoteLink is standard for five years.
“New Owner Center to Increase Satisfaction and Retention”
Look for quarterly webinar invitations posted on this site and via email.