With many dealerships facing headwinds this year due to interest rates and new vehicle prices, the Fixed Ops department has been picking up the slack. Historically, commercial and fleet vehicles are largely underserved due to dealerships lacking the facilities and the bandwidth to take on work in this vehicle segment. However, when a conscious effort to cater to this customer segment is made, the opportunity to maximize Fixed Ops profitability is significant!
“In the last few years, we have learned that dealers do not survive on profitability from car sales but profitability from their Fixed Operations. This rings true now more than ever. Well, what is more essential than ensuring your vehicle can safely take you where you need to go. With that being said the ability to drive gross profit through Service and Parts is more important than ever. If a dealer does not have a clear and focused strategy for this then 2023 will be a challenge.” – James Grogan, Senior Vice President of Client Success | Dynatron Software
Ford Leading the Pack
Ford appears to be leading the pack, asking dealerships to invest in commercial-focused facilities called “Elite Commercial Service Centers” featuring 24+ service bays, mobile service vans, and expanded hours. Tim Baughman, general manager of Ford Pro North America said in an interview with Automotive News, “It’s really going after significant unmet needs in the commercial service marketplace”.
Chris Gulbrandson, president of Apple Autos in Apple Valley, Minnesota opened the first Elite center in January. Apple Autos invested upwards of $15M on the land, building, and equipment according to Automotive News, and they are already seeing a return on their investment. By March of this year, the commercial service center was profitable with commercial service gross profit up 13 percent over 2022.
How Your Dealership Can Tap Into Commercial and Fleet Vehicle Service
Plumbers, HVAC, construction workers, and other professional fields that heavily utilize their commercial vehicles to service customers prioritize the uptime of their fleet. As people and businesses are keeping their vehicles longer, preventive maintenance becomes paramount as vehicle downtime impacts their bottom line.
Even before you decide to invest in upgrading your facility, you can market to this customer segment and begin driving them to your dealership with strategic advertising and perks such as extended hours when possible. Fleet and commercial vehicle maintenance scheduling should be done on an asset-by-asset basis to prevent breakdowns and ensure warranty terms are being met.
Ed Roberts, Chief Operating Officer of Bozard Ford told Dynatron Software, “The key to tug on heartstrings with anyone that owns commercial fleets… is to minimize their downtime and if we can do it for them during company meetings or overnight and minimize the downtime of those vehicles, the opportunities are endless. That is what creates the loyalty”. Bozard Ford boasts the largest mobile service fleet in the country, with 10 trucks and 1 van. The commercial fleet vehicle segment makes up for 65% of their mobile business and 22% of their Fixed Ops gross revenue. When it comes to growing your commercial fleet business, Ed suggests “think outside the box, think about pool companies, pest control companies, landscaping companies, those are the companies you should be reaching out to. When your mobile guys are out there and they see a truck they’re not servicing, take a picture of it and that’s their next contact”.
Dynatron Software is Your Strategic Partner for Fixed Ops Profitability
Dynatron Software makes running your Fixed Operations easier and more profitable. As we enter into Q2 2023, it’s no secret that Fixed Ops profitability is expected to largely offset declines in the sales department. Turning to your service drive to pick up the slack is what every dealership should be doing to ease the Sales Department strain. The road to meeting your goals runs through your Service Department and price optimization is your ticket maintaining and even increasing your revenues in 2023!
Dynatron’s foundational solution, PriceSmart, digests complex DMS data making it easily actionable for optimizing price, maximizing ELR, and improving profitability. PriceSmart focuses on Fixed Ops labor and parts price optimization, pricing compliance, and price erosion to help you increase your CP ELR.
Get started by finding out the hidden opportunities that exist within your dealership! Schedule a meeting with us here.