The supply shortage has both directly and indirectly impacted Fixed Operations. With issues such as a lack of new vehicles, labor shortages, and skyrocketing prices for replacement parts, Fixed Ops leaders are seeing challenges in their service departments like never before. Despite these challenges, there are still areas for Fixed Ops to pick up the slack and remain profitable.
New Vehicle Shortages and Fixed Ops Profitability
Perhaps one of the most significant impacts of the supply chain crisis has been the steep decline in new vehicles on dealership lots. To offset higher production costs, new vehicle costs have increased by 4.2% year over year in January 2023, according to J.P. Morgan.
But what does this have to do with the Fixed Ops department? Customers who may have been thinking about trading in their vehicles to upgrade are actually holding onto their vehicles for longer. By the time vehicles reach 5 years old, most warranties have expired and maintenance costs begin to rise. Capturing customers with vehicles needing new tires, batteries, and other larger services is an essential way to pick up the slack caused by sales departments not selling as many vehicles.
Labor Shortages and Fixed Ops Profitability
The supply chain crisis has played a major role in making the costs of general goods and services rise significantly. As a result, many workers require wages and compensation some dealerships may not be able to accommodate, given the rise in their own costs of operating.
Fixed Ops departments can combat labor shortages with a strategic approach that not only makes your Fixed Ops more profitable, but also allows leadership to pay their technicians more. Dynatron Software’s price optimization solution, PriceSmart, helps Fixed Ops departments optimize their pricing structure while ensuring compliance amongst their technicians. In addition, our TechCF solution helps maximize the time and labor of your existing technicians to minimize downtime.
Supply Chain Impacts on Your Parts Department
As the supply chain crisis has made the cost of parts skyrocket, many dealerships have found it difficult to procure proper levels of inventory, impacting the ability of dealerships to provide timely repairs and maintenance services.
To maintain and grow their Fixed Ops profitability, dealerships should focus on providing value to customers through quality service and expertise. By offering reliable and timely maintenance and repair services, dealerships can differentiate themselves from competitors and build customer loyalty.
Dynatron Software Can Help!
Dealerships that are able to adapt to changes in global supply chains by picking up sales department slack with Fixed Ops profitability, maximize their labor forces, and increase customer loyalty will be well-positioned to capitalize on the opportunities that lie ahead.
Another strategy that dealerships can use to maintain Fixed Ops profitability is to invest in technology. By streamlining processes and improving efficiency, dealerships can reduce costs and increase revenue. A strategic partner like Dynatron Software is dedicated to making running your Fixed Operations easier and more profitable.