As the automotive industry continues to experience high-interest rates, slowing new vehicle sales, and falling profits, the question on the minds of many dealerships is whether their good times are coming to an end. A 2023 Industry Outlook Survey of 264 dealership executives revealed that 44% of respondents believe their profits will worsen in 2023. While dealerships experienced record growth and profitability in both 2020 and 2021, rising interest rates, potential recession, supply chain and chip issues, and vehicle affordability challenges could ultimately disrupt their profitability this year.
With new vehicle inventory levels reaching record lows due to supply chain and parts issues affecting production, dealerships are rethinking their used vehicle strategies as consumers are looking to purchase less costly vehicles. 75% of Automotive News’ survey respondents say they expect a greater emphasis on the used vehicle business even after new vehicle supply normalizes.
How Can Your Fixed Ops Department Maximize Revenue through Used Vehicle Customers
Used vehicles will ultimately need more service appointments much sooner than a new vehicle would. During the time of the sale, your sales team should be educating customers on the recommended service schedule for the vehicle they purchased depending on the model year and mileage. This will set up the Fixed Ops department to take ownership of that customer, ideally for the time they own the vehicle.
Here are some additional tips for your Fixed Ops department:
Market to Used Vehicle Customers
Keeping a used vehicle on the road requires much more attention to scheduled and preventative maintenance than models with fewer miles.
At the time of the sale, your dealership can offer coupons to encourage that customer to come back for their first oil change, tire rotation, or wiper blade replacement. Providing them with this incentive before they even drive off the lot will help your dealership stay at the forefront of the customers mind.
Your dealership can also utilize targeted marketing campaigns to send enticing offers to not only used car customers, but also to new vehicle customers!
Optimize Your Repair Pricing Strategy
Larger repair services come much sooner for your used vehicle customers compared to someone buying new. Because of this, it is important to have a pricing strategy in place to capture this business. Unlike the maintenance category, repair work is the highest-skilled work that enables your dealership greater flexibility when it comes to pricing.
In addition, price optimization in general gives management complete control over any discounts made because it cannot be done without their involvement. Doing so will increase your ELR, which directly translates into net profit!
Dynatron Software has the tools and technology to help Service Management hold technicians compliant. We provide daily data and reporting capabilities that shed light on any hidden issues and provide visibility to every transaction.
Maximize Customer Retention
Getting the job done right the first time sets a standard of excellence your used vehicle customers will come to expect from your dealership. From basic LOF (lube, oil, filter) appointments, to larger repair work, being their “go-to” dealership they trust goes a long way in maximizing customer retention, and ultimately your bottom line.
Dynatron Software is Your Fixed Ops Strategic Partner
The future of used cars presents exciting opportunities for Fixed Ops departments. As the industry experiences fluctuations and uncertainty, dealerships must adapt their strategies to stay competitive and profitable. With new vehicle inventory levels low, used cars are becoming a more attractive option for consumers, leading to increased demand for used vehicles and related services. Dealerships can capitalize on this trend by focusing on their Fixed Ops department and catering to the needs of used vehicle customers.
Dynatron Software is the strategic partner you need to take the steps outlined above and turn them into an action plan. Typical dealers see significant results within 90 days, and 5x-15x ROI each year they work with us. Get started by learning more about the opportunities that exist within your dealership.