Article

At Your Service

The editor delves into two studies that paint a bleak future for dealership service departments and a third that says vehicle owners are there for the taking.

August 2013, Auto Dealer Today - WebXclusive

by Gregory Arroyo - Also by this author

“New Study Reveals Dealership Service Profits Threatened by Aging Customer Base” was the title of a study I came across in April 2012. It was conducted by DMEautomotive, and the automotive marketing company concluded that aftermarket repair chains and independent shops have the advantage over dealership service departments.

The reason: an aging customer base and the record age of vehicles. The study said repair chains were capturing the younger wave of customers, with about half of their most loyal customers falling into the 25- to 43-year-old age bracket. As for dealers, nearly half of their most loyal customers were 50 years old or older, a segment that drives 62 percent of the $78 million service business. Problem is, most of those customers, according to the study, are poised to exit the market.

Then there was the report AutoMD released this past January. Based on an online survey, the website concluded that, while consumers were generally satisfied with their dealership’s service department, they tended to trust independent repair shops for repairs by a two-to-one ratio. The main reason was the cost: Eighty percent of respondents said they felt overcharged for the work performed. And more than 90 percent of those polled said they believed they could save at least 10 percent by visiting an aftermarket repair shop or chain.

Based on those two studies, you’d think service departments were facing extinction. Well, I think those studies also captured opinions from consumers who were still reeling from the Great Recession. But as consumer confidence continues to build and consumers look to replace those aging vehicles, I think dealers will have a leg up going forward.

Think about it. The average age of passenger vehicles in 2011 reached 11.1 years, while the average for light trucks reached 10.4 years. And as DME also pointed out in its study, dealerships lose, on average, 47 percent of basic maintenance work when vehicles reach three to six years.

But I also wonder how much business independent repair chains were really stealing from dealerships, especially after I pulled up a Consumer Reports study from 2011. It showed that 40 percent of respondents were planning on postponing maintenance or repairs on their primary vehicle. And that’s on vehicles that had, on average, 78,000 miles on the odometer. And as we know, that’s when most vehicles are approaching major maintenance milestones that shouldn’t be ignored.

So, again, I don’t think independent repair chains and shops are going to be putting service departments out of business anytime soon, especially with people now ready to buy new cars again. But I do think there is a real opportunity for dealers to not only capture the business, but also retain that 47 percent of maintenance business they lose when vehicles reach three to six years of age.

To that point, my team came across a report from Google titled, “The Road to Winning Drivers: What Drivers Want in Automotive Aftermarket Service.” Google’s analysts sought to uncover online influences that drive maintenance decisions. Their conclusion? “Drivers are yours to win.” The reason, according to the study, is vehicle owners tend to stay with one shop due to the lack of differentiation among service providers rather than high satisfaction. In other words, no segment is knocking their socks off. 

And when Google asked respondents to list which names come to mind when they think about service, 7 percent responded Ford and Midas, while 10 percent answered Jiffy Lube. Fifty-nine percent couldn’t name a brand, while Honda, Pep Boys, Firestone, AAMCO, Toyota, AAA and Goodyear each captured 2 percent of responses. Based on the fact there are a lot of aftermarket chains listed, it would seem my theory was in jeopardy.

Well, Google also found that one in three drivers was uncommitted to a particular service provider — further evidence that customers are there for the picking. And for those who were committed to a particular service provider, 36 percent  said they don’t favor a specific mechanic. The question now is, how do we capture their business?

Well, Google also revealed that 70 million of the online searches it records every month — or about a year of video content on YouTube — are for services like changing an oil filter and brake fluid.

So, do you think you can start taking advantage of that last little nugget of knowledge? I mean, wouldn’t your site look nice and active if you could post a few videos containing service and maintenance tips? If you answered “Yes” to both questions, then keep flipping through this month’s issue. We have several sources, including Google’s head of industry for automotive, weighing in with tips for reaching service customers.

One thing you need to keep in mind: Google found that 62 percent of consumers will go online to double-check a service technician’s recommendation, and 51 percent of them are looking at online videos as part of that research. Wouldn’t it be nice if it were your videos they found?

Comment

  1. 1. Greg Furie [ December 25, 2013 @ 06:10AM ]

    Excellent article. Thank You.

 

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