OEMs Should Take After-Sales Service More Seriously

Advertising campaigns focus on new models released and special limited-time offers.

Car manufacturers target new vehicle sales heavily, and that’s what most people expect. Every carmaker wants to grab their share of the 17 million-plus new vehicles that sell in North America each year.

Despite new vehicle sales comprising more than half of a dealership’s total sales revenue (54.78 percent), it’s not a money-maker. Sales from new cars are just 24.67 percent of a dealership’s gross profit, and the average retail net profit is in the negative to the tune of almost $500 per unit!

Yet, money is being made somewhere, in the fixed operations departments. While it makes up just 13.3 percent of the total sales in the dealership, it accounts for more than half of the dealership’s gross profit.

Time for a Shift of Focus

No one will question the necessity of a car dealership selling new cars. It’s what starts the whole process, a new car customer becomes a service, parts, and body shop customer eventually trades in the car, and it’s resold as a used car. But if the retail automotive industry doesn’t make its money from selling new cars, should there be more emphasis on the departments that DO generate positive income?

OEMs should consider how their online experience caters to fixed ops customers. The landing page should have a portal for service and part department information, service booking access, and an informational section of how-to videos and vehicle care content. 
Dealerships can also target advertising toward their service customers to increase revenue and customer retention. A similarly-focused online experience should be developed for the website.

When more than half of dealers’ gross profit is generated in fixed ops, doesn’t it make sense to give it the attention it deserves?