Improved, aggressive dealer service are growing threats to independent shops

Aftermarket Business World columnist Larry Silvey says that service departments at new car dealerships are a greater threat to independent repair shops than telematics in his column, “Can dealers out service independent shops?” 

New car dealers are taking a closer look at income from service departments as profits from new car sales slip, largely due to better-informed new car shoppers. Because wholesales prices that dealers pay for new cars are available online, new car buyers are negotiating more competitively. This means dealerships can often make more money servicing vehicles over the life of the new car buyer’s ownership of that vehicle than they can selling them.

Some dealers have targeted volume selling and keeping service repair beyond the warranty period. Those that target keeping service for the life of the vehicles that they sell, links nicely with their telematics strategy. Controlling vehicle they sell from the initial sale until the car is later sold by the buyer via telematics and service is a new strategy for some dealerships.

The new business model for some dealerships is to sell as many vehicles as possible and keep customers in regularly scheduled maintenance for as long as they own the vehicle.

Silvey refers to a car dealership in Virginia that offers a wide range of free services that aren’t hidden in the cost of the vehicles they sell. This includes oil changes, towing services, state inspections, car washes, lifetime engine warranty and a guarantee to replace defective parts as long as the customer owns the vehicle. He includes how the dealership overcomes customer complaints about dealers in general and what independent service shops need to do to stay competitive. Click here to read the entire article.

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