The impact of the last few years on variable operations has been the main topic of conversation for quite a while and for good reason. The effects of the Covid-Era on automotive sales were immediate and left us all wondering how to navigate the continued uncertainty of low inventory, high demand, increasing interest rates, and tightening consumer budgets. Yet, for all the talk and attention we have given to the variable side, the most significant repercussions of the pandemic are yet to be felt.
Here’s what we do know:
- New car inventory is still in short supply.
- Increased interest rates make consumer access to funds more difficult.
- Inflation means less disposable income.
The full impact of these factors is yet to be felt on the service drive. Cars are staying longer on the road. According to IHS Markit, the mean year is now 12.1—a significant increase from last year. People are choosing to repair and maintain what they have rather than navigate a new purchase. Less new vehicles on the road means less opportunity to build the loyalty that happens in the first two years of ownership.
That reality comes with a price tag and a bill we will have to eventually pay.
We are heading into an unknown 2023, and it behooves us to remember that historically speaking, any slowdown in new car activity is felt in the service drive in 12-month intervals. What does this mean for the sustainability of the largest profit center at your dealership?
Here at DTVMS, we are going to make a prediction: Your service department has the potential to be your saving grace over the next few years. Because of the low new inventory, you will continue to see decreases in RO. Because of the lengthening mean-year the increase in dollars per RO will remain.
Yes, eventually, there will be a tipping point where both the RO and dollars per will normalize, but in the interim, it is vital that your local community knows to come to you. As the fallout of the pandemic continues, dealerships will rely more and more on their fixed ops to keep the lights on. The best way to do this is to create strategies that position you to take market share from your competitors sooner rather than later.
Here at DTVMS, we strive to add value not just to our direct clients but to any dealership that hears our message. We believe our partner FIXED OPS DIGITAL is the premier source for online service marketing initiatives. Owen Moon and his team are committed to increasing visibility for dealerships and fixed ops departments. Through paid efforts and organic, dealerships that utilize FIXED OPS DIGITAL are adding loyal customers and taking market share at every turn.
The FIXED OPS DIGITAL menu style approach to building content and video pages is, and continues to be, revolutionary in the industry. Their text messaging platform consistently outperforms other platforms we have encountered in the space, and their new social media suite is showing incredible results across the board.
One of the things we genuinely appreciate from our FIXED OPS DIGITAL partnership is how involved and accessible they are at any time. Their knowledge of reporting and the insight they bring is some of the most advanced in the space. We cannot speak highly enough of Owen and his team.
As has so frequently happened, our fixed op departments are about to have the spotlight shine on them again. In the best-run stores in the country, fixed ops is a huge profit center with fixed absorption at 100%. Don’t wait until it is too late; start building your strategies today by partnering with FIXED OPS DIGITAL.
Click this link to learn more and take advantage of their unique offer built exclusively for the DTVMS family.
Herb Anderson/Charity Ann