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Dealertrack Q&A: Future Bright for Service Departments

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Cox Automotive recently finished an extensive study of fixed operations throughout the the car dealership realm. And, despite some doom and gloom elsewhere in the auto industry (due to an overall sales decline, for example) Kai Nielsen was encouraged by the study’s findings.

After thoroughly analyzing his employer’s findings with regard to industry-wide customer service, Nielsen, the director of strategy with Dealertrack DMS feels dealerships should remain rather confident.

“There’s ample opportunity for dealerships to do more,” Nielsen said. “From my point of view on fixed operations, I’m actually really excited about the transformation that I believe we’re on the doorstep of.”

“What I’m really excited to watch is that kind of digital transformation of the service department.”

Fixed Ops Business recently spoke with Nielsen, regarding what he envisions for the near future for fixed operations, amidst a sea change of technology within the industry.

 

As told to Kelly Beaton

Self-driving cars? The industry’s momentum is heading that direction.

And, with that transformation, think how important that service department becomes to a dealership operation. Fast forward a few years, where, let’s say potentially consumers aren’t buying as many cars as they buy today, and we shift those cars out of individual owners to fleets—the Ubers and Lyfts of the world. You know, all those vehicles need to be serviced. That’s going to open up a different service dynamic. All of a sudden, we’re not necessarily thinking about servicing a consumer’s vehicle, but we’re talking about servicing fleets.

I think the smart dealers will have that long-term view on their horizon—and, “How do I set my dealership up in a manner that keeps me successful today, but prepares me for those changes that are coming down tomorrow?”

Our study uncovered that only one in three service visits are conducted at a dealership. Two out of three visits are being executed somewhere else, whether that’s Jiffy Lube up the road, or Midas, or some other alternative. So, the opportunity for dealerships to capture service business is there, no question.

Only about 41 percent of individuals, when they buy a vehicle, are actually introduced to the service department. … And that warm hand-off—which is easy, low-hanging fruit—we still have nearly 60 percent of the time where we’re not taking advantage of that in the industry.

The advanced dealerships are using data to really finetune small components of the repair process. And why do that? What it ultimately translates to is the consumer experience. It puts a dealership in a position to really set the expectations with the customer. “We really feel confident that we can get you out of here in 55 minutes, because we track that.”

Dealers have spent the last several years fine-tuning the digital transformation of the sales and F&I process. And I’m seeing our customer base taking those learnings that they’ve done in variable operations and shifting that back to fixed operations. So, I really believe that we get to the end of 2018 and you’ll have a good chunk of dealership early-adopters that are going to be doing really cool things in fixed operations, that set them apart.

You’ll move into 2019 and that starts to probably get adopted more broadly within the industry. Fast forward one more year, and I think fixed operations as a whole will have gone through the digital transformation—so it’s a fun time.”

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