Report: Service Makes Up 49 Percent of Dealers' Gross Profit
September 10, 2018—Cox Automotive has now released a comprehensive report that was compiled after a survey of dealership employees and consumers was conducted to help dealerships create ways to capitalize on current consumer behavior. And as CBT Automotive Network notes, within that report, the gross profit resulting from service departments is now up to 49 percent from 45 percent just a few years ago.
The report notes that most dealerships have been able to add to their technician team, which is bringing in more business and now around 86 percent of service bays at dealerships are being used, meaning there is more of a need for employees. Consumer behaviors such as getting maintenance more often have also contributed to the success of fixed operations.
At this rate and assuming this number continues to grow, experts agree that fixed operations are now critical to the profitability of dealerships. The Cox report shows that consumers who both purchase and service their vehicles at a certain dealership are also likely to buy their next vehicles at that same dealership, thus bringing in a new sale and more profits from services.
The latest Cox report provides an interesting, in-depth analysis of the gradual change into increased fixed operations. Jim Roche of Xtime stated that “overall customer experience is the key to retention, loyalty and profitable growth,” so dealerships have the responsibility to maintain solid relationships with clients while continuing to provide excellent service in order to keep them coming back.