Every year the number of higher mileage older vehicles increases. And every year dealership service departments lose more market share.
Vehicle owners almost always defect to the aftermarket as their vehicles get older and accumulate more miles. What’s worse is that many service managers, advisors, and technicians just shrug their shoulders and let them go. They accept this defection as a fact of life; “it’s always been this way and it always will be,” they think.
This negative thinking is so pervasive that it becomes a self-fulfilling prophecy. They expect the customers to take their service business elsewhere, and they do!
This has got to stop.
Unless you are crazy-busy all the time, you need to hold on to aging vehicles and reach out to those who have already forsaken you. It’s not like you’re being greedy…you just want it all!
The Opportunity
Look at this graphic: the opportunity is huge—and increasing every year.
Older Vehicles
The average vehicle on the road is 12.2 years old. That’s 20% older than a decade ago. Think about that; it means half of the cars on the road are over 12.2 years old. Older vehicles need more maintenance and repair.
Higher Mileage
The average vehicle on the road has accumulated mileage of 120,500 miles—roughly 10,000 miles annually. That’s up slightly from 2013 when accumulated mileage was 115,000 miles. Higher-mileage vehicles need more maintenance and repair.
Vehicles in Operation
There are 24 million more cars on the road than there were 10 years ago—273 million vehicles. I’ve been tracking this number for almost four decades and it goes up every year. Lots and lots of older vehicles with higher mileage need lots and lots of maintenance and repair.
Domestic vs Import
In 2007, domestic vehicles made up 66.7% of all the vehicles on the road…today it has dropped to 54.4%. Conversely, import vehicles on the road have risen from 33.3% in 2007 to 45.6% today. In a few years, imports will have the largest share of the American fleet.
Okay, so what? There are a lot more domestic dealers than import dealers, so domestic service departments need to be ready. If you are a RAM dealership, realize that you might have a BMW sports car in the service bay next to a Cummins diesel pickup. The core maintenance services on these two vehicles are remarkably similar and don’t require special tools, fluids, or parts.
Action Points
Why not create a business within a business? I’m talking about a “garage” in your service department. This is really not a radical concept, because you probably installed a “jiffy lube” in your shop years ago.
Now it’s time to install a garage that works on all makes, all models, all years, all mileages…the higher the better. Just start with one or two techs. They don’t have to be OEM factory certified A-level techs (which are getting harder and harder to find). There is a bigger pool of competent, hard-working, B- and C-level techs that might jump at the chance to work in your shop.
You might want to consider a simplified maintenance menu and create a marketing piece inviting customers to bring their “other car” to your shop.
Ask the parts department to provide estimates that give vehicle owners an aftermarket option on replacement parts. They’ll likely retail for 30%-50% less and the profit margin might be greater. (I’m sure this idea will cause some of you heartburn; but remember I’m talking about older, higher-mileage cars). If they defect to an aftermarket shop, they won’t be using OEM parts. Obviously, your profit drops to zero when customers defect.
You can do this…at least give it a try. You sold them the car, it ought to be yours to service…for life!