It is the best of times in the automotive service business. There is so much opportunity out there that for your shop to miss out on it would be a real tragedy.
From fixed ops directors, to parts and service managers, to advisors, to techs, to lot porters…all of you should be earning the fattest paychecks you have ever seen in your career. Here is just a snapshot of why I believe the service industry is poised for a growth explosion:
- More cars on the road. There are 250 million cars in the United States; up almost 50 million in the last decade! Wow! Combine this fact with a decline of 17,000 service centers in the same time frame and you have a great formula for growth. More cars with fewer places to service them! What an opportunity.
- Older cars on the road. The average age of cars in the US is 11.7 years—that’s up by 20% from 2004 when cars averaged 9.7 years old. That means over half the cars in the U.S. are older than 11.7 years. That’s a bunch of old cars and a bunch of service needs, including tires, brakes, shocks, fluid exchanges, fuel injector cleaning, and many more.
- Over $60 billion of maintenance left on the table. Experts say $232 billion of customer-pay maintenance and repair was performed last year, while over $60 billion went unperformed. Now that’s a lot of meat on the bone. There are two effective ways to capture this lost revenue: educate the customers on their vehicle’s maintenance needs and then ask them to buy.
- People put a lot of miles on their cars. The AAA Foundation for Traffic Safety just published a massive report on American driving habits. Here are the combined statistics for the average driver:
- Driving Trips Daily: 2
- Driving Trips Annually: 730
- Trip Duration Daily: 46 minutes
- Trip Duration Annually: 280 hours
- Miles Driven Daily: 29 miles
- Miles Driven Annually: 10,658 miles
That’s a lot of stops and starts, a lot of turning and braking, a lot of idling and accelerating, a lot of wear and tear—and most of all, a lot of opportunity for your shop.
- Over 17 million new cars will hit the road in 2015. What a remarkable turnaround from the dark days of 2009 when dealers struggled to sell 10 million units. That means more make-ready, more accessories, more traffic on the service drive, more labor, and more revenue. Another factor is scrappage: the number of cars taken to the junkyard or crusher each year. Every year the automotive industry sells more units than it scraps, which means the vehicle population continues to grow.
- Expansion and Extended Hours. Several OEMs are advising their dealers to be ready for an increase in VIO (vehicles in operation). One manufacturer is suggesting dealers expand their service centers by one-third to prepare for the influx of new customers. I was in a metro area last week and at least one out of four dealers was in some phase of construction, expansion, or upgrade. Some dealers are looking at adding a second shift, with the possibility of moving all their new and used “internal” work to the night crew.
I realize I’m writing to a large and diverse audience spread out across North America and around the world. Maybe not every one of the six opportunities listed above are applicable to you…but many are. The automotive industry is growing and consumers are buying preventive maintenance.
Here are four quick tips to capture your share of the opportunity:
- Utilize the R.I.M sales process. This effective strategy divides service sales into three categories: services Related to the primary item, Immediate services that must be done right now due to imminent safety concerns, and Maintenance services that lower cost of ownership and prevent costly, catastrophic failure.
Frankly, I don’t know who came up with the R.I.M process, but it is brilliant and simple enough that any advisor can learn it quickly. I’ve got a concise, one-page explanation of the R.I.M process; send me an email and I’ll forward it to you.
- Implement a good multi-point inspection process. I know your OEM has a form that must be filled out—that’s not what I’m talking about. I mean a process; clearly defined steps that are followed on every car every time. I’m talking about a process that turns technician recommendations into service advisor sales presentations. I’m talking about getting serious with your fixed ops team so they know that adhering to the process is a condition of employment. So much has been said about multi-point inspections and so little has been done.
- Create a sales culture on the service drive. Your service advisors do many things, but at the top of the list is selling maintenance services. If they’ll do this one thing very well, then many of the other issues the shop has will fade away. One of my fixed ops friends in Canada ran the numbers for one of his import dealerships and found the advisor with the highest maintenance sales had the highest CSI and the advisor with the worst sales had the lowest CSI. I did the same study with one of my dealerships with the same results: the first year their service sales were low and so was their CSI. The second year their service sales were way up and so was their CSI.
- Tie your used car buyers to the service department—for life. You sold them the used car; it ought to be yours to service, right? The fact is that most used car buyers have their cars serviced somewhere else. I have seen many creative programs that forge a bond between the service department and the used car buyer. I promise you this; you’ll make more money servicing that car three times a year every year than you made on the one-time sale of the car.
It truly is a wonderful time to be in the automotive service maintenance business. If you’re not having a banner year in your service department, I’d sincerely like to hear from you. I work with a team of over 900 fixed ops consultants who are eager to help service centers attain maximum profitability— because nobody wants to leave any meat on the bone.