Editorial: Time to focus, improve dealers’ fixed operations

This article was originally published HERE

New-vehicle sales may hog the spotlight, but smart dealers understand that fixed operations is the engine that drives most successful franchised stores.

The same trends that have upended the new-vehicle side — inventory shortages, digital retailing and pricing transparency, and rapidly growing electrification — are now heading to service and parts. Dealers should take full advantage of this transition period to overhaul their strategies, including rethinking some of the foundational principles of how this vital part of their business operates.

Every franchised auto dealership works differently, of course, but the challenges most face in their service operations are remarkably uniform, including insufficient numbers of trained technicians, customer retention and satisfaction rates and difficulty obtaining parts. There is little that dealers can do about parts shortages, but the remaining issues are particularly ripe for a fresh approach.

Consider the role that well-qualified technicians play in a fully functioning and profitable service department. Dealerships have suffered a shortage of techs for years as increased training requirements, the high cost of tools and the physically demanding nature of the work have offset the job’s appeal.

Some progressive dealers have had success with tool-leasing programs that give trainees access to a full line of equipment in exchange for a minimal weekly fee that goes away if the tech stays on the job for a set period. Others have scored by recruiting technicians from marginalized groups and building a welcoming atmosphere that focuses on constant training and teamwork. Dealers should also ask themselves whether flat-rate pay helps or hinders building a cohesive team of service technicians.

Another area in need of an overhaul at many dealerships is service pricing transparency. Just as digital retailing has transformed new-vehicle sales, so, too, does it hold promise for demystifying the service process and increasing customer satisfaction. At a minimum, dealers should have set pricing guidelines that are prominently displayed and easy to understand, and they should rid their service departments of add-on fees that may pad profits but unnecessarily anger customers.

Dealers have an opportunity to revamp their fixed operations as part of the electrification transition. Service profits are good today, and they can be better tomorrow if dealers consider new ways to make service and parts better for consumers.