Auto Dealers Can Fight Price Competitors, Says Cars.Com CEO

Dealership service departments that get good online customer reviews not only draw people looking for a place to get their cars fixed. They also sway consumers considering where to buy a vehicle.

That’s something Cars.com discovered after the online automotive marketplace began posting dealership reviews. Stores earning high praise from service customers benefited on both the front and back end.

“We saw customers looking at a dealership’s service-department satisfaction ratings as one of the key determinants in deciding whether to buy a car there,” Cars.Com CEO Alex Vetter tells WardsAuto. “Consumers want to know they’ll have someone who will stand behind a car throughout the ownership.”

Yet, dealership service departments face stiff competition from and often lose business to national car-care chains that run ads touting discount prices.

To counteract that, some dealerships could do more to make their service operations stand out, Vetter says.

He cites a new certification program Cars.com developed in partnership with RepairPal as helping dealers differentiate and market their back shops.

To earn and maintain RepairPal certification, a dealership completes an assessment every 90 days covering four areas: technical assessment, minimum warranty, customer satisfaction and price guarantee.

A RepairPal Certified dealer must have OEM-certified technicians; at least a 12 month/12,000 mile (19,200 km) warranty; a certain number of 4-star Cars.com service reviews; and pricing that falls within the RepairPal Estimator range.

RepairPal collects pricing information and tells Internet users what to expect to pay for various service work.

People who buy a vehicle from a franchised dealership usually return there for service and maintenance while the vehicle remains under warranty. But many of them defect to the Pep Boys and Jiffy Lubes of the world when the warranty expires.

More than 86% of cars on the road today are past warranty. A DMEautomotive study says dealers lose an average of 60% to 78% of revenue on 3- to 6-year-old cars, and 82% to 92% of revenue on cars more than seven years old.

“Consumers tell us that they leave dealerships because they feel the prices are too high,” Vetter says. “But RepairPal data has shown us that when you look at repair orders, the franchised system is fairly priced.

“The perception is that it’s not. Any time there’s a perception imbalance between reality and expectation is when advertising and marketing can make a dent.”

National car-care chains often lay it on thick with price-based advertising.

Dealers can counter that by playing to their strengths, Vetter says. “You don’t have to have the lowest price, but you need to be competitive and transparent. In the absence of value, price becomes the sole determinant.”

Dealers should tout the quality of both their service-department staff and equipment, he says. “There’s no reason you should leave a franchised dealership that has equipment certified for the very make of the car you drive to go somewhere else.”

He adds, “The lowest price can be appealing. But if reviews show people who did business at a dealership had a great experience and rate its service department as great, that can sway buyers beyond price. That’s where the industry needs to spend more effort and energy.”

Here’s what he recommends dealers should do to play up their fixed operations:

Online automotive-service content is one of Google’s fastest growing categories, Vetter says. “It’s grown 400% on Cars.com. We’re seeing massive growth. As dealers put more content out there, there will be greater consumption.”

Cars.com debuted in 1998 as essentially a want-ads website owned by a newspaper consortium. It has since expanded to offer an assortment of automotive digital services.

Mitch Golub headed the company from its start until his retirement late last year. Successor Vetter says, “It’s impossible to replace the void of Mitch not being there on a day to day basis.”

[email protected]