Consumers Keep Service Levels High

This article initiates a series analyzing this year’s Urban Science/Harris Poll survey. The survey delves into consumer perceptions of the relevance of the traditional automobile dealership model.

This year the length of time Americans keep their cars hit an all-time record high — 12.6 years, according to S&P Global Mobility. Even those who don’t know that number likely realize there’s a huge spike in the need for auto service based on the glut of cars in dealership service bays.

The boom has come along at the perfect time for dealers. Harris data shows various factors contribute to the downturn in vehicle sales. Among the reasons survey respondents cited for delaying vehicle sales include the following — Affordability of vehicles, 67%; High gas prices, 48%; Cost to service vehicles 48%; and cost of vehicle insurance 48%.

Although GlobalData projects that in 2024 there will be 16 million light vehicles sold in the U.S. — almost a 4% increase from 2023 — month-to-month volatility may change the outcome.

Economic recession risks, tighter credit conditions and high car prices are among the factors that have caused some analysts and automaker to revise their 2024 sales projections downward.

That’s just another hit for dealers who had slim inventory but earned record profits during the global pandemic, computer-chip shortage and other supply issues thanks to built-up consumer demand. One lesson from that boom applies to service. Dealers must continually earn service customers’ loyalty, especially now that it is increasingly important to consumers.

The Importance of Service to Consumers

Consider this — the majority of survey respondents (56%) prefer to service their cars at the dealership where they bought or leased their cars based in large part on their impression of the service department . And just under half of those surveyed (46% strongly agree and 25% are neutral) like to have their cars serviced where they purchased it. It’s important to note, though, that this has increased 6% year-over-year between 2023 and 2024.

But, as we learned during the pandemic, consumers’ preferred dealers can change. That is especially true when a dealership is a distance from the customer’s home or office. Almost an equal number of survey respondents who prefer to service their cars where they bought or leased them, want service at a dealership based on a location that close to their residence or office.

The 46% of those that strongly prefer a nearby dealership for service is up 4% from a year ago. An equal number of respondents (25%) who prefer to service their vehicles where they bought or lease their cars give the same rating to dealerships near their homes or offices.

Why does that matter? Consider that 44% of respondents — 5% more respondents than a year ago — say they are committed to getting their vehicles service regularly at their dealership.

Survey results show 70% of consumers (41% strongly agree, up 5% from a year ago, and 24% are neutral) consider that car manufacturer dealerships have unique value that average repair shops don’t.

That’s great news for dealers. For now. Although service departments are currently booming as they struggle with a nationwide technician shortage, dealers need to take extra steps to keep customers satisfied.

The great news is that customer satisfaction can be easily won. Here are some of the top courtesies’ customers want —

Those relatively simple steps are easy to dismiss during service boom times, but doing so may cause a customer to service their vehicle elsewhere — even a dealer’s cross-town rival.

And that’s already a threat.

More than a third of owners prefer servicing their vehicles at another dealership of the same brand rather than where they purchased it. Here’s why:

How Dealers Can Bolster Their Service Offerings

The vast majority of dealers surveyed (93%) understand that a good service department is key to unlocking car sales. In fact, Urban Science analysts conclude that service-loyal customers are twice as likely to buy from the dealer where they service their vehicles.  To that end, (88%) have processes in place to seamlessly transfer new vehicles sales opportunities from their service lanes.

Those processes range from vehicle connectivity data (86%), customer outreach on service needs (91%) and keeping pace with EV service demands (91%).

That’s vital according to Urban Science analysts who found that dealers who tap customer engagement tactics can increase the likelihood for a new-vehicle sales from their customers by over three times.

As the auto industry learned after the pandemic, it’s important for dealers to take steps to ensure customer loyalty before they are needed.

One way to do so is to consider Urban Science’s ServiceView. It gives dealers a comprehensive look at their Service and Parts departments and helps them identify where them can improve and capture more sales.

ServiceViews’ detailed analytics dig into essential Service data to reveal insights that drive efficiency and boost performance. With a range of flexible modules, ServiceView provides a complete overview of service performance across your network and dealership.

The past few years have shown the increasingly important role a dealership’s service and parts department plays in the overall profitability of the store. ServiceView is a proven way to ensure that profit centers continue to produce outstanding results.