Dip in Service Volume Is Warning Shot for Dealers

Repair volume at U.S. franchised dealers dipped in November compared to November 2022, reports Cox Automotive.

Dealers may be disappointed by the decrease in volume in the service department, a key profit center, especially after the healthy numbers reported in October. Although the current slowdown is likely due to the time of year, it should serve as a warning to dealers.

“At the end of the day, this change mostly reflects seasonality, but there are also signs that dealers could see long-term declines without taking important steps to improve the overall customer experience,” says Skyler Chadwick, director of product consulting for Cox Automotive.

Here’s the math: In November, the Repair Order Volume Index (tracked by Cox) tied its lowest point in six years with a reading of 82.1. This represents a 5.1% decrease from October and a 3.2% decrease from November last year.

The Repair Order Revenue Index for November was 133.7, reflecting a 1.5% decrease from the revised reading in October. This index shows a 3.5% increase year over year and a significant 36.4% increase from October 2019. The steady upward climb of the revenue index, in part at least, is due to overall inflation which has raised the costs of goods and services, reports Cox.

The latest report from Cox – Under the Hood: Opportunities and Challenges in the Service Industry – shows vehicle owners’ trust in dealerships is declining. For the first time, dealerships are no longer the “most preferred” service provider among vehicle owners.

“Consumer trust in the dealership service department has decreased 8 percent over the past two years. That’s significant, but it can be mitigated,” says Chadwick.

His advice to dealers: “Start by considering what improves trust — transparency. There are tools that help dealers show consumers what services and repairs are being recommended by texting videos and pictures. Consumers don’t have to wonder if dealers are telling them the truth; they can see it."