Fixed operations has become one of the most important profit centers in the dealership.
Effective labor rates continue to rise, and technology is helping shops quote more work, improve parts pricing and increase customer-pay revenue per repair order.
That is good business—until customers decide the dealership has simply become too expensive.
There has to be a ceiling somewhere.
A store can continue increasing labor rates and improving dollars per RO while appearing financially stronger, even as more customers begin taking routine maintenance and non-warranty repairs to independent shops.
That makes the long-term KPI more complicated than revenue per repair order.
Should dealers be measuring how much service business they lose after the warranty period with the same intensity they measure effective labor rate?
The most profitable repair order today may not be the best decision if it costs the dealership the customer for the next five years.
The shrinking supply of six-…
The shrinking supply of six- to twelve-year-old vehicles creates an interesting fixed-ops angle. Experian says that age group still represents more than a third of vehicles in operation, but the pool declined from roughly 104.8 million to 103.5 million in the past year. Those are exactly the vehicles most likely to be outside factory warranty and require significant repair work. If that population continues shrinking, could independent-shop competition for those customers become even more aggressive—and make dealership retention strategy more important?
Add new comment