How to Combat U.S. Sales Plateau

After years of rising demand and record-setting results, the U.S. sales momentum has come to a relative halt, as a recent in-depth article by WardsAuto notes.

At the same time, dealership inventories and incentives have increased, hindering profit margins for dealers and OEMs. This transformation has dealers scrambling to answer the critical question of how to drive profitable growth as vehicle sales plateau.

Given the customer is the focal point for profitable dealership growth, the simple answer is for dealers to find ways to increase retention rates. To do this, they need to prioritize the fixed-operations side of their business and look beyond the vehicle sale to the continuing ownership experience.

This is a critical growth opportunity. According to the National Automobile Dealers Assn.’s 2015 annual dealership profile report, fixed operations’ average gross profit of revenue is 46%, but fewer than one in three service visits take place at U.S. dealerships.

The service side of the customer journey is where dealers really can stand out and make a deep impression on vehicle owners. Today’s consumers want a great experience that includes easy scheduling, work completed when promised, good communications and fair and transparent pricing.

Dealers can provide a holistic environment via a connected ownership experience that brings customers’ online preferences to the in-store service bay through a streamlined and seamless journey.

If dealers can provide this, customers are more likely to use the dealership service shop, increasing retention rates and, ultimately, profit margins.

This has long-term implications for dealers. Consider the average car ownership lasts 11 years. During that time span, vehicles may require service between 15 to 20 times. Cox Automotive’s 2017 Car Buyer Journey report found more than half of buyers had maintenance/repair service performed after purchasing or leasing a vehicle – but nearly half of those did not return to the dealership for those services.

Among customers surveyed, scheduling difficulty and price were cited as main reasons dealerships were avoided. However, buyers who did return to their dealers for service left with higher satisfaction.

Despite customers registering higher satisfaction following dealership service, there are a few factors that often prevent dealers from fully capitalizing on the fixed-operations side of their business. First, dealers tend to hold fast to their current business practices, as they’ve been successful in the past. Additionally, dealers can delay adopting the new technologies that are driving today’s best-in-class customer experience.

The good news is that with the right…

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