Challenges Auto Dealers Face For Increasing Service Profits

Challenges Auto Dealers Face For Increasing Service Profits

To grow profits in present day’s automotive environment, dealers are now concentrating on increasing their service department revenue. To achieve this goal, they have to deal with several types of challenges. Learning about them and the ways to deal with them effectively is what is needed for the growth of an automobile business.

Reduction in the volume of new vehicle sales

New vehicle sales face immense competition posed by used and off-lease vehicles. Compared to the previous year, in 2018, there has been seen a major decline in the sales of new vehicle by 2.3%. Though this downfall is not a big one but lesser sales of new car implies less warranty work in the future.

Higher quality vehicles

As CRM dealer focuses on manufacturing superior quality vehicles, their productivity is reducing. This is because service intervals are lengthening and there is a shift in work from repair to replacement.

An increase in competition

Independent market chains are experiencing a recession period. Because of the recent increase in the sales of new vehicles, the volume of automobiles that are older than 7 years and still under operation is reducing. This decline is going to continue till 2022. Experts advise chains to expand their service offerings and introduce aggressive advertising campaigns.

The major target of an auto dealer are customers who have vehicles from 4 to 6 years old. As auto dealers can’t let independent chains take away their market share, they maintain yield by capturing a bulk percentage of their entire market service potential.

A shift in the expectations of customers

In present day’s automobile business, customers are expecting a convenience-driven and a transparent experience, that traditional dealer procedures and systems are not equipped to provide.

Absence of a proper service growth strategy

Increasing service revenue requires a lot of planning and strategy. Growth needs the creation, management and execution of a strategic plan. In absence of a strategic plan, a business would not get sufficient input and direction to excel and make a consistent and sustained progress.

What are the ways by which service yield can be increased?

For better service yield, an automotive dealer needs to aim for providing complete automobile care to its existing customers. It is needed to identify, capture and communicate all service requirements. This may need modifications in the write-up, service recommendation and multi-point inspection processes.

Along with this, a business needs to use specific technologies like mobile tablets to spend adequate time with every customer. Data needs to be leveraged so that staff can easily recognize recommended repairs.


Learning about the challenges and adopting the right strategy can help in increasing market share of a business. Creating marketing programs and processes that aim on developing relationship is a fundamental part of any service yield plan.

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