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Dealership service rises to 34 percent market share — potential $214 billion up for grabs

While dealership service centers are most preferred, they continue to combat perception of being overpriced and expensive, study finds

Mission, Kan.—Despite current headwinds and market conditions, dealership service centers remain resilient and continue to be among the most preferred service providers. According to the 2021 Cox Automotive Service Industry Study released this week, 34 percent of consumers prefer dealership service centers, a 1-percentage point increase from 2018, and ahead of general repair shops.

However, there is still a majority of the market dealerships (and general repair shops) aren’t capturing, translating to $214 billion in potential revenue.

Dealership service centers are the most preferred because of their existing relationships, as 55 percent of consumers say it is because the dealership knows their vehicle. On the other hand, dealerships continue to combat the perception they are overpriced and expensive.

The top barriers to returning to the dealership are not only cost, but also location according to consumer rankings, all of which makes way for what owners consider easier and more convenient options, such as general repair shops.

On top of that, nearly one-in-four consumers also say their dealership service visits take longer than expected, adding to their frustration, according to the study.

Dealerships Working Against Operational Challenges

Exacerbated by the pandemic, service departments cite part delays from manufacturers (58 percent) and finding or hiring the right technicians (45 percent) as their top operational frustrations, and both can directly impact the consumer experience, including the notion that service departments take longer than expected.

On average, dealerships cite a decline in the consumer satisfaction they deliver, with only 55 percent of dealerships believing satisfaction has improved in the past 12 months (down from 71 percent when surveyed in 2018).

Specific to staffing, 57 percent of dealership respondents say their service department is not fully staffed, and 80 percent expect these labor shortages to continue or worsen in the future. The majority (60 percent) also say the service technician is the top role they plan to grow this year, so there is a focus on investing in this area of the business.

“The industry is ripe for transforming the consumer experience,” said Tracy Fred, vice president of operations for Xtime. “Despite a challenging marketplace, opportunities exist to better leverage digital tools to deliver on and even exceed consumer expectations, while also offsetting some operational challenges.

“Elevating the entire service experience with a consumer-first mindset and the use of technology can help raise overall profits, capture additional market share and help mitigate the frustrations service departments are currently facing.” 

Opportunity Exists to Better Leverage Digital Solutions to Improve the Service Experience

Dealership service centers offering digital features have a more positive outlook. Of the dealerships saying the experience has improved in the past year, they more often offer services such as service pick-up and delivery, ridesharing, progress tracking, online cost estimates, mobile check-in, and other digital services.

Not only are they offering these conveniences, but they have the added benefit of meeting consumer demand for a more digital service experience.

Car owners particularly want the ability to schedule their appointment online, and it appears the dealership is striving to meet consumer needs there with 74 percent of dealers offering this option today.

Of those owners scheduling online, 91 percent are highly satisfied with the experience; however, a third of consumers are unsure if their service provider offers this feature, which is consistent with the 2018 Cox Automotive Service Industry Study.

Consumers also want to review and approve repair estimates online (67 percent) and access their vehicle service history (66 percent), which according to those surveyed are among the most critical digital features a service center should offer and provide an added level of transparency and convenience to the service experience.

Top Performers Excel Across Efficiency and Consumer Experience, Helping Boost Profits

Top-performing service departments have a consumer-first mindset and use technology to enhance the experience by offering digital tools and convenience-focused services, such as rideshare and reviewing and approving repair orders online. Nearly all top-performing dealers surveyed (99 percent) agree that improving consumer experience is an important focus moving forward.

“Consumers continue to stress the importance of a digital experience, and dealerships must evolve and offer flexibility by enhancing online capabilities,” said Fred. “Meeting consumer demand for convenience by considering new service lines like ridesharing also can help combat location as a barrier. These same services can also be leveraged as new staffing strategies, like enabling Lyft for service pick-up and delivery to allow your existing staff to focus elsewhere.”


About the 2021 Cox Automotive Service Industry Study

The 2021 Cox Automotive Service Industry Study included 2,502 consumers in the U.S. from ages 18-75 that have had at least one service visit in the past 12 months, and 529 franchise dealers with decision-making authority over fixed operations. For the complete 2021 Cox Automotive Service Industry Study, visit https://xtime.com/content/guide/service-industry-study/.

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