Dealer bays stand to gain significant repair opportunities from the new cars and light trucks they sell
Fort Wayne, Ind.—Consumers are currently keeping their new vehicles over 65% longer than in 2006, when the average buyer owned a new car or light truck only 4.3 years before replacing it.
“Dealer bays stand to gain significant repair opportunities from the new cars and light trucks they sell because of the lengthening new vehicle ownership cycle,” according to the latest Lang Aftermarket iReport. “This presents market challenges to independent repair shops.”
The following are highlights of the report.
Buyers Keep New Vehicles Longer
New car and light truck buyers are keeping their vehicles much longer than they did just a few years ago. As recently as 2006, buyers owned new cars and light trucks just 52 months before replacing them.
Today, with record-high new vehicle prices and lower new vehicle volume, buyers keep their new vehicles much longer, an average of 85 months. This is over 3.5 years longer than the typical new vehicle ownership cycle in 2006.
Reasons for Longer New Vehicle Ownership
Three factors are encouraging buyers to keep new vehicles longer:
• The price of new cars and light trucks continues to climb. Today, vehicles cost 30% more on average than just 10 years ago. Higher prices keep consumers from returning to the dealer showroom for a new set of wheels as soon as they once did.
• Consumers are signing up for longer loans to pay for increasingly expensive vehicles. Last year, the average new vehicle loan topped 69 months, with many running up to 80 months.
• Extending new vehicle ownership is the lack of dramatic annual styling changes. Accordingly, a buyer can keep a vehicle for many years without it looking dated.
Longer New Vehicle Ownership Impact
With new buyers keeping their cars and light trucks longer, dealers have greater opportunities to establish an extended repair relationship with owners.
As buyers hold on to their vehicles longer, they are more likely to service them at dealers rather than migrating to independent repair shops.
Dealer Bay Strategies Change
Traditionally, dealer bays have focused on warranty work and repairing the late-model vehicle nameplates they sell, especially those five years and newer.
All that changed with the 2008 economic downturn as dealers began to promote service bay business across a wide mix of vehicles nameplates and ages to compensate for the drop in the new vehicle market.
More Sweet-Spot Repair for Dealer Bays
As new buyers keep their vehicles for a record number of years, dealers can promote service bay traffic with their vehicle customers over a longer period.
Dealers now have the opportunity to service many more cars and light trucks in the repair-age sweet-spot (6 to 10 years old), the vehicle age period with the highest rates of replacement for many products.
This opportunity motivates dealers to attract older vehicles’ repair business to their bays, which gravitated to independent repair outlets just a few years ago.
Lower New Vehicle Sales
With vehicle sales averaging less than 15 million annually since the 2020 of COVID-19 (down more than 2 million per year versus 2015 to 2019), dealers have turned to service bay business and used vehicle sales to replace lower new car and light truck volume.
Developing their repair business to accommodate new and used vehicle buyers has become a primary source of income for many dealers.
Challenges for Independent Repair Outlets
As dealers combine their technical-repair capabilities with the convenience of quick service lanes, they are providing stronger competition to independent outlets.
Independent repair outlets must adapt to the lengthening new vehicle ownership cycle and the changing bay strategies of dealers, who are expanding the range of vehicle nameplates and ages they repair.
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