The year 2024 brings a wave of change for dealerships, testing their resilience and adaptability. As slow sales of new vehicles and the rise of electric vehicle (EV) repair take center stage, dealerships find themselves competing more with independent repair shops. With this dynamic landscape in mind, we’re addressing the most significant challenges dealerships will face this year – and how to make informed choices on capital equipment, staffing and training.
1. Owners Will Keep Older Cars Longer
With skyrocketing prices and interest rates up to 10% on new car loans, owners are keeping their current rides for longer, with an increased service frequency. According to MarketWatch, just 22% of Americans can afford the average cost of a brand-new car, which now hovers around $48,000.
This financial barrier is a primary factor driving the surge in repair volumes at service centers, as highlighted in a recent Cox Automotive Report.
Cox Automotive reveals that the average number of vehicle service visits increased from 2.3 in 2021 to 2.5 times last year. And with the average vehicle age hitting an all-time high of 12.5 years, it’s safe to assume that the demand for service and repair will continue its upward trajectory.
2. Electric Vehicle Service Work Will Increase
Over 1 million EVs were sold in 2023. This means dealers must prepare for the surge in electric vehicle service. While some dealers have taken initial steps like hiring trained technicians and upgrading equipment, it’s clear that more resources are needed to meet the rising demand. Notably, the Cox Report sheds light on the current state of EV service, revealing:
- 71% of dealers have added technicians certified in high-voltage training
- 67% of dealers have invested in infrastructure to support EV service
- Only 28% of dealers believe that EVs will require more service compared to internal combustion engine (ICE) vehicles
However, the actual data debunks the notion that EVs require less service. EV owners reported an average of 2.6 service visits per year, slightly higher than the 2.3 visits reported by ICE vehicle owners.
3. Renewed Emphasis on Customer Service
What aspect of your customer service experience tends to leave customers most frustrated? And more importantly, what steps are you taking to address these concerns?
According to the Cox Report, it’s disheartening to learn that nearly half of all customers are dissatisfied with at least one aspect of the service. The top frustrations include:
- Service taking longer than expected
- Staff pushing additional services
- Appointment scheduling challenges
- Prices for work exceeding estimates
- Lengthy waits for available appointments
To win back customer trust and satisfaction, consider investing in additional training, leveraging technology, or upgrading equipment to tackle these common complaints head-on.
4. Repair Shop Competition
While dealerships still hold the top spot for service visits, their market share is declining. In 2023, they accounted for 30% of all service visits in the U.S., a significant drop from the 35% they held in 2021. General repair and service stations claim 28% of the visits, with tire repair stores, body shops, and specialty shops making up the remainder.
But here’s the twist: for the first time ever, general repair shops have overtaken dealerships as the preferred service provider due to location, prior experience, cost, convenience, and the genuine rapport between customers and staff. Independent shops have effortlessly outpaced dealerships, creating a new era in the world of service providers.
How Rotary Can Help
While there may not be a single solution, seizing the opportunity presented by the growing demand for services can pave the way for sustainable revenue growth. Whether expanding your workspace with additional bays or optimizing existing resources with advanced equipment that streamlines repair work – like our SPOA10-AV Two-Post Asymmetric Lift with All-Vehicle Lift Arms, R1090 Pro 3D Wheel Alignment System or R3AC80 dual-gas A/C Cart – we can help.
Discover how Rotary is Serving the Shop so your dealership can stay ahead of these and other present and future challenges. Visit Rotary at the NADA 2024 Show February 2-4 in Las Vegas, Nevada, at booth# 2401W.
You can also check out rotarysolutions.com/nada2024 for a full show preview, highlights on the latest innovations in vehicle service equipment and more!