With used vehicles accounting for a larger share of the U.S. automotive financing market, it’s time for your car dealership’s service department to shine. Manufacturers and their dealer partners can increase service department effectiveness and profitability by making it a more rewarding experience.

The Latest Auto Financing Data

The recently released Q3 2019 State of the Automotive Finance Market report from Experian highlighted some interesting findings surrounding used cars:

  • Used vehicles account for 55.15% of the U.S. financing market, which is up 2.4% year-over-year.
  • Consumers, even those financing used cars, are still relying on longer loan terms. The average used auto loan term checked in at 64.89 months, compared to 69.28 for new car loans.

Both of these factors scream dollar signs for dealership service departments.

Furthermore, according to Automotive News, there are over 272 million vehicles on U.S. roads. NADA data, meanwhile, shows that service and parts gross profit at franchised new car dealerships has gone up every year since 2012. In 2018, service, parts, and body shop gross profit accounted for 49.6% of total gross profit at franchise dealers.

Tips to Improve Your Dealership Service Department

Service department revenue is clearly a key component of a dealership’s bottom line. Here are some tips to improve service at your store:

  • How to Increase Dealership Service Department Effectiveness and ProfitabilityHave a process – A profitable and effective service department has a defined process in place that they stick to every time. The CBT Automotive Network recommends that your store’s process should focus on these three areas: timing, quality, and consistency. You have to get people in and out and perform service in a timely manner, as well as set time lines that can be adhered to in order to keep customers satisfied. Your dealership also has to emphasize quality in all aspects of the service process, from performing the maintenance to relationships with customers. Ultimately, you have to be consistent with your store’s service procedures each and every time in order to deliver consistent results.
  • Digitize – When digitization is discussed in the automotive industry, the focus tends to be on the shopping and sales processes. There’s plenty of room for it in the service department, however, and it’s all in the name of making things more convenient for your customers. Two focal points that J.D. Power discussed in their 2019 Customer Service Index Study were online scheduling and text messaging. The study showed that all generations save for Pre-Boomers displayed an increased preference for internet scheduling and a decreased preference for phone scheduling. Meanwhile, it revealed that 34% of customers prefer to communicate via text message, yet only 9% of service departments have adopted this practice.
  • Evaluate as you go – Your service department needs to set clear goals, while performance needs to be constantly evaluated to track progress. To accomplish this, rely on key performance indicators that are important to your store, and use historical data to establish realistic goals. Additionally, you have to make progress visible – think weekly, bi-weekly, or monthly emails – to improve accountability and generate interest in accomplishing your goals.

The Bottom Line

With used vehicles becoming a bigger part of the market, there’s no time like the present to focus on improving processes in your car dealership’s service department. Delivering better experiences will hopefully lead to improved customer satisfaction and loyalty, which in turn equals more profit.

Speaking of improving processes at your store, Auto Credit Express wants to help you accomplish exactly that. We’re a real-time special finance lead originator that also offers new and used car leads through our partnership with CarsDirect Connect. Plus, our other products and services, from our BDC to our direct mail campaigns, are designed to help dealers succeed.

Learn more by giving our team a call at 888-535-2277 or filling out our contact form online. We look forward to hearing from you!