It’s no secret that parts play an essential role in the auto industry. In light of the global coronavirus pandemic, automakers are finding that disruptions in the supply chain could cause ripples that take car dealership service departments time to recover from. Here's what your store needs to know.
Coronavirus and Essential Services
Dealers may be forced to reduce or stop showroom sales for a short time, but the service centers in many dealerships play an essential role in keeping fleets operational.
Someone has to remain in place to see that essential service vehicles such as ambulances, fire trucks, and police cruisers, as well as cars of other essential workers, are kept in working order. A disruption in the supply chain could impact these operations at unexpected times.
Already this year, most automakers have felt the strain of supply chain disruption as manufacturers in China and other countries across Asia closed factory doors. Now, most automakers in the U.S., including Detroit’s big three automakers – General Motors, Ford Motor Company, and Fiat Chrysler Automobiles – have halted normal parts distribution as of March 20th. All three have also shut down all auto manufacturing in North America for the time being.
For now, essential parts distribution is happening by volunteer hourly employment, with other workers staying home for the duration of the quarantine. In some states, like Michigan, California, and New York, all businesses that are deemed non-essential have been ordered to close their doors to stop the spread of COVID-19. The impact of this direct order may not only be seen now, it could be felt well into the later parts of the year depending on how this epidemic plays out.
Speculated Drop in Dealership Service Center Visits
According to a recent WardsAuto article, the coronavirus is likely to create some lasting impacts on dealer service centers, many of which could negate the gains shown in the recent 2020 J.D. Power customer service satisfaction survey.
J.D. Power executive vice president of U.S. automotive retail practice, Chris Sutton, speculates that the current percentage of work not getting done, which already frustrates customers and is due to a part being unavailable 20% of the time, will only increase.
“That 20% could dramatically increase due to parts suppliers’ extended shutdowns in China and other locations. When parts are unavailable, customer satisfaction [can] significantly decline,” said Sutton.
Another worry that you may find your store facing is a general decrease in service center business. With cars being driven less, necessary services such as oil changes and tire rotations will occur less often. If your service center is struggling to hold on to business due to COVID-19 or statewide non-essential business closures, you may have to find other ways to keep your bottom line above water.
What Do These Changes Mean for Your Dealership?
If you rely heavily on your service department for revenue, but are seeing a marked decrease in fixed operations, it may be time to start looking into other approaches you’re currently not taking. Though no one knows how long the coronavirus pandemic is going to affect businesses, you can rest assured that there are essential services relying on vehicle maintenance. Additionally, when it’s safe to come out again, you’re going to want to be ready for the upswing.
One way you can do this is by shifting your focus to an often underserved group of important car buyers: subprime borrowers. These prospects make some of the most loyal customers, because they remember who was there for them when the chips were down. You can be sure that these buyers are going to need your help getting into a vehicle after the economic downturn.
At Auto Credit Express, we can help you continue to drive business to your store. We’ve been a leader in the subprime automotive space for over 20 years, and we want to get you the prospects you’re looking for. To see what we can do to help your sales when you need them most, simply fill out our online contact form, or get in touch with us by phone at 888-535-2277.