Now more than ever, fixed ops are driving profitability

If you’re reading this, odds are you’re already aware of the downward trend in new car sales. In fact, Edmunds predicts that the recent decline in automotive sales may be a trend that continues for the next several years. There are loads of theories as to why this is happening, but the numbers don’t lie. It’s something all of us in the auto industry are probably aware of.

What can you as a dealer do to bolster your business against declining new car sales? Let’s take a look under the hood and explore another path to dealership profitability.

Your service lane could hold the app

According to NADA, fixed ops account for about 12% of the average dealership’s revenue but a whopping 60% of dealership profit.

Compare that to what dealerships typically gross on new cars (about 5% of their net profits, according to NADA) and used cars (about 13%). These numbers mean that service should never be treated as an afterthought. Service is a massive contributor to a dealership’s financial strength, which is especially important when fewer people are purchasing new cars. In fact, NADA found that dealerships wrote more than 310 million repair orders in 2018, with services and parts totaling more than $116 billion.

Fewer new car purchasers doesn’t have to mean fewer customers if your dealership focuses on service. After all, every single car on the road requires regular service. But with consumers having an entire universe of alternative service options to choose from, dealers need to provide a positive and effective experience that will keep customers coming back. Their 5-star online reviews certainly won’t hurt, either.

Because of its high profit potential and low overhead, focus on efficiency in your service department. Anything you can do to keep jobs flowing smoothly and customers smiling consistently will help put more money in your pocket at the end of the day.

Here’s the bottom line: your service department fuels your bottom line

Streamlining business operations, both in and out of the service lane, can keep dealerships profitable despite the decline in auto sales. And Fortellis is ready to help with that.

With Fortellis, dealers get access to options and apps that make it easier to boost fixed ops profitability. The APIs available through our platform offer more efficiency through seamless integration, while workflow-oriented APIs require less time and training for employees to learn. Take Hailer for example. It can save service departments between 4 and 5 minutes per customer when arranging transportation—and when you're averaging around 50 ROs per day, these minutes add up fast.

Our community’s domain expertise leads to more focused and innovative apps for dealers, like the Hailer app which uses Lyft’s ride-share vehicles as service transportation as a supplement, or replacement for – your shuttle and loaner fleet.

See how the Fortellis Automotive Commerce Exchange can help increase your fixed ops profitability, and beyond, in Las Vegas at NADA 2020.

Authored on Thu, 12/26/2019 - 16:22