Possibly since the dawn of the first dealership, dealers have known the importance of building repeat business through the service bay. The more the customer relies on your dealership for all their vehicle needs, the more likely they will return for that repeat purchase, creating a cycle that can last for as long as the customer is driving. However, that golden cycle of purchase-service-repeat seems more elusive than ever.
According to XTime Metrics and Cox Automotive, for service departments at U.S. dealer franchise locations, the Repair Order Volume Index in January 2022 decreased month over month by 9.0 percent from December 2021, while the Repair Order Revenue Index increased 1.6 percent during the same time frame. Repair order volume remains well below pre-pandemic levels, but revenue per repair set another record high. The service bay was less busy, yet revenue continued to boost the dealership’s overall bottom line, generating an average of $490 in revenue per repair order.
Service revenue proved so lucrative for retail automotive dealers in 2021, that six of the country’s largest dealers notched a 12.6 percent increase in the fourth quarter of 2021 vs. 2020, according to company filings. Clearly, measurable revenue can be driven in the service bay.
But there is a potential risk to that revenue. Cox Automotive notes that 70 percent of car buyers do not return to the dealership for service and maintenance, resulting in a dramatic loss in revenue and failure to build a repeat-buyer relationship.
Thanks to the pandemic, the overall volume of repair orders being processed at U.S. franchised dealerships continues to be lower compared to the months prior to the shut down as many consumers continue to delay having their vehicles serviced. Whether due to lack of use (working from home) or lack of funds (job loss), the specific reason for the decline in repair orders is likely the result of many factors.
So, what can dealers do to make that golden cycle a reality? One tried and true method is attaching a pre-paid maintenance product to every sale. This has helped dealers for the last few decades strengthen that customer connection and boost that revenue opportunity. But, what if the maintenance plan provided by the dealership doesn’t provide the services that the majority of customers find most valuable? Or, how can a dealership offer a special promotion on the maintenance plan while demand is high?
EFG Companies sought to tackle these challenges with its own Maintenance Value Program. Beginning this month, dealers signed up for MVP with EFG Companies now have ultimate control over services, pricing and promotions. Backed by EFG’s proprietary dynamic rating system, dealers using MVP can add or drop services, set pricing levels, and offer promotions in as little as 15 minutes to deliver the right package for every customer.
MVP gives dealers greater flexibility to adjust for market and seasonality swings, enabling salespeople to nimbly respond to consumer needs while increasing high-value service revenue and customer retention.
After two years of pandemic-hampered sales and limited inventory, retail dealers are seeking opportunities to generate revenue while providing market-differentiating service. The technological advancements delivered with MVP accomplish both, and we are already developing the roadmap for utilizing this rating system across more products to give dealers even greater control of their F&I product offerings in real time.
MVP Pre-paid Maintenance provides three tiers of reimbursement and service levels, with specific services and product pricing determined by the dealer. With seamless online administration through EFG’s national award-winning DRIVE platform, dealers can also show a customer’s claim history, quickly process service requests, and submit claims.
Sample customizable elements:
- Quantity and type of service
- Oil & Filter
- Tire Rotation
- Engine Air Filter
- Cabin Air Filter
- Reimbursement Increments
EFG Companies brings a wealth of industry expertise, business acumen, and tools to drive value for our dealer clients. We’re not just your F&I provider – we are your business partner. Contact us today to learn more about our profitable solutions that can drive success for your business in 2022.