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EFG Companies Featured Fixed Operations

In Fixed Ops, Coordination Counts

When was the last time you did a health check of your fixed operations (fixed ops) department? How is fixed ops affecting your CSI scores? Is the department helping or hurting your customer retention efforts?

According to Cox Automotive, fixed operations as a profit center is more important than ever in 2023. Dealers should see continued strong dynamics in the service lanes, with or without a recession, as owners try to hold onto their vehicles longer. While the average ticket size increased in 2022, revenue is not a guarantee. In order to be successful in fixed operations, all of the cogs must be coordinated – not only within each dealership’s service bays but across rooftops as well.

Savvy dealers take a holistic approach to fixed ops, sales and F&I with the understanding that each area of the dealership directly impacts overall dealership operations and the total customer experience. While each department might occupy a separate line item in the spreadsheet, failure to understand and capitalize on a coordinated customer service approach reduces efficiency, profitability and customer retention. Let’s look at a scenario where lack of coordination within the service department impacted the bottom line.

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Industry Trends

2023 – Focus on the Need

Retail automotive dealers are gearing up to face a variety of challenges in 2023. From economic uncertainty, fluctuating profitability targets, changing sales models, and the persistent overhang of compliance regulations, the ‘good times’ for dealers could come to a screeching halt. While some dealers will manage the transition smoothly, others will be caught off-guard. Successful agents will need to be nimble, focusing their client service models on what each dealer needs. A one-size-fits-all model will not work as the industry evolves.

Need for Consumer confidence

Over the past few years, car buyers gravitated towards the vehicle they ‘wanted’, focusing on the features and benefits of the latest models. With a recession looming and inflation rising, car buyers in 2023 are expected to scale back those aspirations and focus on the features they ‘need’ because it’s likely their current vehicle is on its last leg. This transition from ‘want buyers’ to ‘need buyers’ involves a different sales mindset for the dealer. Agents can smooth this transition for dealer clients, by providing the tools and resources they need to tap into those need-based buyers.

For example, F&I managers will need to be prepared to present the value of consumer protection products in terms of saving consumers money throughout the life of the vehicle.  By adding $25 to their monthly loan payment today, the educated consumer could save hundreds – if not thousands – of dollars tomorrow.

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Economy Industry Trends

2023 – Firing On All Cylinders

2023 will require dealer principals and their teams to fire on all cylinders to successfully weather the numerous challenges on the horizon. Economic uncertainty, evolving dealership sales models, fluctuating profitability targets, persistent staffing challenges, and continued growth in electric vehicles (EVs) are just a few of the issues which will impact retail automotive dealers.

There is plenty room for optimism for those dealers who put strategic plans in place, implement focused training protocols, bolster pricing models and fixed operations, and keep an eye on compliance. Let’s break down some of the opportunities for dealers to succeed in 2023.

EVs, sales models and customer connections

Growth in EVs and the hybrid instore and online sales model has highlighted the issue of strengthening and maintaining customer connections at the dealership. As more EV manufacturers sell direct to consumers, and consumers become increasingly comfortable buying a vehicle online, dealerships face challenges communicating with customers before, during and after the sale. Dealers who invest in implementing targeted sales processes and training will exit 2023 with more profitable businesses, greater employee retention, and stronger customer relationships.

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