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ALMOST 74 per cent of customers who visited a dealership for service in the past 12 months will buy their next car from that dealership, according to Cox Automotive’s latest Service Industry Study.

The data sits alongside results from an annual NADA dealer financial profile research study that found that service departments now make up 49 per cent of a US dealership’s gross profits, up from 45 per cent in 2012 and shows the service experience is vital for customer loyalty and repeat sales.

“While consumers are going ever further from home to purchase a vehicle, only one in three customers are willing to drive more than 18km for service,” the study said.

It said 74 per cent of service customers return to buy a car compared with only 35 per cent of customers who had no contact with the dealer’s service department.

Cox Automotive’s service experience platform in the US, Xtime, gathered data that found that customer service rates had increased at dealerships by almost 10 per cent since 2015.

Xtime’s vice-president of marketing and managed services Jim Roche said fixed operations like service departments will drive dealership profitability for the near future.

“The opportunity is ripe for dealerships to capture more service market share, but they need a better understanding of how consumers think and act when it comes to the service department,” he said.

“The insights from this study will help dealerships shape their service strategies and ultimately, improve the overall customer experience which is the key to retention, loyalty and profitable growth.”

The study found that dealership staff will also need to consider enduring consumer misperceptions around the cost of dealer services.

One major misconception is price. Cox Automotive found that most people believed the dealer service department is more expensive than its competitors.

However, the study said that new research shows dealerships are competitive compared with other service providers, particularly for common services such as oil changes.

The report also said that dealerships should watch factors that impact on customer loyalty; such as capacity issues in the workshop.

The survey said 86 per cent of franchise dealerships are approaching full capacity for single shift shops.

This has been affected by the increasing volume of OEM recall work that Cox said was “complicating the task of balancing the shop schedule of manufacturer-paid service work versus consumer pay service repair orders”.

“Moreover, dealerships will need to find ways to demonstrate the value of the service department,” it said.

 

 

 

By Neil Dowling

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