CDK Global

Let’s say a dealership has successfully overcome concerns of trust, fair pricing and convenience — and won back customers that had been previously lost to other providers. How easy is it to keep them coming back for service?

The numbers suggest it will take some work: shopper loyalty, according to a 2020 study conducted by the CDK Research and Insights Team, ranked dealerships (at 47 NPS) significantly behind independent service providers (at 63 NPS).

A 2020 study conducted by the CDK Research and Insights Team found that 74% of customers who opted to go outside of a dealership for service would consider visiting a dealership in the future. This is encouraging news for dealers, as it suggests there’s potential for customer behavior to change.

But what would it take to move shoppers to not only put dealerships into their consideration set, but to choose one for service? When asked about this, shoppers expressed hesitance — specifically about dealers’ ability to:

There have been many articles about how the pandemic made dealerships take a digital leap forward in 2020. For most dealerships, this means they added digital retailing tools to their websites. Did anything else change?

Surprisingly, not much. In most cases, dealerships haven’t changed their sales processes to adapt to technology and changing customer behavior. They’re still pushing the in-store appointment, ignoring online leads and offers and trying to get customers to follow the path they want them to take.

Today’s consumers demand — and deserve — a fast and modern way to buy cars. The industry has taken great strides to get there, but there’s still a long way to go. Especially when it comes to F&I.

The F&I process is time consuming. Buying a car will probably never as quick as a trip to the store, but it doesn’t need to drag on for hours either. Including F&I as part of an easier, seamless process will help you attract younger customers and transition to Modern Retailing.

It’s no secret that auto dealers are hurting for inventory right now. The lack of new vehicles at dealerships is like nothing the industry has seen before.

Independent auto dealers are making a killing right now. They snapped up inventory before the current chip shortage made it difficult to find quality used vehicles. Consumer demand led to a record 10% increase in used vehicle prices in April — the sharpest monthly increase in more than a decade.

But how long will it last? Factories will return to normal production, and when they do, supply and demand of used vehicles will return to a more equitable state.

It’s popular to talk about the chip shortage – and for good reason. The blows just keep coming. First, there’s the slash in vehicle production. Dealers who typically inventoried 600 to 700 new cars now have fewer than 50. I spoke with a dealer in California last week who literally had two new vehicles on his lot.

Then, there’s the subsequent soaring cost of used vehicles. According to Manheim, index prices are 52% higher than a year ago and are predicted to stay that way through June.

Success in the Fixed Ops department is essential for dealerships. According to the 2020 NADA Data Financial Profile, dealers rely on their Service departments for 30% of their net profits. But for customers of new cars, dealerships are seldom their first choice for service options: it’s commonly estimated that more than 70% of new-car purchasers take their service needs to a third-party mechanic.