by Jason Unrau
Published 1 December 2022
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The auto service industry in the United States achieved a market value of more than $64 billion in 2021. It’s big business to service, repair, and accessorize vehicles, and the forecast is for the industry to grow another 19% in the next five years. Unfortunately, car dealerships are only capturing 34% of that market share, according to the 2021 Cox Automotive Service Industry Study.
Both trust and price are the drivers for why nearly two-thirds of car owners choose an independent repair shop over their selling franchised dealer. And while stigmas are difficult to overcome, it’s not impossible, especially with data-driven solutions that cater to the customer.
InteliChek’s market data can help dealerships capture more of the service and repair market, boosting profitability and creating long-lasting relationships with customers in these four areas.
Fosters Customer Trust in the Dealership
News stories pepper the internet recounting car owners who have been taken advantage of, oversold services, or overcharged for repairs and maintenance on their vehicle. These might be outliers, but they certainly don’t help to dispel the entrenched idea that dealerships charge too much for the service they provide to customers. But when the data is factored in, that perception quickly changes.
While car owners believe that the dealership charges around 50% more than an independent shop, the reality is that the pricing is much closer than that. Some services, like oil and filter changes or alignments as loss leaders, can often be less expensive at the franchised dealer. Across the full menu board, dealerships actually are only slightly higher in price, on average, and virtually always within 15 to 20% of their independent competition.
Demonstrating this market data to car owners will quite literally surprise them. Picture a purchaser who’s being introduced to the service department when they take delivery of a new vehicle, and seeing comparisons between local chains and their dealer’s pricing that are negligibly different. There’s no argument that dealers are better equipped to work on the vehicle, and seeing the market data shows that the dealership doesn’t have anything to hide for service pricing.
Openly comparing their pricing with others, whether it’s the lowest or not? That goes a long way to develop trust with the consumer.
Portrays an Authoritative Position
Every service advisor or service manager has presented an estimate and heard the response, “That’s too expensive. I can get that done cheaper somewhere else.” Is that true? It might be, but it’s often much less in savings than the customer thinks, and they’re foregoing the additional benefits a dealership provides.
Dealers offer shuttle services and loaner cars. Their workmanship and parts are backed by a warranty that can be done nationwide within the dealer network. They’re the experts on the make and model, and they have the specialized equipment to get the work done quickly and accurately. However, that only matters once the price objection is out of the way.
By posting market data demonstrating the dealership’s competitiveness with pricing, the primary objection is no longer centered on dollars and cents. It frees the service advisor to secure the sale using the information supporting the dealer’s service department as the best choice for their repairs.
Helps Hold the Line on Competitively Priced Services and Repairs
The price of parts has skyrocketed in recent months, even without dealer markup. Labor charges have also increased to keep pace with inflation. But for consumers, all they see is that the price has gone up. It’s this territory that results in declined services and demands for a discount.
In reality, it isn’t just the dealership that’s inflated their pricing. Manufacturers are charging more for parts and fluids across the board, whether for franchised dealers or the aftermarket. While the car owner might think they can drive to the service shop a block over for the same service at a fraction of the price, it just isn’t the case since that shop has also been hit with the same price increases.
And instead of discounting to keep the business, market data can show the vehicle owner comparisons nearby. A well-positioned dealer will often be lower on certain services – a coolant flush, for example – and slightly higher on others, like a tire rotation and balancing. With that information clearly on display from a third-party source, the case for a discount vaporizes and approved services surge.
Indicates Areas Where Price Adjustments are Necessary
Among the most important reasons for using market data is simply to ensure pricing is in line with other shops in the area. The feeling of being taken advantage of or “ripped off” stems can quickly stem from a vehicle owner approving a repair and seeing lower prices at competitors on their drive home. It might be innocent enough with the dealership unaware that the market is priced lower on certain services in their area.
The reverse is true also. The market data may show that other shops nearby are charging significantly more for the same service, meaning the dealership is leaving money on the table while providing better benefits to the consumer. Whether up or down, knowing where others are priced can help the dealership to adjust pricing to be within a margin that customers won’t object to.
Using market data for service pricing is all about retaining your current customers, attracting new ones, and keeping them satisfied. InteliChek is an easy way to build customer trust while showing value, demonstrate the benefits of choosing the dealership over non-franchised repair shops, keep the highest gross profit, and reduce instances of declined services and defecting customers.
