Can You Avoid the Pitfalls of the New Car Slump?

With fewer people buying new cars due to higher interest rates, more customers are holding onto their older models. This should be a great opportunity for dealerships to win them over with top-notch service, but that hasn’t happened yet.

What can dealerships do? And what other industry changes should dealers be paying attention to right now?

In a recent episode of the Retention Roadmap podcast, we interviewed Dan Shine, who touched on these topics and more.

Dan is the Senior Editor at Automotive News, where he heads up coverage for key areas like service and parts, finance and insurance, used cars and auctions, wholesale, and retail tech. He works closely with a team of reporters to develop stories that are published online, in print, and featured in the weekly newsletters.

Below are a few of the industry trends we discussed. To catch the whole conversation, listen to the full episode.

Rethink how you connect with customers

Customer retention is of course still a big issue for dealerships across the country, especially as cars are staying on the road longer and customers are less loyal than they used to be. Despite all kinds of efforts, dealerships struggle to keep customers coming back, particularly those driving older vehicles.

The numbers tell the story: only about 30% of customers return to the dealership for service, while roughly 70% take their business elsewhere. The challenge is figuring out how to consistently bring customers back through the doors.

Shine mentions that while some dealerships have found success with creative retention strategies, these stories are more the exception than the rule. The industry is still searching for a reliable way to keep customers loyal and prevent them from jumping ship to independent shops.

To make progress, dealerships need to rethink how they connect with customers. This might mean

• Better communication
• More personalized service
• Reduced wait times
• Using technology to make the service experience as smooth as possible
• Offering value-added services, which have proven to be effective.

The key is giving customers a strong reason to stick with the dealership, especially when it comes to maintaining their older vehicles.

Adapt to evolving customers expectations for dealership interaction

The way people interact with businesses has changed, and the automotive service industry is no exception. To stay competitive, dealerships need to embrace the shift toward digital-first operations, because providing a seamless online experience isn’t just a nice-to-have—it’s a must.

For service departments, this digital transformation means customers now have higher expectations, such as:

Real-time online scheduling

Customers want to schedule their service appointments whenever it’s convenient for them. Having an easy-to-use, real-time scheduling system can help meet this demand, making the process smoother for everyone. Audit your scheduling process to make sure it’s as smooth as possible for customers.

Near-instant updates

Shine talked about how the focus has moved from weekly updates to providing continuous content, responding quickly to events. For service departments, this means keeping the lines of communication open with customers through email, text, and social media. Sending automated reminders, real-time updates on service status, and personal follow-ups can make a big difference in the customer experience.

Multi-channel communications

“We’ve become a very digital-first organization,” Shine says, underscoring the importance of meeting customers where they’re most active—on social media. Service departments should use these platforms not just to promote their services, but to interact with customers, answer questions, and build a loyal following.

Keep an eye on the rise of mobile services

Dan Shine sees mobile service as a big deal that could shake up the automotive industry. Some dealerships are jumping on board, while others are hesitant because of the costs and logistics.

Companies like Ford are pushing their dealers to offer more mobile services, and dealer groups like AutoNation are already stepping in.

Dan points out that this isn’t the first time dealerships have let opportunities slip away—like when they stopped doing windshield repairs and tire sales, which opened the door for independent shops to swoop in. He thinks mobile service could follow the same pattern, with dealerships losing customers to more nimble operators who can deliver services right to people’s doors.

He’s also keeping an eye on a new startup called Curbee, led by the former head of Tesla’s mobile service, which is trying to partner with dealerships to run their mobile services for them. Similarly there’s Spiffy, a mobile car-care service providing oil changes and other maintenance. Shine speculates that dealerships might be kicking themselves in five years for not getting in on mobile service sooner, as independent companies might dominate this space.

Where to learn more

Automotive News has a range of newsletters that keep you in the loop on everything happening in the industry. Whether you’re focused on service and parts, finance and insurance, or retail trends, there’s a newsletter for you.

For example:

• The Service and Parts Weekly comes out every Thursday and is packed with the latest updates.
• On Wednesdays, there’s the Finance and Insurance newsletter.
• Tuesdays bring the Retail Roundup with the top retail stories from the past week.

To sign up, just head to the Automotive News website and hit the subscribe button at the top, or just go straight to the subscription page here. You’ll get the latest news delivered right to you.

Get more industry insights with DriveSure’s 2023 Dealership Service Retention Report, which Dan draws data from. “I always grab a bunch of stuff from it and use it for some charts and stories and stuff,” he says. “It’s always chock full of good information.”