Dealers continued to see demand and profit in the service center throughout October, with revenues and work volumes remaining strong despite industry-wide instabilities stemming from the United Auto Workers strike.
Service center revenues improved 0.6% from September and 3.4% from October 2022, according to Cox Automotive’s latest Xtime data report. In previous years, fixed-ops earnings have typically weakened in the months following October, benefitting modestly from the holiday season but taking a turn near the start of the new year. However, even if profits stagnate again this winter season, dealers are still making more from their repair and maintenance operations than before the pandemic, as evidenced by a 33% increase in revenue seen from October 2019 through October 2023.
Serving to further boost revenues, demand for service centers has remained strong. Many consumers have opted to either postpone their next new vehicle purchase or buy an older, preowned model so as to avoid inflated car prices and burdensomely high-interest rates. With the average age of the vehicle population growing faster than usual and the need for repair or maintenance work on the rise, dealers have consequently seen consistent demand for their service centers, even throughout the majority of the COVID pandemic. This trend continued in October 2023, during which work order volumes rose 2.9% month-over-month. Although the number also represents a 2.7% year-over-year decline, dealers remain far ahead of the four-year low seen during 2020.
Service centers present an opportunity not only to earn more profits but also to insulate dealers from economic headwinds. While car sales have fluctuated heavily in response to shifts in demand between the new and used segments, drivers, regardless of the age of their model, will always require repair and maintenance work. Ensuring a dealership’s fixed-ops team is equipped to provide the best and most efficient service will be key to supplanting revenues as the market gradually shifts back to pre-pandemic norms.
