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Dealerships respond to rising competition with third-party service providers

Dealership service centers are facing more competition than ever from third-party repair and maintenance providers

Dealership service centers have continued to lose business to non-franchised repair and maintenance providers, according to new research from Cox Automotive.

Over the last few years, fixed op profitability has mostly trended higher, as has the number of customers in need of repair. However, these gains have coincided with a slight shift in how car owners view dealership service centers. Based on an analysis of work orders, the retail automotive sector’s share of all service visits has shrunk from 35% in 2021 to 30% in 2023.

This year also marks the first time in Cox Automotive’s research that consumers have ranked third-party repair and maintenance providers higher than dealership service centers. While general repair shops were ranked just two points ahead of their franchised competitors, the shift in sentiment indicates that retailers are no longer providing the service experience they once were.

Two of the main issues cited by customers in Cox Automotive’s study were trust and cost. Car owners often do not trust their dealers to give them a fair deal, sentiments exacerbated by recent trends of heavily inflated car prices and bloated profit margins. These feelings may be affecting the ability of dealership service centers to compete with third-party providers. Above all, buyers who feel they were treated poorly by a dealer or their staff when purchasing a vehicle are much more likely to visit a competitor for follow-up work than return to the original seller.

Nevertheless, the retail automotive sector still has much to gain by offering repair and maintenance work, especially if they can overcome the challenges mentioned above. Prioritizing the customer’s experience, improving technician training and supplying teams with innovative technologies will be key to boosting profit and retention in the dealership service center.

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Colin Velez
Colin Velez
Colin Velez is a staff writer/reporter for CBT News. After obtaining his bachelor’s in Communication from Kennesaw State University in 2018, he kicked off his writing career by developing marketing and public relations material for various industries, including travel and fashion. Throughout the next four years, he developed a love for working with journalists and other content creators, and his passion eventually led him to his current position. Today, Colin writes news content and coordinates stories with auto-industry insiders and entrepreneurs throughout the U.S.

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