Fixed-ops revenue and service demand ticked up in January, offsetting the impact of declining car prices seen throughout the month.
Data from Cox Automotive indicates that dealership service teams saw more business month-over-month. January’s fixed-ops volume rose 2.7% from December, an increase which Skyler Chadwick, Cox Automotive director of product consulting, noted came against “severe winter weather across the U.S….” Business remained slower than last year, however. Compared to January 2023, work order volumes declined 1.3%.
Fixed-ops remained a valuable source of income for dealers in January, buoying earnings with higher-than-normal profit margins, even as new and used car prices continued to normalize in the wake of rising inventory. Service revenues rose 3.3% from December and remained 4.3% ahead of last year’s average. The burden of repair and maintenance costs on consumers has risen sharply over the last four years, fueled by rampant inflation. In that time, service order revenues have risen 37.7%, with only occasional dips in value typically seen in the middle of the year.
The service department remains a foundational component of any dealership, boosting customer retention, profits, and brand awareness. Fixed-ops also provide a source of income for retailers during downturns in the market, remaining insulated from fluctuations in car prices or new and used vehicle demand. In the months ahead, dealers must continue pursuing strategies that boost service quality and improve departmental efficiency if they hope to shore their businesses against a developing automotive price war and the release of tougher vehicles that require less maintenance.
