2020 has posed many challenges for the automotive industry. However, car dealers have been extraordinarily resilient. We have seen the majority of dealers implement digital toolsets and adapt their operations to meet shoppers’ needs wherever, and however, they want to shop. The same can be said for the fixed-operations department. Service directors have added pressure and a unique set of both challenges and opportunities. Today, we speak with Jim Roche, founder of WarrCloud about the lessons learned from this year and how service departments can improve in 2021.
Many industry analysts are predicting that the 2020 SAAR will most likely end up around 14.5 million despite the tight grip of the Coronavirus. 2021 is likely to be a different story with analysts predicting a SAAR of 15.5 million. However, these numbers are still a far cry from the consistent 17 million in the last five years.
In Roche’s opinion, the longer-term trends of margin compression for both new and used vehicles are going to re-assert themselves. With this in mind, the big lesson of 2020 according to Roche is to invest in the fixed-operations department. If service wasn’t the backbone of the dealership before, it certainly is now. According to NADA, service was more than 50% of dealership gross in 2019. That trend is projected to continue through 2021.
At Roche’s latest venture, WarrCloud, the company conducted market research where they asked dealers and service leaders a variety of different questions about their plans for 2021. Overwhelmingly, this group said that expense optimization in service is of the utmost importance. Despite coming off of a strong year, they are looking for ways to improve the gross that service generates. One way to do this is to outsource labor which Roche believes will be a trend in 2021.
Pickup service and delivery are here to stay as well. According to myKaarma, overall pickup and delivery tripled between October 2019 and October 2020. Top dealers are processing over 1,000 pickup and delivery orders every month, and the overall dealer average is 190 per month. 91% of customers also said that they prefer dealerships that offer pickup and delivery services. It is an incredible loyalty and revenue driver.
For more great insight and advice from Jim Roche, be sure to watch the full interview above.
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