Franchised dealerships continue to lose share to general repair shops, according to a study from Cox Automotive.
The recent report–Under the Hood: Opportunities and Challenges in the Service Industry –found dealerships accounted for 30 percent of all service visits in the U.S. in 2023, down from 35 percent in 2021. And most concerning is general repair shops are now their preferred service provider over dealers.
Owners are visiting service centers more often as they are driving more and holding onto existing vehicles longer due to high prices and loan rates for new vehicles, stated Cox in their report.
Key to Dealer Ops
According to Cox, the average owner had their vehicle in for service or maintenance 2.5 times a year in 2023, up from 2.3 in 2021 but down from a pre-pandemic average of 2.8 in 2018.
Vanessa Ton, senior manager of market and customer research at Cox Automotive, offered that the service business continues to be a key part of any dealership operation.
“While our report lays clear some of the challenges facing service providers today, the good news is that the industry continues to grow with more customers going in for service visits, and most providers are seeing a boost in revenue for service as well,” said Ton in a press statement with the release of the report.
Repair Shops Preferred Destination
The report found repair and service stations just two points behind dealerships at 28 percent. Tire repair stores, body shops, and specialists combined for the other 42 percent.
A third of car owners indicated that “general repair shops” were their preferred service provider, an increase from 32% in 2021—and ahead of “dealers” for the first time. In the 2023 survey, 31 percent of owners indicated that “dealers” were their preferred solution, down from 35 percent in 2021.
Cox officials said the preference is being driven by the trust in franchised dealer service declining. When vehicle owners were asked why they returned to the dealership where they purchased the vehicle for service, 54 percent of respondents offered “trust” as a reason, down from 62 percent in 2021.
Inflation Issues
With inflation still elevated in the U.S. economy, the automotive industry has not been immune from rising costs. According to the Cox research, there has been a 45 percent increase in the average price per service visit over the last two years. And, as important, four of the top five reasons for not returning to a dealership for service were cost related.
But the suggestion dealers charge more for service is mostly unfounded as the average dealership service visit in 2023 costs $258; a visit to a non-dealer service provider was priced at $249 on average.
The issue for owners favoring repair shops may be more in service then financial—48 percent of vehicle owners were frustrated with at least one aspect of their recent service experience. Among the negatives noted with dealerships include service taking longer than expected, dealers pushing additional services, struggles to schedule an appointment, and prices for the work higher than estimated.
The Cox Automotive survey was undertaken during the second half of 2023 and surveyed 2,493 vehicle owners who had at least one service performed in the past twelve months, accounting for over 5,500 service visits. Additionally, employees with decision-making authority over fixed operations at 525 franchised dealers were interviewed for the research.
Opportunity for Dealers
Ton opined the opportunity is there for dealers on price transparency and restoring trust with customers to increase retake business lost to repair shops and other service outlets.
“When it comes to vehicle ownership, repairs and maintenance are important but can present challenges,” she said.
“To overcome these challenges, car dealerships should focus on expanding their service capacity by ensuring they have an adequate number of service bays and well-trained technicians, especially as the demand for electric vehicle services continues to rise.”
