You’ve heard about funny math where the person does some fancy mathematics based on a few assumptions and the next thing you know, they have concocted some life-changing proposition for you to consider. While the numbers I will present in the next couple paragraphs are large, stay with me, this is serious math.
According to the National Automotive Dealers Association’s (NADA) latest research, the average new car dealership conducts more than $4 million of service and maintenance work yearly. Now, 4 million is a big number, but these dealerships average 18 bays. They’re big operations. So, while they are doing $4 million, the average independent repair shop is averaging about $425,00 in service and maintenance in a typical year, roughly 10% of the new car dealer.
Now everyone, and I mean everyone, has heard that Chrysler and General Motors have closed at least 1,500 new car dealerships, and there has been a lot of speculation about the impact this will have on new car, used car and service buying patterns. Will former customers of these dealerships go to another dealership that flew the same flag as the closed outlet? Will they shift their loyalty to another vehicle brand? And for service work, will they find another dealership or give the independent shop a try?
We all hope the answer to that last question will be to give the independent shop a try, because when you do the math (1,500 dealerships times $4 million), there is $6 billion in service work up for grabs. While 6 billion is a big flashy number, let’s look at the other big number - 4 million. If 10 of our averaged-sized shops divided that $4 million, they would all double their sales, or 20 shops would experience a 50% increase in sales, or 100 average shops in the vicinity of that closed dealership could get a 10% increase in sales (most of you would be very happy with a double-digit increase).
With the economy starting to show signs of a recovery, consumers may finally start to get back to their old spending habits and put some money into the maintenance of their vehicle. You need to take the steps to make sure your shop is the one they choose. Get the word out with your existing customers, advertise, buy a list of potential customers in your area and start to market your services and capabilities to them.
This could truly be a once-in-a-lifetime opportunity for your shop to gain the new customers you need to get your shop operating at optimal productivity levels and make some serious money.
Reprinted with permission of Babcox Publishing, Underhood Service December 2009.