Boost Your Service Profits by Promoting Your Service Department

It goes without saying that most auto dealerships focus on selling cars. But did you know that the best way to boost your overall profitability is not through new and used car sales—but through your service lane? 

By focusing solely on selling cars, many auto dealerships overlook an even easier—and less costly—market: existing car owners. Getting repeat business from vehicle owners is a strong differentiator for any dealership, and that’s why promoting your service department to vehicle owners can be so effective in boosting your sales numbers overall.

Here, we’ll explore why so many auto dealers focus solely on selling cars at the detriment of their service lane, and why that is not a smart move. By the end, you’ll understand how marketing your service department can drastically improve your vehicle sales.

Why Most Dealerships Only Focus on Car Sales

If you were to ask dealership principals, presidents, vice presidents, and executive general managers how they started out in the business, you would notice a pattern in many of their stories. Many of these executives gained their success and automotive experience in the sales department. 

For some, this success and expertise in selling cars contributed to a bias that exists today in many dealerships: the belief that service departments are merely an OEM requirement. 

This perspective can trap dealerships into unconsciously limiting their profitability by overlooking ways to grow through new or existing customers. In fact, studies show that service departments have an even greater gross-profit potential than selling vehicles. 

According to the National Automobile Dealers Association (NADA), the following figures represent a dealership’s total gross profit:

• 26% from new-vehicle sales
• 25% from used-vehicle sales
• 49% from the service and parts department

Increase Car Sales with Wisdom from Roger Penske

Automotive giant Roger Penske is a firm believer in leveraging the service department to increase overall sales.

“Roger showed me an operational plan to increase sales through service revenue and profitability,” Edifice founder Skip Soucie, who worked for Penske in his 30 years in auto retail, says. “When properly strategized, the service department does more than support its own bottom line—it aids and gives a competitive edge to the sales department.”

Penske maintains that the sales, service, and parts departments must be held financially accountable as independent cogs in the same “profit machine.” 

Simply put, if dealerships can increase their service and parts revenue and gross profit, with auto service marketing, they will also increase their service absorption, or the amount of fixed expenses paid by the department’s net profit. This reduces the sales burden on each individual car sold, making the dealership more competitive and ultimately increasing their profit.

Easy Ways to Turbocharge Your Service Center

Leveraging your service center is the most reliable way to generate revenue for your dealership. By promoting your service lane, you can turn this department into the trusted profit center you need.

• Introduce customers to your service center. Whether they just purchased a car from you or they’re simply walking in, make sure to steer the customer toward your service lane to keep their vehicle in tip-top shape.
• Offer limited-time deals. Create a sense of urgency that a great deal is about to expire, and there’s no better time than now to service their vehicle. For instance, identify a day of the week that is typically slow, and create a special recurring event to drive in business (i.e. Tuesday afternoon happy hour: 10% off standard oil changes).
• Send existing customers timely reminders. Everyone is busy, so help your customers out by reminding them when it’s time to service their vehicles. Doing so will not only drive them into your dealership, but foster trust and loyalty.

Final Thoughts

While new and used car sales are the driver for any dealership, the profitability of your service center cannot be overstated. By focusing marketing efforts on promoting your service lane, you will help to significantly boost your dealership’s overall gross profits.

If you’re ready to accelerate your marketing, contact us at Edifice. We have the industry know-how and experience to help make 2022 your dealership’s most profitable year yet.

Schedule a free demo with us today!