New car sales have plummeted in recent months, and it seems as though that trend is likely to continue. While car dealers have had to battle sales declines, many have turned to their service departments to make up for slipping profits. But many are finding that service is also not quite as lucrative as it used to be.
First, new car sales have reduced the amount of warranty work. Washington DC Mercedes Benz dealers stress that more cars being sold results in more cars being serviced at dealerships. Additionally, non-warranty service, while expected to increase, has also bottomed out recently as the economy has forced all drivers to conserve precious dollars.
Many car dealers are finding that revenue has dropped since the third quarter of 2008. In the current economic downturn, consumers are alternating their spending habits. This includes increasing the time between service intervals, skipping minor scheduled service, and in some cases ignoring mechanical issues altogether which Los Angeles Honda parts dealers say will only increase costs for drivers in the long run. Some dealers have also found that more customers are inquiring about financing options when it comes to service. Others are also bringing their vehicles in for engine and/or transmission replacements, as more consumers are investing in what they have rather than buying a new car. While these repairs are helpful according to Hyundai parts sellers, they don’t make up for the vast majority of customers which only receive minor and low-cost maintenance on their vehicles.
While forecasts look grim for new car sales, many service managers are also predicting poor results when it comes to vehicle service in 2009. Many car dealers have even had to reduce the number of mechanics in 2008. Meanwhile, the National Automobile Dealers Association does expect a modest revenue gain when in 2009 when it comes to parts and service departments, as Toyota Accessories Stores and others are already seeing consumers hold onto their cars for longer periods of time.
Already the automotive industry has seen many car dealers close their doors in 2008, and even despite gains in other profit centers, one Westminster Toyota dealer says many more dealerships are likely to go out of business. Although many service departments remain optimistic, there are others that realize that this year may be the most difficult yet.
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