Dealers Can Turn to Safety Recalls to Help Boost Revenue

As Chip Shortage Limits Inventory, Dealers Can Turn to Safety Recalls to Help Boost Revenue

While OEMs scour the globe to find chips, dealers still need to find ways to bring in extra revenue. Vehicle service revenue will be more important than ever.

The biggest challenge in the auto industry today — the global semiconductor shortage — is causing ripples that ultimately will impact vehicle supply and threaten dealership profits. According to IHS Markit data, the industry lost 1.3 million production units in Q1 2021.  

The problem is likely to get worse in Q2. 

On an April 28 conference call with reporters and analysts, Ford CEO Jim Farley said the company could lose as many as 1.1 million units this year. Several other manufacturers have reported plant shutdowns in recent days. 

In late April, there was approximately 33 days inventory on dealers’ lots. Customer demand remains high, so dealers are making healthy margins on each vehicle sale right now. But, lack of inventory will likely lower overall sales and decrease dealership profits. 

While manufacturers scour the globe to find chips, dealers still need to find ways to bring in extra revenue. Vehicle service revenue will be more important than ever, as dealers scramble to make up for lower inventory and lost sales. 

We’ve seen our clients drive significant service revenue proactively managing safety recalls. Remember… “There is money in the VINs.” 

Most dealers are sitting on an ample source of vehicle repair revenue and may not realize how large this could be. Every vehicle they’ve sold in the past couple years represents vehicles with potential open safety recalls. Dealers can run these VINs and identify vehicles with open safety recalls. Dealers can then reach out to these customers to get them into the dealership for service. Not only will you find new revenue but your CSI scores can increase and customer pay can bring the average recall repair work up to more than $500 each! 

This simple strategy has benefits on multiple levels. First, it can drive significant revenue. A Hyundai dealer generated an additional $800,000 by deploying this strategy — on just 1,600 vehicles! It also helps strengthen customer relationships. The customer comes into the dealership and gets a free repair. They’ll likely thank their dealership for letting them know about (or at the very least reminding them of) the safety recall and doing the repair at no charge to the customer. Truly, everybody wins. 

There is no telling when the chip shortage will abate and its true impact won’t be known for several months. But, dealers who proactively drive additional safety recall service revenue are more likely to weather the chip storm and protect profits in 2021.  

You May Also Like

How AI is Enhancing Vehicle Inspections

Learn how AI-powered vehicle inspections are revolutionizing car buying, selling and transportation in the dealer industry.

AI vehicle inspection, artificial intelligence

Artificial intelligence (AI) is rapidly transforming nearly every industry, and the automotive sales, remarketing and transportation sector is no different. AI-powered vehicle inspections have recently emerged as a groundbreaking innovation.

Vehicle inspections are crucial to determining a car's condition and value, facilitating informed decisions for both buyers and sellers. In an industry that is increasingly buying, selling and trading vehicles virtually and transporting them long distances, AI is quickly becoming an indispensable tool. AI offers three distinct advantages for vehicle inspections that can significantly increase efficiency and bolster confidence for the industry:

The Power of OEM Window Stickers: A Must-Have for Every Used Car Dealer

OEM window stickers detail a vehicle’s features, aiding buyers in making informed decisions and helping dealers boost sales by showcasing every car’s full value.

couple buying car in dealership-stock
Are You Ready for AI to Drive Auto Lease and Finance?

Discover how AI is revolutionizing the automotive finance and lease industry, improving customer experience and detecting fraud.

Where Dealers and Lenders See Opportunities in Automation

The integration of artificial intelligence and advanced data technology has emerged as a competitive strategy for many dealers and lenders.

4 KPIs to Improve Automotive Sales Phone Lead Management

Learn how to streamline operations, enhance customer interactions, and drive higher conversions by mastering these critical metrics.

Other Posts
Cox Automotive Names Joe Kichler to Brand New Position

Cox Automotive’s newly created role will accelerate connections between company’s digital wholesale and logistics solutions.

How Auto Retailers Leverage Advanced Connected Vehicle Data

Learn about real-time inventory management solutions, predictive analytics and the seamless integration of technology to optimize operations.

Why Today’s Auto Dealers and Lenders are Embracing AI Contracts

Learn how automated technology solutions, leveraging AI and digitized processes streamline vehicle transactions.

Identifying Gaps in Digital Retailing Solutions & 5 Easy Fixes
Live Chat Revs Up Automotive Marketing in 2024

Discover strategic shifts, like prioritizing digital marketing with live chat, to engage customers effectively and drive sales.

Live Chat Revs Up Automotive Marketing in 2024