How ready are you for the dominion of fixed ops as the savior of automotive retail?
Some will argue that it has always held this coveted position but is rarely acknowledged to have this power. The spotlight has always been on new cars and variable operations, but with the pandemic, fixed ops’ prestige has enjoyed a remarkable uplift. This rise of stardom will accelerate in 2023 and beyond.
If signs are necessary, consider how fixed ops technology and services providers are forming to help dealers take advantage of the rise of fixed ops. For example, at NADA ’23, an emerging company, Vehlo, a software and financial solutions provider for the automotive repair industry, announced its Dealership Fixed Ops Customer Experience suite of internal, customer-pay and dealership efficiency solutions.
Back to my lead-in question – How efficient and ready are you to leverage the new dominion of fixed operations? How do you know?
You look at your “maintenance” records: While you’ve been busy selling at robust margins since 2020, how did you invest in technologies to drive process improvement and efficiencies? Did you spend on sales training to maintain your team’s selling edge for a return to normal? Have you identified opportunities for using software-as-a-service strategies and A.I. to improve outcomes and reduce costs?
What do your reconditioning speed-to-sale numbers tell you about efficiency in recon and used car turns? The gold standard in recon turn time is three to five days. The math here can illuminate your efficiency and profitability. This calculator can help.
“Optimistic dealers are asking, ‘How can I improve the efficiency of my business?’ They must leverage their fixed operations in new ways,” said Ed French, president of Autoprofit, a dealership performance consulting firm. We spoke on the night before NADA.
“One way,” he said, “is to operate two service departments within the dealership.”
• A highly skilled and trained specialty shop: skilled in electrical, computers, onboard computers and fuel-management systems for gas cars, and in battery technology, motors and various radar devices common to electric vehicles, and
• A service and maintenance business: According to Cox Automotive, current affordability issues will incentivize owners to maintain their current vehicles. Cox predicted “continued strong dynamics in the service lane, with or without a recession.” French reiterated the necessity for improving technician efficiency to grab more revenue represented by used cars on the road. S&P Global Mobility states that the fleet is 283 million passenger cars and light trucks, of which approximately two-thirds are six-plus years old.
1. Invest in technology that can ensure parts are distributed to technician bays ready for when the vehicle arrives.
2. Stage vehicles so techs can complete one and pull another into the bay without wasting time waiting. For the recon department, efficiency steps like this are critical to having a profitable used car department.
3. Streamline and declutter communications. Dealership-wide workflow technology helps work notifications move seamlessly on-site and off-site to eliminate wasteful walking around to find the individual with the answer. Get answers immediately without stopping work.
4. Put a light above restroom doors that turn on when facilities are occupied. Keeps a tech stationed across the shop from wasting steps and time to walk there to learn it is occupied.
Scott Rea, executive vice president for TraXtion, a fixed ops development platform, reminds us that repair and maintenance are a $500 billion-a-year business. “The 284 million vehicles on the road equal a $1,760 per vehicle opportunity per year. Dealers right now capture just 25% of that repair work. This is fantastic news. It presents the opportunity to steal this work back from the aftermarket and the technicians doing it as well.”
Another way to be more cost-efficient with tire sales, Rea said, is to employ or reassign a low-price hourly employee to roam the shop busting tires. Likewise, a dedicated alignment person can help keep labor costs down and productivity high, assuming you identify and sell 200-plus alignments per rack per month. “Dealers today do not measure alignment rack utilization like they do tech hours or assigned hours or present hours. That missed opportunity is costing them money,” Rea said.
So, is your mindset, culture and process ready? “The ride we’ve been on is over,” French said. “All of a sudden, the basics are essential. And that ties right into what I consider the most important, asking about the whys and hows of the software dealers use. Our role, obligation and responsibility are to help dealers refocus on their foundations. To do that, we vendors must roll up our sleeves and reintroduce the why and the how of every software tool our customers are presently paying for.”
All this to say, connect to what you expect.