Why Parts and Service Are So Important for Dealerships

Why Parts and Service Are So Important for Dealerships

When people think of a car dealership, they often think about buying cars. But the secret to a dealership’s long-term success is actually in parts and services. These areas can bring in more money than car sales, helping the dealership stay healthy and profitable. Here’s why:

1. Steady Income: Parts and Service Bring Back Customers

When someone buys a car, that’s usually a one-time thing. But parts and service are something customers need over and over again. For example, people return for oil changes, tire rotations, and repairs—sometimes once a year or more! This creates steady income for the dealership, even when car sales slow down.

• Keeping Customers Coming Back: When dealerships provide good service, customers keep coming back for their car needs. They may even return when it’s time to buy a new car.
• Reliable Money: Parts and service create a predictable cash flow, helping the dealership plan for the future, even when car sales are unpredictable.
• Special Deals: Dealerships can also offer things like loyalty programs or service packages, encouraging customers to come in regularly and spend more.

2. More Profit, Less Cost

Parts and service can bring in more profit than selling cars. Car sales often have small profit margins, especially with discounts and deals. But with parts and service, the profit margins are much bigger!

• Parts Sales: Dealerships make 40-60% profit on parts, while car sales only bring in about 5-10% profit. The markup on parts helps cover costs like storage and managing inventory.
• Service Work: When people pay for things like oil changes or brake repairs, dealerships can make up to 75% profit from the labor, plus extra from parts.
• Lower Costs: Dealerships don’t need to spend as much on inventory or big showrooms for parts and service, so they can make more money from the same space.

3. Building Loyalty with Service

Providing great service is key to making customers loyal. When people get high-quality, reliable service, they trust the dealership and are more likely to return for repairs and even buy their next car there.

• Making Connections: Service visits give dealerships a chance to create strong, long-lasting relationships with customers. This builds trust and makes people feel comfortable coming back.
• Word-of-Mouth: Customers who are happy with the service are more likely to tell friends and family about it, bringing in new customers without needing expensive ads.
• Keeping Cars Running Longer: People keep cars for a long time, so they need parts and service to keep them running smoothly. Dealerships that offer great service for old cars will keep customers coming back for years.

4. Selling Parts Online: A Missed Opportunity

Most dealerships don’t take full advantage of the chance to sell parts online. But with more people shopping online every day, this is a big missed opportunity!

• Selling Everywhere: By selling parts online, dealerships can reach people far away, even across the country or around the world. Customers can order parts without leaving their home, which makes it easier for them to take care of their cars.
• Being Convenient: With an online store, customers don’t have to visit the dealership to buy parts. They can shop anytime, making it much more convenient for them.
• Standing Out: Dealerships that sell parts online can beat out competitors who only sell in person. People like shopping for parts online, and dealerships that offer it will have an edge over others.

5. The Future: More Profit from Parts and Service

As cars last longer and people care more about maintaining them, the parts and service departments will only get more important. There’s a lot of potential for growth in these areas.

• Eco-Friendly Parts: As people look for more eco-friendly options, dealerships that offer sustainable parts will attract more customers.
• New Tech: New technology can help dealerships offer better, more personal service. Predictive maintenance, for example, can help dealerships spot problems before they happen, adding more value to the service.
• Subscriptions and Packages: Some dealerships are offering service packages or subscriptions, where customers pay for all their maintenance in advance. This helps generate steady income while keeping customers loyal.

Conclusion: Make the Most of Parts and Service

Dealerships that want to stay profitable need to focus on parts and service. These areas offer bigger profits, repeat business, and loyal customers. Dealerships can also grow by selling parts online, which opens up new markets and gives them a competitive edge. Instead of just focusing on selling cars, dealerships should embrace the power of parts and service to build a steady and profitable future.