Key takeaways
- Fixed absorption is rising (63.9% in August vs. 61% a year prior) but remains well below the commonly recommended 100%+ target that stabilizes profits through service and parts.
- Some dealers are already over the bar: NADA’s October Dealer Academy data cited stores in Virginia surpassing 105%, indicating best practices are achievable and replicable.
- Large revenue gaps persist, especially in tires, where franchise dealers capture only 8% of sales despite 75% of customers buying from the first credible recommender.
- With 86% of vehicles out of warranty, winning customer-pay maintenance and repair work is pivotal for retention and margin.
- Service experience (Wi‑Fi reliability, phone handling, appointment flow) heavily influences loyalty; CBT News flags losses from mishandled calls and poor responsiveness as a recurring drag.
Notable stats and signals
- Fixed absorption: 63.9% (August) vs. 61% (prior year); target: ≥ 100%.
- Outliers: select Virginia stores >105% (NADA Dealer Academy, via CBT News).
- Tires: 75% of customers buy from the first provider who recommends; dealers’ share: 8%.
- Vehicle parc: 86% out of warranty; most of that service occurs outside dealerships.
- Throughput: a service advisor can see ~10x the monthly customer volume of a typical salesperson.
- Customer experience: CBT News says service visits shape loyalty more than showroom encounters and cites industry losses tied to mishandled calls, holds, and voicemails.
Biggest opportunities
- Tire capture: Inspect early, show tread/wear clearly, and quote competitive options on the spot to close first-recommendation sales.
- Out-of-warranty work: Target older vehicles and lapsed customers with maintenance, repairs, and tire offers.
- Process discipline: Tight scheduling, consistent MPIs, clear documentation, and timely follow-ups to raise approval rates and keep bays full.
- Phone performance: Faster answer times, trained call flows, and missed/abandoned call tracking to convert inquiries to appointments.
- Warranty efficiency: Speed accurate claims and cycle times to free capacity for higher-margin customer-pay jobs.
- Amenities: Reliable guest Wi‑Fi and improved waiting areas to reduce friction and encourage repeat visits.
90-day action plan
- Baseline and gap: Audit fixed absorption, RO mix, technician capacity, and tire close rate; set 100%+ target with monthly milestones.
- Tire-first SOP: Add tire checks to early write-up, use visual tread tools, present good/better/best quotes, and stock fast movers.
- Phone mastery: Implement call routing/monitoring, answer within 20–30 seconds, track abandons, and coach to a standard script and booking KPI.
- MPI consistency: Require photo/video inspections, standard lines for common findings, and same-day approval outreach with digital authorizations.
- Friction fixes: Upgrade Wi‑Fi, tighten appointment windows, and provide accurate promise times with proactive updates.
- Targeted outreach: Campaign to lapsed and out-of-warranty owners with maintenance bundles, tire promotions, and online scheduling.
- Advisor development: Train on inspection presentation, objection handling, and clear communication to raise close rates and CSI.
- Dashboard cadence: Review weekly—absorption, tire capture, MPI-to-RO conversion, first-call appointment rate, warranty cycle time, and 12–24 month retention.
Why it matters
Incremental gains in service and parts reduce reliance on cyclical vehicle sales. Reaching or exceeding 100% fixed absorption can keep the operation profitable through fixed ops alone, while better tire capture and out-of-warranty focus unlock “hidden” revenue and long-term loyalty.
