DMEautomotive Research: Auto Service Intervals Have Increased Nearly 4% in Last Year, Costing Average Dealership $91K in Lost Revenue
Average service cycle expands from 140 to 145 days as Americans keep longer-lasting vehicles for more years than ever before; dealers must now market to the owner, not the vehicle
DAYTONA BEACH, Fla., Sept. 4, 2013 /PRNewswire/ -- DMEautomotive (DMEa), the science-inspired, results-based automotive marketing leader, today released new findings1 from DMEInsights, its recently released analytics product, revealing that the average dealership's auto service interval has undergone significant changes within the last year: increasing from 140 to 145 days - or nearly 4%.
DMEa found that this five-day expansion between service visits is costing the average dealership $91K in lost revenue a year – or $18K for every day of interval added. While these new realities impact dealerships and aftermarket providers alike, the total cost to U.S. franchised new car dealers alone is $352 million-plus each year.2 A number of factors - including people keeping vehicles longer than ever in history, far better built cars, people driving less, and people relying less on OEM service recommendations in favor of more online and mobile research - is fueling this ongoing lengthening of time between service visits.
"Service intervals will only get longer, and this should be a wake-up call for every dealer, because it impacts them in diverse, costly ways," said Mike Walther, president and CEO of DMEautomotive. "Longer intervals don't just mean a lot less direct service revenue, because when customers come in for fewer visits in the first three years of ownership (where brand and dealership loyalty is forged), they're also less likely to re-purchase at that dealership…and even CSI scores are negatively impacted."
Fueling the Trend:
Supporting DMEautomotive research's findings are some macro auto industry realities:
- Even with new-vehicle sales rebounding, Americans are now keeping their vehicles for record lengths of time: the average age of a U.S. vehicle is now 11.4 years, up nearly two years from 2007.3
- Cars are better built, require less maintenance and simply last longer: for instance, the annual percentage of vehicles sent to the scrap yard has dropped 50% since 2007.4
- People are driving less: the average number of miles U.S. drivers rack up peaked in 2004 at over 900/month, and despite a recovering economy, that had fallen to 820 in 2012 – down roughly 9%.5
- Consumers now rely less on their owner's manual and service centers as sources of maintenance info, and are increasingly turning to multiple digital/mobile information resources. For instance, a large, new DMEa consumer survey6 finds that less than half of servicers now follow OEM recommendations, a precipitous drop from 2011 when 64% did. And from 2011-2013, usage of owners' manuals as a maintenance resource dropped 10%, while turning to service centers plummeted 17%.
"Many dealers use service reminder marketing programs that haven't fundamentally changed in years. But the new, ever-lengthening service intervals are just further proof that it's now imperative for dealers to start marketing to the owner, and not to the vehicle," said Walther. "The auto industry desperately needs to abandon the old 'spray and pray' approach of the old programs, and adopt a 'new era' service marketing approach that's focused on total customer retention. That means delivering relevant, super-targeted messages based on each customer's actual behavior and purchasing patterns, and doing a better job communicating where their customers increasingly live: across digital and mobile channels like mobile apps. That's the way to reclaim those lost service dollars, increase loyalty and get more customers into the service drive, more often."
DMEautomotive (DMEa) is the industry leader in science-based, results-driven automotive marketing, and provides turnkey marketing to the largest and most innovative automotive organizations, from automobile dealerships to many of the largest aftermarket companies in the U.S. DMEa's uniquely panoramic view of the complete automotive sales and service market, combined with its cutting-edge, science-based marketing programs, increases customer yield, conversion and retention.
DMEa does not take marketing performance on faith, and each product and service is measured by a simple, precise scientific approach: Is it true? Prove it. Will it work? Test it. Does it generate results? Show it! Supported by DMEa's proprietary, cloud-based Red Rocket Technology Platform, the DMEa product suite includes science-based, data driven, multi-channel customer acquisition and retention marketing programs; best-in-class campaign reporting; data management and analytics; auto-focused Customer Interaction Center solutions, and complete on-site mail and email fulfillment services. Headquartered in Daytona Beach, Florida, DMEa also has major operations in Jacksonville, Florida.
1 Findings based on DMEautomotive's Insights analytics tool and its Auto Insider Network (AIN), a network of dealerships within the top dealer groups that allows the company to aggregate/share their data.
2 NADA data 2013, based on total number of US dealerships: 17,635
3 Polk research, 2013
4 Polk research, 2013
5 U.S. Transportation Department study, 2012
6 July 2013 DMEa consumer survey, with 1,966 respondents
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