The Shift

April 1, 2017

Dealerships have gained a piece of the market share—here’s how independents can reverse the momentum

For years, independent auto repair facilities were sold as an affordable alternative to dealerships, Bill Haas says. And because of that, independents have thrived.

But now the momentum is shifting, with dealerships gaining ground in overall market share for the first time since the Great Recession.

“[Dealerships] have gotten smart about not just marketing car sales,” Haas says. “They’re marketing the service aspects of the dealership and why you need to return for maintenance and repairs.”

This shift was noted by Jim Lang, president of Lang Marketing, in his “Independent DIFM Share Peak” report. He found that independent DIFM (which stands for “Do-It-For-Me”) repair outlets’ light-vehicle volume peaked at 78.9 percent between 2013 and 2014, but then declined in 2015 to 78.7 percent. While that’s a small decrease, it is the first drop since 2007, and Lang says the trend is likely to continue. Over the next four years, the report predicts more than $1.1 billion in sales will move from independents to dealers.

Both Lang and Haas spoke with Ratchet+Wrench to discuss how independent shops can reverse the two biggest factors shifting the market share.

Increased Bay Count

The Shift

When the 2008 recession hit, 3,000 dealerships closed, allowing independents to fill a marketplace void. Then, over the three following years, the service share for dealers went down almost 9 percent.

This is important to note, because dealers haven’t gained back market share by adding dealerships—they did it by increasing overall bay count, in an effort to provide customers with more quick lane and oil bays.

“Now the focus is to provide more frequent, less complex service to consumers so that they have contact with consumers on a repair basis several times a year,” Lang says. “This strategy has worked pretty successfully for Ford, and now a number of other nameplates are adapting that strategy by encouraging dealers to increase their service bay capacity.”

Your Move

Haas claims many savvy shop owners have already noticed this trend and have begun to introduce more quick lane services.

“Price continues to fall down the ladder in being an influence on buying decisions,” he says. “Convenience is a bigger influence on the buying decision. They want to know, ‘How quick can I get in? And how quick will you be done?’”

Accounting for this shift will require planning. Either make adjustments that provide for quicker service, or physically add more bays exclusively for drive-through service. Then, advertise those services.

“People want to come in and be back on the road in 15 minutes,” he says. “If you can’t do that, the dealership will.”

Improved Used & Foreign Car Sales

The Shift

As new vehicle sales dipped between 2008 and 2012, it hurt dealerships, Lang says, leading the survivors to rethink the aftermarket.

“So, another impetus for service bay growth has been the increase in off-lease vehicles,” he explains, “and the increase in number of used vehicle sales by dealers.”

Thus, Lang says dealers have focused on selling and providing service for refurbished vehicles, creating a newfound stream of income. 

“In years past, dealers were only really interested in vehicles maybe five years and newer for service,” he says. “And now, because of the reduction in warranties, vehicles are more reliable. So there’s less warranty work. And so with this new strategy, they’ve been able to rebound a share in the aftermarket.”

Dealers have also made gains in foreign vehicle sales. Those customers are more likely to return to the dealer for service, Lang says.

“That’s mostly because of the technology of the repair required, the special tools required,” he says.

Your Move

Haas says dealerships have done a stellar job pursuing out-of-warranty work, noting a Toyota dealer that offers a 10 percent service discount for vehicles with over 100,000 miles.

“That’s pretty attractive offer for someone with a Toyota with 120,000 miles on it, as it’ll probably be a pretty hefty ticket. How do you compete with that?” he says. “It comes back to the branding, letting people know you’re the place to bring that Toyota.”

To tackle the issue with improved used and foreign car sales, Haas says to market yourself as a brand specialist … for every brand. On your shop’s website, create landing pages for every make your shop services, and then populate those pages with brand-specific photos and keywords. Show off any equipment upgrades you’ve made, and the specific training you’ve invested in for technicians.

“If I create that specialization in marketing, and they search for Toyota brake, they’re going to land on my page and see I’m the go-to specialist for Toyotas,” Haas says. “You need to be proactive, not reactive. You can’t assume people know you fix Land Rovers. That’s not the case anymore. You’re going to have to tell your story.”

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