A Fixed-Op Focus is Key in a Chip Shortage

A Fixed-Ops Focus is Key in a Chip Shortage

The recent semiconductor chip shortage has put quite a wrench in the cogs of automotive sales. But at the root of this is a much bigger problem. The semiconductor chip shortage has halted automotive production in general. 

And in no small manner. From a story by CNBC: “The ongoing semiconductor chip shortage is now expected to cost the global automotive industry $110 billion in revenue in 2021, according to consulting firm AlixPartners.”

Even before the chip shortage, things were getting tight, with the COVID-19 pandemic applying intense pressure on dealerships to close or alter their selling strategy entirely. Now, dealers have started to adapt and close the gap by introducing digital retailing aspects to their methods (and if you haven’t done so, you might want to start; click here to see how!

It’s Time to Find a Shift in Focus

While the chip shortage and resulting inventory shortage have many dealerships scrambling, they have an ace in the hole: fixed-ops. While you might already know that fixed-ops comprise a great deal of a dealership’s earnings, it’s essential to know to what extent. 

According to this service industry study by Cox Automotive: “Vehicle sales are now contributing less to dealership profit, and fixed-ops is contributing more. Today, fixed-ops comprise 49% of dealership gross profit.”

That is no small figure. Leveraging the department that accounts for nearly half of the dealership’s gross profit can be a great way to create lasting customers and add value to your business as a whole while things are still on the path to normalcy (whatever that is!)

Although a dealership’s bread and butter is selling cars, the outlook on when the chip shortage corrects ranges from “not very soon”  to “not soon at all.” Top opinions differ on this timeline. From a story by Popular Science: “The CEO of chipmaker STMicro estimated that the shortage will end by early 2023. The CEO of automaker Stellantis said that the shortage ‘is going to drag into ’22, easy.’ Intel CEO Patrick Gelsinger said the shortage could last two more years.”

 

3 Ways to Focus on Fixed-Ops for Your Dealership

An excellent service experience does more than just keep your customers coming back for maintenance and repairs: it keeps your dealership top of mind for future purchases too. Simply put, a good fixed-ops approach gets you customers and retains them. 

  1. Make convenience a priority.

    Given the current circumstances (pandemic, high gas price, etc.), accommodating customers is a winning quality. Consider pick-up and drop-off options, after-hour drop-offs, or even at-home services if their needs are simple enough. 

    Being “always on” with communication is so important as well. Online service scheduling is the new standard. With ActivEngage’s integrated service scheduling, your busy modern customers can check availability and service appointments whenever they want. 

  2. Stay competitive and give great value.

    Match (or beat) that competitor price! Easier said than done, but in such a competitive market, it can pay dividends to honor competitor price match requests and potentially secure them as a future car buying customer. 

    Service offers and deals get customers in service bays. But don’t just throw offers out without a strategy. ActivEngage’s ActivTarget behavioral offer software can help you focus tailored offers to inquiring service customers that match their needs. It’s kind of like magic! 

  3. Up your service marketing efforts.

    This might be obvious advice, but consider doubling down on your fixed-ops advertising. As we’re amid a pretty serious inventory and chip shortage (at the time of writing this blog), it might be beneficial to bolster your service department efforts. Ensure you’re positioned as a reliable, dependable location for both sales AND service in the consumer’s mind. 

Fire Up Your Dealership's Fixed-Ops During the Chip Shortage with ActivEngage

Ready to fire up your fixed-ops efforts? ActivEngage can help! 

In addition to the online service scheduling options mentioned previously (through our messaging platform), we also offer a wide range of digital retailing tools in our product suite, such as: 

  • Customer journey insights with DataWise analytics
  • Preliminary soft credit pulls with QualiFi
  • Review management and optimization with AcceleRater
  • And much more!

Add a little more certainty to these uncertain times with the streamlined, industry-leading digital tools from ActivEngage and get your fixed-ops teams firing on all cylinders! 

 

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