The recent car chip shortage has put quite a wrench in the cogs of inventory levels and new vehicle 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!)
Shift to a Focus on Fixed Ops
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 (short for fixed operations) comprise a lot 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 are 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 your variable ops are still on the path to normalcy (whatever that is!)
Although a dealership’s bread and butter are 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 fixed operations experience does more than just contribute to more gross profit and keeps your customers coming back for maintenance and repairs: It keeps your dealership top of mind for their possible future vehicles, too. Simply put, a solid fixed ops approach gets you customers AND promotes long-term loyalty from previous customers to your dealership - not just for your fixed ops departments and service business.
Make convenience a priority.
Given the current circumstances (pandemic, high gas prices, etc.), accommodating customers with service is the winning quality of a healthy dealership. Consider pick-up and drop-off options, after-hour drop-offs, or even at-home service 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 dealership customers can check availability and service appointments whenever they want.
Stay competitive and give great value.
Match (or beat) that competitor's price! Easier said than done, but in such a competitive market, it can pay dividends to honor competitor service price match requests and potentially secure 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!
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:
- 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!