Franchised auto dealerships are losing market share on service business to repair shops, a new study shows.
A Cox Automotive survey of nearly 2,500 vehicle owners conducted in the second half of this year found dealerships still get 30% of all U.S. service visits, but that’s down from 35% just two years ago.
At the same time, dealer service centers are getting more visits over the past two years as the pandemic’s effects have faded, with more driving and cars skewing older due to higher prices and interest rates. The average owner visited a service center 2.5 times this year, up from 2.3 times in 2021, Cox said, though that’s down from 2.8 times in 2018.
Cox projects that consumer service spending will exceed $400 billion in the next two years, so maintaining a big of a share or growing it of that can be lucrative.
But the number of owners who prefer nondealer service providers has surpassed those who prefer dealerships for the first time, Cox said. A third of owners said they prefer general repair shops, up one percentage point from 2021. Thirty-one percent said they prefer dealerships, down from 35% two years ago. Cox attributed the decline to trust issues.
Of respondents who gave trust as their reason for returning for service to the store that sold them their vehicle, 54% cited trust as a reason, down from 62% in 2021. Those citing trust are more likely to be satisfied with service and more loyal than those who didn’t, Cox said.
“… while our report lays clear some of the challenges facing service providers today, the good news is that the industry continues to grow with more customers going in for service visits, and most providers are seeing a boost in revenue for service as well,” said Cox Senior Manager of Market and Customer Research Vanessa Ton.
Survey respondents, including nearly 200 electric-vehicle owners, each had at least one service done in the past 12 months, together making for more than 5,500 service visits. Cox also interviewed fixed-operations staff at more than 500 franchised dealers.
Originally posted on Auto Dealer Today