With the recent success of the Massachusetts Right To Repair legislation, it is easy to believe we are in great shape moving forward in regard to any competitive aspects concerning the car dealership service shops. No doubt that the R2R rules will certainly give us a level playing field from which to compete – and, in essence, that’s all the aftermarket needs to win the business. Yet, regardless of the advantages we may have over the car dealerships, and regardless of the factors we have on our side, there are issues out there that may challenge the aftermarket, factors that may not necessarily be under our control.
First of all, let me be very clear: I have never been extremely concerned about the aftermarket competing with the car dealer service centers. The aftermarket has many strong advantages over the car dealers. The limited number of OE-based service bays alone makes it an uphill fight for the car dealers — and that doesn’t even address the pricing issue — making the car dealer service option not a reasonable one for the majority of consumers. Those two factors alone have always made me a bit skeptical when the conversation turns to the “threat” of the car dealers.
There are, however, some factors in the field that should make us mindful of the competitive nature of the OE service providers.
First of all, because of the complexity of today’s vehicles and the various high-end electronic components in those cars, SUVs and light-trucks, we often are at a disadvantage in providing true aftermarket options for certain components. And, even when we have the manufacturers who produce quality components, too often, shops “prefer” the OE component and, way too often, just elect to source certain high-end electronic components directly from the dealer because they find it simpler. I certainly disagree with that approach, but I can understand the seeming logic.
Additionally, there is a factor out there working against us significantly, and, as the carmakers continue to look for more ways to enhance their brands, this factor will continue to be a significant one.
In this issue of Service Executive, we present some research from DME Automotive focused on the affect of prepaid and OEM-provided maintenance plans – especially those provided by the carmakers, programs like BMW’s Ultimate Service, ToyotaCare, Experience Buick and myriad others.
According to the DME research, 60 percent of consumers “are likely to continue servicing at the dealership after the plan expires,” a formidable habit formed during the maintenance plan period. Compared to average dealer post-warranty retention rates of 22 percent and 40 percent – depending on the specific nameplate – these plans seemingly lock the car buyer to the dealership for service and repair beyond the maintenance plan period.
Satisfaction rates with all of these maintenance plans (prepaid and OE) seemingly drive the loyalty as well, with 69 percent of respondents either “extremely satisfied” or “satisfied” with the prepaid plans. And 56 percent say they are likely to keep servicing at the dealership when the plan expires.
As a consumer and the “fleet manager” of four vehicles in our household, I am inundated with maintenance plan options for our vehicles, ranging from those prepaid aftermarket plans as well as the push during the purchase of a new vehicle. And, more and more, to promote the reliability of their vehicles, the carmakers have come up with these programs that support the car owner for anywhere from three to seven years. So, the trend will continue to impact us for some time.
Obviously, the key for us is meeting or exceeding service and maintenance expectations. As I have said many times before, when we deliver quality parts, do it right the first time, and deliver this first-rate service we are known for, the business will come our way.
There will always be competitive forces, and challenges will abound. But we can meet these challenges if we keep our eye on the prize – at all levels.
Gary A. Molinaro
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