An oft-told story of 2020 was how the pandemic brought back into focus the importance of fixed operations at franchised dealerships. The pandemic forced states to temporarily close businesses, including auto sales departments across the country. But service departments were considered essential and remained open, bringing in money to keep dealerships afloat until restrictions eased later in the year.
Ian Grace, senior director of partner performance at automotiveMastermind, thinks the crisis that hits the industry in 2021 will be a lack of vehicle inventory.
Blame microchip shortages and other supply chain issues that are pinching production. And that could result in a sort of dealership déjà vu.
"It's causing many [dealers] to kind of go back to that 2020 view of the importance of the service drive," Grace says.
In addition to more repair and warranty work, Grace says the service drive could help the dealership bottom line by being "a source of inventory acquisition" for the used-vehicle lot.
Grace uses data to point dealerships "in the right direction of who are the right people to sell [what's currently on the used-car lot] or who's driving what I know I could move inside of seven days," he says. Pre-owned vehicle sales were "really paramount to the success of many dealers last year because it was the only source of customer engagement."
Most manufacturers will be impacted "in some way, shape or form inventory-wise this year," Grace says.
This may result in a shortage of new vehicles and eventually, a shortage of used cars as well. To survive, dealerships need to be in a "farm and hunt" mode of looking for good used cars — and the service drive is fertile territory.
"If you want to really approach things so that you can be ready to adapt in a dynamic environment," Grace says, "you need to have the right tools, the right people and the right processes in place, especially around the service drive."
