U.S. auto dealerships continue to increase sales from their service and parts departments, but the rate of growth is slowing.
Last year's 2.7-percent increase in total service and parts sales comes after increases of 3.8 percent in 2002, 8.5 percent in 2001 and 9.1 percent in 2000.
``There has been some spottiness in traffic, no question,'' said consultant Lloyd Schiller. He is president of Dealer Service Corp., a management training and development company in Boca Raton, Fla., that works with car dealership service, parts and body shop operations.
Auto dealerships also are pulling more profit from their service and parts operations. The average dealership earned $250,874 in net profit from service and parts sales in 2003. That's up 6.2 percent from the previous year and the sixth straight annual increase. In 2002 the increase was 5.9 percent.
The National Automobile Dealers Association (NADA) points to several reasons for last year's increase in total service and parts sales: The U.S. light-vehicle market remained strong; the number of miles driven rose; and the population of technologically advanced vehicles increased.
But Mr. Schiller, who conducts workshops for NADA, sees potential for car dealers to improve their service and parts operations.
``When we go through dealerships and look at what they are doing with traffic coming in, what we have is a failure to execute on very fundamental customer handling and sales processes,'' Mr. Schiller said.
Customer relationship management software can help dealers automate the process of contacting customers routinely, he said, but the interaction between service adviser and customer builds the relationship that keep a customer.
``We're in a slightly softer economy, and warranty work is declining because quality's getting better,'' Mr. Schiller said. ``We have to keep getting smarter and better and more accommodating and creative-all those things to keep the retention up or improve it.''