Service contract sales could be the key to keeping customers driving the oldest vehicles engaged with their dealerships.
By 2020, there will be about 76 million vehicles on the road that are 16 years old or older, up from 35 million in 2002, marking a “sweet spot” for the aftermarket repair business, IHS said this month.
That spells opportunity for dealerships that track customers’ ownership cycles and vehicle-protection expiration dates.
Customers want updates about their vehicle; they want to know their options. For example, 57 percent of respondents to a September AutoAlert study said they want to be notified about key points in their ownership, such as when the manufacturer’s warranty is near expiration.
Dealerships that alert customers to expiration dates could sell them extended service contracts, which would lead to increased business in the service drive and perhaps more trade-ins and vehicle purchases.
AutoAlert’s study was aimed in part at evaluating customer awareness and motivation to trade in their vehicles and at learning how customers want to be notified about vehicle upgrade eligibility. The study was based on IHS’ ownership data and a survey of more than 400 vehicle owners.
If dealerships stay connected with customers, they will build loyalty and gain repeat business. Consistent monitoring of customers’ status in their ownership cycle and routine follow-ups can increase F&I product sales and dealership repair work long after the vehicle purchase.