There's no question that the industry sales collapse has severely hurt dealerships. And fewer cars on the road creates long-term concerns about the future health of retailers' parts and service operations.
But there is a silver lining showing up right now in the service shop: more older cars to fix. At Asbury Automotive Group, the sixth-largest retailer in the country, about 60 percent of the vehicles serviced so far this year were more than 3 years old. In all of 2008, just 40 percent were that old.
“With those older cars, we're seeing larger repair orders, and we're seeing increased profit on those repair orders,” Asbury CFO Craig Monaghan said earlier this week.
The customer-paid work typically done on younger cars are routine jobs such as changing oil and rotating tires, Monaghan said. But older cars have problems with higher-ticket parts such as transmissions, engines and wiring harnesses. “It's usually a bigger job and a more complex job,” he said.
As customers keep vehicles longer, dealerships develop an advantage, he says. With cars becoming more sophisticated, the corner mechanic is not always going to be in a position to fix the problem.
Monaghan likes the trends. “It is an opportunity for us to generate more profits.”