Vehicle customization and accessories sales helped Galpin Motors Inc. in Southern California average $16.6 million in parts and service sales at its seven dealerships last year.
Galpin Auto Sports, which tricks out cars for these dealerships, adds as much as $500,000 a month to the company's revenue, says Beau Boeckmann, president of Galpin Auto Sports and vice president of Galpin Motors. Galpin operates a huge parts warehouse and a thriving wholesale business, with 20 trucks delivering parts throughout its market.
Another major dealership group in Southern California, Fletcher Jones Automotive Group of Newport Beach, averaged $15.96 million in parts and service revenue in 2016 at its 17 dealerships.
Garth Blumenthal, general manager of Fletcher Jones Motorcars in Newport Beach, the group's flagship Mercedes-Benz dealership, cites the group's Preferred Owner Program as a key to service customer loyalty and retention.
Anyone who buys a vehicle from Fletcher Jones is enrolled in the program. Service benefits include free loaner vehicles, airport shuttles at its Newport Beach and Ontario, Calif., Mercedes-Benz stores and free car washes Monday through Saturday.
Such amenities have enabled Fletcher Jones to build relationships over generations with families of customers, Blumenthal adds. "If they need their car serviced, they think of us," he says.
Don Tipton, an automotive retail consultant in Jacksonville, Fla., counsels dealerships that seek to boost their parts and service revenue to perform a daily review of repair orders to look for missed opportunities.
That process can acquaint a dealership with the mix of service work it is attracting and the extent to which customers are declining repair recommendations, says Tipton, president of DTC Retail Consulting Inc. "Just looking at numbers without analysis is dangerous," he adds.
As vehicle sales plateau, service departments will need to do even more to keep customers in order to maintain dealership revenues, says Steven Szakaly, NADA's chief economist.
"Part of the strength of the diversity of the dealer retail body is they can have different approaches to how they run their service area," Szakaly says. "One-size-fits-all does not work."