There was a time not long ago when carmakers wanted dealerships to assign all the overhead of the business to the service department so that whatever they made in new-car sales would fall to the bottom line as profit.
That practice has, for the most part, gone away. Dealers understand today that every department has its own overhead. But that certainly does not make the service department, or any fixed-based operations, less important to the store.
With a few months left until the end of the year, it looks pretty certain that new-vehicle sales in the U.S. will end up about even with last year. The real question is how the industry will perform next year given all the uncertainties, beginning with the fall elections, and their impact on business.
But one thing seems obvious: Every dealer should keep a very close eye on all operations, particularly fixed operations. Service has always been an easy-to-ignore department in retailing, and yet, in the next year or so, this just might be the difference between making or losing a substantial amount of money.
There are plenty of opportunities to maximize vehicle sales revenue, whether by adding accessories to new-car sales or making sure there is a new-car salesperson in the service lanes in the morning when all those vehicles show up.
The opportunities are probably missed today simply because there are so many other things going on that earn money for the dealership.
But dealers will have to take care of every potential profit center in the business. It will be important not to let any opportunities fall by the wayside.
And if we are all wrong and it turns into another barnburner in 2019, then dealers will have the best year ever.
Lots of challenges, but lots of new opportunities. It's always exciting.