Automotive service and the sale of original equipment-branded parts are increasingly lucrative businesses for automakers and their franchised dealerships. As new-vehicle sales slip, manufacturers and dealers must continue to identify additional profit channels.
Creating more demand for original equipment parts would benefit automakers and retailers while helping to capture service revenue that many dealerships are losing. The most recent Cox Automotive Service Industry Study concludes that new-vehicle dealerships forfeit as much as $266 billion a year in service revenue — $15.9 million for the average dealership — because they fall short on keeping customers. According to the Cox study, 70 percent of customers who bought or leased a vehicle from a franchised dealership did not return for service in the past year.
As vehicles age, drivers often have them serviced at independent shops. Yet even these shops need to source the right parts, with the option of buying original equipment parts from a franchised dealership. Before this can happen, though, these parts must be available in a dealership's database.
Independent shops, which perform more than 70 percent of post-warranty service and repairs, typically buy most of their parts from nonoriginal equipment sources that often don't offer factory-branded parts. There is significant untapped opportunity for automakers and dealers to sell more of their parts to independent repairers by coding original equipment parts more effectively and making that enhanced information available to everyone who buys parts.