Don Parker, who worked in dealership service departments for more than 40 years, including 12 as the manager at a Chevrolet store in the San Diego area, viewed fixed absorption the same way a doctor regards a patient's pulse.
"It's an indicator of how healthy you are, but it doesn't really tell the whole story as to the health of the individual," he says. "It's no different in a dealership because there are many ways to get to that number."
Dealerships can boost their fixed absorption by cutting costs or trying to squeeze every possible dime out of customers through aggressive selling, but Parker warns those are short-term fixes.
"If you sell them hard based on fear, customers are going to go away thinking they paid too much and that they didn't need it," he says. "As soon as they get that sense, you're going to lose those customers. It has to be done with a well-balanced consultative sales approach instead of fear-based."
Dealerships that focus on customer retention will build a longer-lasting high absorption rate and sell more cars, adds Parker, who served on General Motors' national advisory board on fixed operations.
"When a car hits 4 or 5 years old, there's definitely more opportunity," he says. "Those are the ones that influence your sales numbers, the hours per [repair order], because they start needing more repairs. When [the customer] is ready to buy his next car, you've taken care of him, and you're the first dealer he thinks of."