Guest commentary: Rethink your service drive acquisition strategy

Dealers nationwide are facing unprecedented headwinds when it comes to acquiring used-car inventory. The supply crunch caused by the pandemic and chip shortage will continue for at least a few more years, and today's affordability challenges are piling onto the problem.

Higher interest rates are deterring new-car sales and making lease options a costlier proposition, both of which translate into even fewer desirable used vehicles in the marketplace.

While these converging conditions are creating a challenging environment to source desirable used vehicles, a valuable sourcing opportunity exists within your own dealership on your service drive. However, sourcing from your own service drive and doing it effectively are two different things.

One of the biggest challenges dealerships face in setting up a successful service drive acquisition program is that their fixed operations and sales departments are often disconnected across the board — no connected software, no comprehensive strategy and no aligned pay plans.

And it's these disconnects that keep a service drive program stuck in neutral.

Seeing that happen more often than not, I've compiled the four best practices our most successful dealers have followed to capitalize on one of the best places to source quality used vehicles — the service drive.

1. Approach a fixed and variable operations strategy holistically. Start with a solid strategy that spans your fixed and variable operations and get buy-in from your leaders. This will ensure both sides of your dealership are working together toward its goals. Once your leaders are on board, be sure they clearly articulate the strategy to all team members so everyone is on the same page and moving in the same direction.

2. Align compensation plans. This might be controversial, but challenging times call for novel approaches. A common but little-discussed problem with service drive acquisition is the disparity between how service and sales departments are compensated. Fixed ops personnel are compensated by a percentage of the written repair order. If sales steps in with an offer, that hits service personnel in their wallet. Dealership managers can create compensation plans that reward and incentivize all staff to work as a team toward a common goal. For example, service staff could receive a bonus for every car that gets acquired out of the service line.

3. Embrace technology. With a solid strategy and team members on board, now you need to empower your staff with the right tools. One of the biggest disconnects we've seen between variable and fixed operations is in the technologies used. If you're serious about tapping into this treasure trove of desirable units, you'll need software that connects your appraisal, inventory management and service solutions. According to insights from Cox Automotive, dealers who connect their service software and inventory management solution acquire incrementally more vehicles each month.

4. Be more targeted. Software in place? Check. Teams aligned? Check. The final piece of the puzzle is to target and prioritize vehicles that make the most sense for your dealership's capabilities and have the highest potential for profitability. You may not want or need every vehicle that runs through your service drive. By using the right technologies and setting the appropriate parameters, you can be sure your teams are spending their time going after the right vehicles and making the best offer that can win the car while still leaving room for profit on the flip side.

With everything going on in the industry, today is the day to rethink your service drive acquisition strategy to build used-car inventory and profitability.