1 Thing We're Talking About: Dealer feelings about fixed ops dips slightly

A Cox Automotive poll of U.S. franchised dealerships conducted from April 24 to May 7 revealed that auto retailers were slightly less enthusiastic about the current state of their fixed operations than they were in the first three months of the year, with their feelings about future opportunity down as well.

As to their current level of fixed ops business, dealers' responses totaled a score of 64 in the Cox Automotive Dealer Sentiment index, down from 68 in the first quarter. A question about future opportunity in parts and service netted a score of 69, down from 72 in the first quarter.

The poll surveyed 568 franchised dealer representatives and 492 independent dealer personnel. Scores greater than 50 indicate dealers view conditions as positive or improving.

Jonathan Smoke, Cox Automotive chief economist, said the company's Xtime data shows parts and service operations continue to be "a mostly positive story."

The first couple of months of 2023 saw some winter-related issues that caused repair tickets to be down compared with a year earlier, Smoke said.

"We continue to see strong revenues and strong pricing power," he said. "Generally, I think dealers — especially franchised dealers — are enjoying strong revenue growth and strong profits."

Staffing was an issue highlighted in the Cox survey, with 80 percent of franchised dealers and 69 percent of independent dealers saying finding enough workers was a problem. Service topped all other areas of dealership operations on this issue, including sales departments.

Smoke said one challenge service departments might be facing is capturing enough of an aging vehicle business.

Franchised dealers "generally are focused on a certain age of vehicles," he said. "If they aren't aggressively trying to increase more of those older units coming in, they will have a challenge of keeping the same level of business.

"But that's the only thing I can think of because we're pretty optimistic about fixed operations continuing to be one of the stronger parts of the business."