Service departments in trouble

When folks don't buy cars, they don't need service. That's why service departments could see volume declines of around 20 percent between 2009 and 2013, according to a new report from J.D. Power and Associates. Repair work is usually one of a dealer's most profitable businesses, more so than car sales, so any extended slowdown is certain to sting at the bottom line. Automakers sold 10.4 million vehicles last year, the lowest number since 1970 (and far below the 16-17 million vehicles sold in each of the last several years). Sales will probably rebound this year, but not by much. From the press release:

"Over time, many vehicle owners gradually defect to non-dealer service facilities for repair and maintenance needs, particularly when the warranty period expires," said Jon Osborn, research director at J.D. Power and Associates. "With service customer retention becoming more crucial than ever during the next few years, dealerships must focus on not only providing superior levels of customer service, but also on enhancing convenience for vehicle owners and providing pricing that is more competitive with non-dealer facilities."

Osborn tells the LAT that "dealers are going to have to do something to get more customers in. More competitive pricing would be one way to do it. Going after the quick lube business would be another way." Another possibility: opening satellite service departments that are more convenient for customers.