Are more service customers migrating to aftermarket shops?

Publish Date: 
Mar 6, 2012
By Holly J. Wagner

THE U.S. AUTOMOBILE customer base is aging. So much so, in fact, that it's starting to affect business for franchised auto dealerships, particularly in the service department.

So says DMEautomotive (DMEa), which has just released a comprehensive study of the $215 billion U.S. automobile service market..

The Changing Service Loyalty Landscape reportedly is the first-ever analysis of consumer service loyalty rates at auto dealerships, independent stores and aftermarket chains. And it's worthwhile reading for anyone running a retail or service business in the powersports market.

The basic finding is this: older drivers still like to go to their dealership to have service done on their cars, but younger drivers prefer to take their cars to aftermarket chains, and much sooner than expected.

The report goes so far to say that the auto dealership service center is becoming a "senior center" as younger consumer segments gravitate toward aftermarket chains. The report provides fresh evidence that the age of the U.S. vehicle fleet significantly benefits independent stores and aftermarket chains over franchised dealerships.

The findings (scroll down) will have a dramatic effect on powersports service departments.

"Dealerships are losing service business not only from the septuagenarians, but from anyone who now has a more convenient option," notes Eric Anderson, Dealernews contributor and vice president of sales and marketing for Motorcycle Aftermarket Group (MAG). "The old multi-franchised powersports model positions these large retail businesses as destination stores. These days, that means 'out of my way' no matter what age you are. My (very) local EconoLube-and-Tune does motorcycle oil changes now and mobile motorcycle mechanics like www.splittinglanes.com are in the process of redefining convenient service for riders. The local independent motorcycle shop also performs basic services without an appointment; i.e. more conveniently than the larger, more distant destination powersports store.

"Bigger is not necessarily better in today's economy," Anderson continues. "UPS brings easily installed parts and apparel to our doorsteps, so destination dealers searching for more service business could begin to think about duplicating the old bookmobile, roach coach, auto detailing and AAA roadside assistance models. Don't wait for them to come to you any longer; go to where the customers need you most. Have you checked out the mobile barber shop yet at www.theoriginalmobilebarbershop.com? New rules call for new ideas."

The DMEa research report. Produced by DMEa's Strategy & Analytics division, The Changing Service Loyalty Landscape is based on a recent survey of 4,000 U.S. vehicle owners. The complete report is available by clicking here.

DMEa's white paper identifies three levels of customer loyalty for service departments: loyalists (who both visit and spend most at a certain store type); swing loyalists (who either visit, or spend most at, a store type, but not both); and disloyalists (who neither visit nor spend most at a certain store type). Researchers analyzed loyalty, spend and service selection motivators by age. They revealed that dealership loyalists represent the oldest service customer, while aftermarket chains -- which poach the largest share of business from dealerships and independent shops -- are capturing younger clients.

The report also shows that dealership loyalists are more likely to be over 60. Roughly half (47 percent) of aftermarket loyalists are under 34, and nearly half (46 percent) of dealer loyalists are a "graying" 50-plus.  Meanwhile, over a third of those most likely to be disloyal to a dealership service center are in the 25-34 age group.

What this all means, is that a lot of (older) service department customers are going to exit the market soon, and they won't be replaced by younger clientele. (continued)