Let’s take a deep dive into the breakdown of age segments of vehicles in operation within a dealership’s local market. Service Drive retention is the percentage of Units in Operation (U.I.O.) in an Area of Influence (A.O.I.) that have visited your dealer for customer pay service in the last 12 months.
Segment 1 Cars
0-3 years old. Average miles: 24k or below
Warranty insures service drive retention along with prepaid maintenance. Wear and tear not covered.
This is where 90% of dealership parts inventory investment is centered towards. The cars are being repaired in house. We hand parts across the counter. High GP%! Life is good. Especially if it’s a warranty job.
Segment 2 Cars
3-6 years old. Average miles: 24- 48k
This is where cars cease coming back to the service drive. Cars are now worth half of original MSRP due to depreciation.
Most cars have a 3 year, 36k warranty. Luxury brands are around 4 year, 50k. Warranty is the primary factor in service drive customer retention along with pre-paid maintenance and tires. This is the time OEM warranties expire and when the “mass exodus” takes place away from the dealership towards independent repair facilities (IRF’s). Most cars are now worth half of the original sales price paid due to depreciation. Customers have become very price sensitive. Many of these cars are off lease returns that require reconditioning.
Segment 3 Cars
6-9 years old. Average miles: 48- 72k
High mileage; often second owners. “Sweet Spot” for replacement parts needs.
How many owners of these cars come to the service drive or parts counter? Not many. These customers are online, looking for parts fitment, part #’s and competitive pricing. Segment 3 is what we call the “Sweet Spot” for parts demand. The aftermarket and IRF shops “own” these cars. Dealers struggle to compete with World Pac and “Hot Shot” delivery. Many of these cars are now on their 2nd or 3rd owner.
Segment 4 Cars
9+ years old. Average miles: 96k+
Average age for all cars in operation is 11.6 years old.
The majority of all cars on the road are in this segment. The average age of cars on the road today is 11.6 years old. The only time you see these parts customers are for “captive” parts they can’t find anywhere else.
What’s the takeaway for parts managers? Online eCommerce parts platforms allow you to connect with customers who would otherwise never visit your dealership for service or repairs. Expand your horizons and take things online.