Fixed Ops Magazine 2024 Vol 21-5a - 57

ers who plan to buy in-store often browse and compare
product prices online beforehand. Dealers whose
parts inventory aren't represented online may as well
not exist to these shoppers.
Rise of electric vehicles and the growing EV market
is starting to have a major influence on dealership
operations. As traditional part sales evolve to accommodate
new technologies, dealerships must adapt to
different parts requirements and service models while
fighting to maintain profitability.
Changes in
attainable. There's massive revenue potential in fixed
ops that's largely untapped. Mining this opportunity
through modernization is the best if not the only way
to safeguard the future of your business in an industry
on the cusp of transformation. Yet, this goal remains a
major challenge for many dealerships, with the average
U.S. dealership absorption rate hovering at just 57%.
CHALLENGES AND OPPORTUNITIES IN THE
2024 AUTOMOTIVE MARKET
The 2024 automotive industry is up against economic
uncertainties that include shrinking profit margins on
new vehicles, the rapid rise of automotive technology,
and a strong consumer preference for convenient
shopping options. These factors are driving dealerships
to rethink their traditional business models and
seek new avenues for growth.
Economic pressures are creating significant economic
hurdles for the industry. Dealership profitability grapples
with the tightening grip of:
* Rising operational costs
* Shrinking profit margins
* Intensified competition
To maintain financial stability, dealerships are under
pressure to diversify and find new revenue streams.
Increased digitization and eCommerce has changed
how consumers shop for everything-including automotive
parts and services. Online shopping is not a
convenience, but an expectation. In fact, even consumSEPTEMBER
OCTOBER 2024 || FIXED OPS MAGAZINE
consumer behavior
clearly
illustrate
that today's consumers are tech-savvy and demand
self-service shopping experiences. This means dealerships
that don't have an optimized digital presence
face losing customers to competitors who are taking
the needs of automotive shoppers seriously. Consumer
expectations are being molded by leaders in
customer experience like Amazon. If your dealership
doesn't get on board, it will be left behind.
Industry challenges and long-term projections will
accentuate the pressure for any Dealership that resists
modernizing as they will face serious challenges, like a
diminishing customer base and rising overhead costs.
But with a forward-thinking approach and by bringing
in the right tools and strategies, these obstacles can
be overcome. Dealers who invest in the historically
ignored and undervalued areas of the dealership will
see new revenue opportunities.
Slim margins and rising costs of a changing industry
are threatening the traditional dealership's bottom
line. The focus needs to shift towards maximizing the
untapped opportunities within your fixed operations,
particularly in parts and accessory sales. This transition
is crucial for achieving a 100% absorption rate
and securing your dealership's financial stability in
years to come.
THE ROLE OF PARTS ECOMMERCE IN
DRIVING ABSORPTION RATES
Parts eCommerce offers a great opportunity for auto
dealers. Placing parts inventory online means dealerships
can tap into a national customer base and
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Fixed Ops Magazine 2024 Vol 21-5a

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