Prior to the pandemic, Parts Departments were already the second largest asset and area of potential growth for dealerships. At that time, according to NADA, 49.6% of the average dealership’s gross profits came directly from the parts department, and in 2019, parts sales totaled more than $120 billion. Now, in the wake of shortages, the hiring crisis, and a boom in demand for used car sales, Parts Departments have become even more valuable and essential to a healthy dealership. With a decline in new car sales, dealers were forced to shift focus to the part of their business that has proven resilient amidst the upheaval: fixed operations.
The shift to service
As the challenges of the past two years have molded dealerships all over the country, we’ve seen a palpable change in the primary focus of dealers, fixed ops managers, and parts managers. More and more conversations revolve around how to better optimize inventory, how to increase service efficiency & quality, and how to grow customer relationships with better tools for follow-up and nurturing. While dealers can’t control the lasting impacts of chip shortages and low new car inventory, they have been able to recognize the opportunity in selling parts (both retail and wholesale), especially to competitors and, increasingly, online.
Factoring in the hiring crisis
Another trend that has emerged is the influx of brand-new-to-the-position parts managers, service managers, fixed ops managers, and all other roles within the parts department. The resulting realization is that there is a major lack of resources, training, consulting, and support available to these roles and the roles DMS complexities and transitions have only complicated the situation- leaving these folks completely without a paddle. For new parts managers especially, there are simply too many areas of focus to effectively run an operation that is on a growth trajectory- even if that operation is already profitable.
For dealers ready to maximize the potential that lies in Fixed Ops, focusing on giving your team the tools they need, increasing retention of great employees, and helping your parts managers stay proactive and growth focused will maximize the opportunity of this rare climate- giving you the trajectory for the best possible outcomes.
What do you think- how has your fixed operations changed in the past year? Leave a comment below!
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