The Auto Market Brief

Service departments are no longer just another revenue stream for dealers, they’re a critical inventory funnel, customer relationship engine, and profit driver.

In this special episode of The Auto Market Brief, Erin Keating is joined by Alex Bland, Cox Automotive's Sr. Director of Market and Customer Research, to break down new consumer and dealer research exposing what's changed in fixed operations, and how this area is becoming the most critical profit engine for dealers in today’s market.

As vehicle affordability tightens and ownership periods stretch, dealers are losing service share to independents, even as service revenue hits record highs. This conversation explores what’s driving that paradox, where dealers are leaking opportunity, and how trust, transparency, and convenience can turn fixed ops into a powerful retention and sales driver.

In This Episode:
  • Why dealers are making more service money, but losing market share
  • How convenience, trust, and pricing perception reshape service decisions
  • Where service visits unlock sales, trade‑ins, and lifetime value
The Auto Market Brief delivers timely data, clear context, and practical insight to help industry leaders make smarter decisions—what’s happening now, and what’s coming next. 

The Auto Market Brief is powered by Cox Automotive. For more industry insights and expert perspectives, visit our Insights Hub at https://www.coxautoinc.com/insights.

Creators and Guests

Host
Erin Keating
Erin Keating is an Executive Analyst and Senior Director of Economic and Industry Insights at Cox Automotive. She brings 30 years of professional experience, including 14 years in the automotive industry, providing analysis on market conditions, automaker performance, and consumer demand shaping the economics of the new-vehicle market. Erin spent 10 years with Audi of America, including leading Audi Motorsport North America, informing her perspective on both commercial strategy and competitive dynamics.
Guest
Alex Bland
Alex Bland is the Senior Director of Market and Customer Research at Cox Automotive. He leads research focused on dealer performance, consumer behavior, and market dynamics across the automotive ecosystem. Alex and his team are responsible for some of Cox Automotive's largest studies, including dealer sentiment, fixed operations, ownership, and service‑lane research, helping translate complex data into practical insight for dealers and industry leaders navigating a rapidly shifting market.

What is The Auto Market Brief?

The Auto Market Brief, powered by Cox Automotive, breaks down the latest trends and forecasts shaping the automotive industry. The show is hosted by Cox Automotive Executive Analyst Erin Keating, coupling years of experience translating data and trends with the data and industry insights of the largest automotive services and technology provider.

Joined by other Cox Automotive experts and outside guests, you’ll get data-driven insights and industry outlooks from some of the industry’s leading voices.​

Erin Keating:

Welcome to The Auto Market Brief from Cox Automotive. Each episode, our experts and special guests break down the latest trends, insights, and news shaping the automotive market. We'll give you the information that truly matters so you can make smarter decisions and drive your business forward. Hi, everybody, and welcome back to the Auto Market Brief Podcast. I'm Erin Keating, your host and executive analyst here at Cox Automotive.

Erin Keating:

And I'm actually joined by a special guest today, Alex Bland, a senior director of our Research and Intelligence Group. Welcome, Alex.

Alex Bland:

Great to be here, Erin. Thanks for having me.

Erin Keating:

Of course. Always. Always love having a conversation with you. So, you know, I live and breathe the headlines every day. That's sort of my job is to make sure I'm listening to the heartbeat of what's happening in the automotive industry broadly.

Erin Keating:

And I will tell you something I'm hearing not only in the headlines, but something from a lot of automakers and for sure dealers, and I know you're hearing it too. Service is becoming the big profit engine. It's always been a pretty solid profit engine for all dealers. But in the wake of things being really expensive in the new car market and the used car market being a little squeezed, dealers are relying more and more on fixed operations and that profitability engine. And we at Cox Automotive actually do a survey.

Erin Keating:

I don't know how often, so I'll have you tell me that in a minute, Alex, but we do a survey and a lot of research on our own. And I know that we just published our brand new fixed operations and ownership study. And that's what we have Alex here to talk about today that so we can help bring the industry up to speed on what are consumers thinking, how should we be thinking about it from a dealer perspective, and perhaps even some tricks of the trade that we can offer for people to really up their game here and help beefing up that profitability engine. So Alex, let's get a little bit grounded for our audience. Tell me about this study.

Erin Keating:

Why do we do it and what's the timing on it and when?

Alex Bland:

Yeah. So all great questions, Erin. And I couldn't agree more with the importance of fixed operations really forever, but so so prominent in people's minds today. This is something we look into every few years. There's not a perfect cadence because, honestly, this is not the sexiest topic in automotive, which has always surprised me.

Alex Bland:

Given how important and fundamentally critical it is to a dealer's business, I would have always thought this would have been more top of mind. But now as things, to your point, get crunched, it's sort of risen up the ladder in terms of things to focus on. So we went out. We talked to 500 dealers. We talked to over 2,500 consumers to put together something that we feel is both insightful and hopefully useful for this critical yet sometimes underrepresented area of the the dealer's ecosystem.

Erin Keating:

Love that. Yeah. And, you know, it's it's not even just that the average transaction price is really high right now. And so perhaps they're feeling even more squeezed on that new car margin and, again, used car margins. But we also know that cars are a lot more complex.

Erin Keating:

And there's a lot more to them these days that you need a lot more tools and tooling and mechanics that are really up to speed on all of the new technologies, as well as there's a lot of recalls. So we know that dealers are consistently battling between customer pay work and then recall and warranty work that of course gets comes from the OEM. So we dig a little bit into some of these aspects, but why don't we talk about at the top of this, like competitive pressure is really entering into the system. We are seeing that dealers are actually losing business to general repair shops and so forth. And while vehicles in operation is going up, tell us a little bit more like if service demand is growing, why aren't dealers actually automatically winning that business?

Alex Bland:

Yeah. It's it's it's a a very nuanced question, and there's a lot of answers. And it's easy to miss it if you're not paying attention because the reality is dealers are making more money from service than they've ever made before. The dollars are up. The thing is the percentage of service visits they're getting is actually down.

Alex Bland:

And if you look at the counts, I find this staggering. Over the last seven years, the number of auto mechanic businesses increased by 33,000. And those aren't popping up because they're not making money. They're popping up because they are making money, and that's money the dealers are leaving on the table and and not realizing. So dealers are making more money, but they're losing share to all the different mechanic folks that are popping up all across the country.

Erin Keating:

Right. So what are some of those key reasons why they're losing them?

Alex Bland:

There's a lot of reasons. Some of it starts with the the perception of price. So price is a big part of it. Whether it's true or not, the perception is the dealer's more expensive. Sometimes that's a a price that that that third party mechanic is supporting and and pushing.

Alex Bland:

And that's not always true. Right? There's a lot of, oh, wait. One more thing with the third party mechanic. You don't get quite as much of with the dealer, so we've got that piece.

Alex Bland:

There's trust. That trust comes down to the age old stereotypes that go with dealers that many consumers have not just on the sales side of the business, but it lives on the service side of the business as well. So those are alive and well. So there's a trust issue that dealers struggle against. And then there's always gonna be convenience.

Alex Bland:

Right? As close as the dealership is to my house, there's gonna be four other mechanics or franchises closer that I can consider if I just don't wanna go as far.

Erin Keating:

Absolutely. I mean, I will say from personal experience, I just had to get my EVs serviced for the first time. I didn't even really understand what it would be serviced with. So that's a whole other aspect we could talk about because I wasn't I didn't need an oil change. But I did have a closer dealership to me.

Erin Keating:

Because I work here and I understand the need for loyalty, I did go the extra miles to go back to my dealer of purchase, but I know not everyone will make that decision. And you mentioned convenience, and I know that recently there was a report out there that the mobile service business is anticipated to grow from something like $4,300,000,000 to $6,500,000,000 by 2030. So I'm sure this is putting a lot of pressure on dealers to figure out how to best serve customers from a convenience perspective. But again, I go back to that idea that the cars are also more complex. Do these independent repair shops have access to the OEM tools, calibration tools, etcetera, etcetera?

Erin Keating:

So what did our study tell us about how this is impacting dealers and what strategies, they can really put into place that might help them retain the customers?

Alex Bland:

Yeah. I I think you call out a good point. The convenience thing moves the needle so much. And the reality is that all things being equal, people are gonna tend to go with the dealer. And that leaves dealers trying to figure out how to make all things equal.

Alex Bland:

And that convenience item is one, whether it's the mobile repair item or it's the service pickup and delivery concept, which we've seen consumers get excited about, but it's not really a a real thing currently. Anything dealers can do to help bridge that convenience gap is important. Then you've also got I mentioned trust before the trust side. I I've always been a dealer guide. Like you said, the first time I saw some of the new technology available in terms of photo and video capture of actual service issues was when I went to a third party, and it was as if the the door and the light came on for the first time for me.

Alex Bland:

And it shocked me how far behind the dealers that I had been visiting were in relation to that. And as much as I am skeptical about repair stuff just inherently, seeing a video and a voice over of someone walking around showing me what's wrong, even though I don't have a clue whether it's correct or not, it gives me some sense of validation that, you know what? That's correct. They're not just trying to upcharge me or add something else. And that sort of trust builds loyalty, and it builds repeat purchase.

Erin Keating:

Absolutely. And I think we've seen both in our service study last year as well as in this study that customers overwhelmingly say they want those tools. Now, usage of those tools is lower than their desire to use them, but of course, that could come back to the fact that they're not being offered them. So, really important point. And again, going back to my very recent experience, I happened to stick around the dealership and work while they were taking care of my car.

Erin Keating:

So the mechanic could come and talk me through what he found in my tires. But if I had been remote because convenience was really important to me, like our customers are saying, and so either I had taken a car with me or I pickup and delivery, that video capability of even texting it to a customer to say, hey, here's what we found underneath the car. You're saying that is something that really helps build trust and doesn't make the consumer feel like they're being sold. Right?

Alex Bland:

For sure. For sure. It it it's all about trust. Whether it starts in the sales process, you start building trust. That trust helps roll into the service sector of the business, and success there then wraps you back around into sales.

Alex Bland:

It's a full ecosystem to try to build the best lifetime value out of the customer you can.

Erin Keating:

Yeah. So, you know, we're really starting to also understand that service is not just fixed apps. It is that retention tool. It is your opportunity to offer consumers trade in prices. We do know there's a threshold of pain, if you will, of repairs and maintenance that might convince someone, hey, it's time to repair that vehicle.

Erin Keating:

We know that people are holding on to their vehicles longer. So that's a lot of stuff in there. Let's start with what is the picture right now with how long people are holding on to cars and where dealers are losing that customer in their life cycle.

Alex Bland:

Yeah. And and to your point, dealers are seeing consumers less because consumers are holding on to cars longer than they ever have, and there's a lot of reasons for that. Right? It's better better vehicles that require less repair and and fall apart far less often. Right.

Alex Bland:

You've got affordability challenges that exist for the consumer today that dealers are feeling. We hear that all the time in terms of the crunch there. So they're getting less bites at the apple than they have historically, which I think to me makes it even more important that you, to your point, try to leverage service as a a part of that overall ecosystem. Right? So I'm trying to find used inventory.

Alex Bland:

It's not easy to find used inventory today. So let's try to use the service lane as a used vehicle acquisition tool. Let's try to use it to look for offers we can give to our customers to get them back into the sales line. Then we pick up a vehicle that we understand. We get them back in.

Alex Bland:

And, again, the whole ecosystem is a little bit healthier. We have more repeat customers, and it's just a a a better situation all the way around.

Erin Keating:

Now am I imagining things or did we not we there is a threshold. Right? There was like a numb a magic number that we've seen. I think it's somewhere north of 3,000 or something. Like, when a repair order gets to be that that level, that's when you should it should be flagging you.

Erin Keating:

You know?

Alex Bland:

Yeah. Somewhere around the $3,500 range, there's there's a tipping point there. But from my perspective, it's a best practice to always sort of keep the customer updated on that because there are a lot of folks who are looking to flip out more frequently for new technology. Right. If you can keep the payment even and move into something else that's that's newer, nicer, different, it's nice having that option.

Alex Bland:

And, again, it gives you a reason to have a conversation with the customer and build that relationship.

Erin Keating:

Right. As as what is it? Glengarry, Glenn Ross, you know, always be selling. Right? So there's some real need for dealerships to make sure they're truly connecting their service department with their sales department to be sure that the service department is aware of those things, is properly reintroducing sales consultants when needed, making them aware of when service appointments are coming up for loyal clients so that they can be ready to speak to that client while they're there and so forth.

Erin Keating:

So I think that's really interesting. The other thing is that I think the study revealed that post warranty is where they're losing a lot of business. And I think even our service study last year said that in some cases they were losing customers that were still within warranty. What is, what are we finding there and what are some things that dealers can think about as far as retaining customers?

Alex Bland:

Yeah. I think the the historic norm has been once you're outside of the warranty, all those things we talked about, the trust, the convenience, the price perceptions takes people away, and they're looking for other options in terms of service. That continues to grow. But we also have seen a downtick in service visits during warranty. And I may or may not live with someone who might choose to go to the more convenient option, assuming what we're doing, what we're looking to repair isn't as expensive or technologically sophisticated.

Erin Keating:

Right.

Alex Bland:

They may be willing to pay.

Erin Keating:

Right. Yeah. That's interesting. And I do think that, you know, I mean, these are the types of things that when you're buying a used car or even a new car, you are, you know, you're sitting in that box, as they call it, because there are some additional products they're looking to potentially sell you on, but not just because they're trying to make money, but because these things are post warranty, it would bring you back to the dealership. You are protecting yourself beyond when that car comes out of warranty, you know, and again, there's a lot of recall issues out there.

Erin Keating:

Not all of them can be solved over the air. And there is some challenge with tech shortages, right, in some of the dealerships or lack of optimization of service bay utility. And some of that does come from the fact that if they're consistently working on recalls, then they don't necessarily have as much time for customer pay. Anything in there about that piece around convenience or, you know, having customers wait too long to actually get an appointment at the service dealer because of that, you know, inefficient utilization of the space?

Alex Bland:

Yeah. Convenience is always at the heart of the the decision process here. And we see a lot of customer complaints when it comes to either not being able to get it done within what they expect as a reasonable time frame or the miss the miss setting of expectations of, okay. It's gonna take this long. It didn't.

Alex Bland:

I've stayed at the dealership all day. You didn't offer me transport to or from, so I'm stuck here. And that expectation setting goes to costs and financial items as well. Right? So it's not just the convenience piece, but it's setting expectations on what we're doing, what the repair looks like, and what the cost is going to be at the end of it.

Erin Keating:

Yeah. And you mentioned cost and so transparency around pricing. What do you think is like the misconception there and where does it come from and how should dealers think about overcoming individuals preconceived notion that the dealer is trying to gouge you whereas the the service center around the corner is not going to?

Alex Bland:

Yeah. I think this is a very interesting topic because I think the the pressure on this part of the ecosystem will only rise with the the dawn of AI. And I I'm just waiting for consumers to turn AI into their own version of WebMD for their car. So I've diagnosed it, and I know how much I think I should pay. So here's a piece of paper.

Alex Bland:

I

Erin Keating:

write as

Alex Bland:

my email. Exactly. But so I this is a a very hot button sort of issue. And what we see is the dealers aren't really charging all that much more or different than the third parties are. Third parties can be a little more sneaky with upcharging and, oh, wait.

Alex Bland:

We have one more thing, and then suddenly it's the same price or more. So it's important for dealers to be very transparent in sharing what things are gonna cost, what it looks like. And I don't see a problem with being bold about we're on the same even playing field pricing wise as these third parties who are gonna tell you something different.

Erin Keating:

100%. I know that I was speaking to a couple of different big dealer meetings, leading into the tax refund season. And of course, that is prime season for getting your service lane filled up and for used car equity mining in your service lanes. And I remember just saying, you know, why aren't you on your website thinking about posting transparent pricing and even competitive pricing just as much as you would around the cost of a new vehicle, right? Because consumers are looking to your website, they're looking to third party sites to figure out where they should go and get their car serviced.

Erin Keating:

So having that pricing transparency across your digital retailing environment, I assume, would be a competitive advantage, especially if you can call out the comparison, you know, with the other organizations within your DMA or your area of service, if you will. Right? I mean

Alex Bland:

Yeah. Very much agree because the dealers already are perceived to have the the best technicians. That's a differentiator. You just have to make sure that the other items are on an even playing field so that you can win where the the areas that you win push you over the top.

Erin Keating:

Yeah. Exactly. Fun fact, or maybe it's actually really not a fun fact, but we were just discussing this recently. I was speaking with a Wall Street Journal reporter who had had a fender bender in his EV. And this is just sort of an APB out there for all the dealers and the consumers to think about.

Erin Keating:

The insurers are really tied in with the independent repair and collision organizations, not necessarily as tied in with the dealerships. However, this gentleman had to take his car into where the insurance told him to get it repaired. And it was only about a week or two later that he found out, oh, they didn't even have the tools, the calibration needs and everything. He had to wait another two weeks. And so all along, he could have just gone back to his dealer of purchase to be sure they could have taken care of him because they have access to all of those OEM tools.

Erin Keating:

And yet, he was out of a car for a month trying to chase this down. So dealers get proactive about talking to your, you know, customers about, hey, if you run into insurance issues, call us first. We'll be able to let you know if we would be able to service those vehicles. Because again, you mentioned that like really complex technology on these cars these days.

Alex Bland:

Yeah. That's a you know, that's a fantastic point I'd never even considered. That's another sort of chopping away at the funnel of business that you're losing that you may not even realize you're losing.

Erin Keating:

Right. Yeah. That's that one was really surprising to me. And I've put out a couple of questions to some insurance companies to say, don't you have deeper relationships with the automakers in their dealer network? Because yeah, especially today, you could be sending people on long goose chases for weeks, you know, that doesn't help anybody, Right?

Alex Bland:

Exactly. Exactly.

Erin Keating:

So let's talk let's put this in real dollars. Let's you know, for the dealers listening, what is this really costing them not going after this leakage, if you will?

Alex Bland:

What so we've got an estimate of what that that looks like, and it's it's an estimate, but I think it's a a fair number in terms of what dealers are missing in terms of the bite at the apple. So the way we put this together, let me give you a little bit of background. If if we look at the average number of service visits a year and we say that's just over two service visits, and the average length of ownership is about eight point four years, and the average per service visit is about $615. We're looking at about 12,000 or so dollars over the course of a lifetime that the dealer is losing. It's an estimate, but I'll also tell you, I wouldn't be surprised if that's dramatically underrepresented because there are those other pieces that don't factor into that.

Alex Bland:

There's the lost opportunity on the used inventory. There's the lost sales conversion because we know that someone who is a loyal service customer is two times likely or more to come back for sales again. So while that's a pretty big dollar value on its own, I think that the health of your overall dealership ecosystem is impacted even more than than it's able to clearly quantify there.

Erin Keating:

So let's wrap this up. Let's give, like, two to three, you know, actionable things that our audience should take away as far as, look, this is what we studied. And if we had two things, three things to recommend to you to do today to to get your fixed ops working for you in all directions, what would they be?

Alex Bland:

I would first start off and we this a lot of this comes from dealers who we talk to who are succeeding more than others, who are more financially successful. The first thing is intentionality. It's have a specific plan, have a goal in mind, and then build towards that in a way that links it all together. Everything's gonna happen whether you're intentional or not, but your chances of success are far greater if you're intentional and you've got a specific plan. Within that plan, leverage technology.

Alex Bland:

Use the technology that's available to make your experience better and, frankly, the technology that your third party competitors are out there using to try to steal your customers away. And then within that, I think it's a deepening of the relationship with the customer. You're trying to deliver great experiences. You're trying to be proactive in bringing them in when they're in. You're doing a great job, but you're also offering them those other options, whether it's the valuation on their vehicle, getting them back into the sales cycle, understanding where they're likely to be in their vehicle life cycle to proactively send service and maintenance reminders.

Alex Bland:

All those things bring you closer together because I think it's the health of the relationship at the end of the day that you're trying to foster to drive the bottom line.

Erin Keating:

No question. I think that's such an important point. Trust and transparency comes from a relationship and and making sure that that's what you're really focused on is your relationship with your customer. Super important. Alex, it's always so great to talk to you.

Erin Keating:

This is a really great study. I hope that we can get everybody looking at coxautoinc.com. Please go to our Insights section. You'll be able to download a lot more information there. We've had a couple of press releases about this, but we really appreciate everybody joining us for one of our bonus Auto Market Brief podcast episodes.

Erin Keating:

Stay tuned for more to, highlight our economy, talk about industry headlines, and more bonus episodes like this where we get to speak to, specialists just like Alex Bland here. Thank you again for being with us.

Alex Bland:

Always a pleasure. Thank you, Erin.

Erin Keating:

Thanks for joining us on this episode of the Auto Market Brief. To stay up to date with all the latest news and perspectives from our team of experts, be sure to visit our insights hub at coxautoinc.com.