Navigating Inflation: Strategies for Dealerships to Make Repair Costs Affordable

New technology in the automotive industry provides a variety of attractive options for consumers. From smart integrations to advanced safety features, customers are visiting dealerships to try out the newest models and learn about the benefits.

These features are often a selling point of vehicles, but customers rarely think about the cost to repair or replace them or the necessary components and labor. Educating customers about these components and their lifespan, as well as service drive costs can be turned into an opportunity to drive more profit at your dealership.

Fun Features Aren’t Pocketbook Friendly

New technology is an attention grabber, but also expensive. The average price of a new car is over $48,000, according to Kelley Blue Book. Today, many shoppers start their search for a new vehicle online and are prepared to foot a higher bill when they purchase the vehicle. Yet, customers often overlook the potential costs to repair their favorite new features.

Repair costs for high-tech features and electrical components often come at a substantial cost, and these are typically unexpected by an average vehicle owner. This presents a chance for dealerships to educate their customers about the expense of repairing costly components. This will give your dealership a way educate your customers about the benefits of vehicle service contracts (VSCs).

Common Features and Their Costs

While shoppers are often educated on the costs of new vehicles, a trip to the service drive often results in sticker shock. Most vehicle owners aren’t prepared for seemingly simple repairs to cost hundreds or even thousands of dollars due to specialized labor or costly parts.

If you’re driving a car that’s newer than 2015, chances are it includes smart features such as Blue Tooth, GPS navigation, onboard Wi-Fi, or a rear entertainment system. These features are useful and convenient—but the cost to repair these high-tech features can prove to be more than what the customer believes they are worth. Safety features like backup cameras and automatic power doors and the sensors that control them are also features that have surprisingly high repair costs.

Vehicle today also use onboard computers that are integrated into every aspect of a vehicle’s function. These computers can tell when maintenance is needed and control the add-on features listed above. Unfortunately, failures within these systems are often hard to diagnose, requiring dealerships to spend a lot of time and resources to uncover the problem. Replacement of a computer can be even more expensive, costing thousands of dollars. All too often, these issues crop up post-warranty, leaving repair costs to the vehicle owner.

Vehicle Service Contracts and Technology

Customers love the latest features on their vehicle, but in the event of a mechanical failure, repair costs can lead to an unhappy overall experience.

As technology continues to change rapidly, the service drive technicians at dealerships are often more familiar with new features than independent local automotive shops . Most customers prefer to skip buying the additional protection of a VSC at point-of-sale during a vehicle purchase, choosing to rely on the factory warranty to protect their investment. Marketing VSC’s to your customers post-sale increases the likelihood that they will take advantage of the opportunity to have extra protection and return these customers to your service drive.

As the cost of new and used vehicles rises with inflation and the price of new technology, car owners are hanging onto cars longer. The average age of passenger vehicles on the road hit a record high of 12.5 years old in 2023. A VSC gives customers the confidence that your dealership will be there in issues that should arise with their vehicle. It is a promise that the dealership is invested in this relationship for the long haul, not just the sale of the vehicle.

The Power of Post-Sale Marketing

Post-sale marketing helps dealerships build lasting relationships with their customers and enhance the business’ reputation and brand throughout the community. Learning how to effectively use post-sale marketing leads not only to better customer relationships, but other benefits such as increased revenue, higher reinsurance reserves, and more vehicle sales.

At Automotive Product Consultants, we offer post-sale vehicle service contract marketing programs at no-cost to dealers. These programs market to dealership customers and educate them about the benefits of buying additional coverage from the dealership.

We encourage dealers and agents to contact us to learn how Automotive Product Consultants can power a post-sale vehicle service contract marketing program that will drive sales and revenue for your dealership. Reach out to us today for a free program demo.

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Did you know that more than 10 million electric vehicles are on the road worldwide today? To put this into perspective, that figure was only 53,000 in 2012, representing a massive 18,000% growth in the EV market. As the EV market continues to thrive, exploring the benefits of vehicle service contract coverage, the costs associated with electric vehicle repairs, and the unique technical requirements of these environmentally friendly vehicles is essential.