Cox Automotive: Why Dealerships Are Falling Behind General Repair Shops Amid Rising Costs

A new report from Cox Automotive reveals that franchised dealerships in the U.S. are losing service market share to independent repair shops. In 2023, dealership visits dropped to 30% from 35% in 2021, while independent repair shops continue to rise in popularity. Consumers are increasingly choosing independent repair shops, with 33% of vehicle owners indicating a preference for them, up from 32% in 2021. This shift is driven by concerns over trust, convenience, and pricing, with many car owners viewing independent shops as more cost-effective and transparent compared to dealerships. Go with Saeautocare for more details.

Rising Costs Affect Consumer Decisions

The cost of servicing is a critical factor in consumer choice, as the average dealership visit in 2023 costs $258, compared to $249 at independent service centers. Though the difference might seem minimal, the perception that dealerships are more expensive has led many consumers to seek alternatives. In fact, 48% of vehicle owners reported dissatisfaction with dealership services, citing long wait times, additional services being pushed, and prices exceeding expectations. Trust in dealership service has also diminished, with only 54% of customers returning to dealerships because of trust, a significant drop from 62% in 2021.

The Cox Automotive report highlights that cost frustrations are driving car owners to explore independent service shops. The combination of rising inflation and dealership practices has made customers more price-sensitive, and as a result, independent shops are gaining a competitive edge.

The Future of Dealerships in the Car Servicing Industry

To remain competitive in the evolving car servicing landscape, dealerships must prioritize price transparency and focus on building stronger relationships with customers. Although the actual price difference between dealerships and independent service centers is relatively small, the perception that dealerships charge more continues to harm their reputation.

In addition to addressing concerns over pricing, dealerships will also need to invest further in preparing for the continued growth of the EV market. As more EVs hit the road, dealerships that offer specialized EV servicing will be in a better position to attract and retain customers. By improving both the customer experience and service offerings, dealerships can regain market share and remain competitive in an industry that is rapidly changing.

The Growing Role of Electric Vehicles (EVs)

As electric vehicles (EVs) become more common, dealerships are adapting to the new demand. According to the Cox Automotive study, 71% of dealerships have added high-voltage certified technicians, and 67% have upgraded infrastructure to handle the specific needs of EVs. However, challenges remain. EV owners are visiting service centers more often than owners of traditional internal combustion engine (ICE) vehicles, with an average of 2.6 visits per year for EVs compared to 2.3 for ICE vehicles.

EV owners also experience longer wait times at service centers, leading to increased frustration. According to the study, EV repairs take an average of 51 minutes longer than those for ICE vehicles, and costs for EV service visits tend to be higher. Despite these challenges, dealerships remain optimistic about the future of EV servicing, although more investment in infrastructure and trained personnel is required to meet the growing demand.