A new whitepaper from Affinitiv makes the case for focusing on service absorption as dealers feel the squeeze of tighter front-end margins and plateauing sales. 
 - Photo courtesy Affinitiv

A new whitepaper from Affinitiv makes the case for focusing on service absorption as dealers feel the squeeze of tighter front-end margins and plateauing sales.

Photo courtesy Affinitiv

CHICAGO — Marketing technology provider Affinitiv has released a free eBook for auto dealers. ”Industry Disruptors: The Razor and Razor Blade Model” was designed to provide guidance for sustaining long-term profitability in an era when new-vehicle profit margins have shrunk to 2.5% and revenue growth is threatened by increasing price transparency and flattening sales.

“The news is full of stories about industry disruptors such as ridesharing, electric vehicles, and autonomous vehicles, but the reality is these disruptors are several years away from impacting auto dealer operations,” said Scot Eisenfelder, CEO of Affinitiv. “This eBook addresses the more immediate impact of a trend that’s affecting auto dealers today.”

The Razor and Razor Blade business model utilizes a strategy where a product is sold on the front end with little to no profit margin, and all the profit is made on the back end. To survive in coming years, auto dealers must maximize service retention, Eisenfelder argues.

“Most dealers rely on OEM-based owner retention programs to cover all their service marketing needs, but this level of marketing is table stakes,” he said. “Thriving in challenging times requires a broader reach in terms of customers, channels and services offered.”

To download the whitepaper, click here.

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