The auto care industry is booming. According to the 2023 Cox Automotive Vehicle Service Industry Study, the U.S. is approaching pre-pandemic levels of service visits, and consumers are expected to spend more than $400 billion on auto care by 2025.
Dealers continue to be the top choice for service, but the Cox Automotive Study reveals a significant change from previous years: Consumer trust in dealer service departments is on the decline. General repair/service stations, body shops, and quick lube and retail chains are creating intense competition within the industry.
Preferences are Changing
Although dealer service departments saw the most business in 2023, consumer preferences are starting to change: In the Cox Automotive Study, general repair shops were consumers’ preferred service provider. Repair shops were ranked best in location, prior experience, cost/price, convenient hours, and their knowledge of the customer.
Meanwhile, 48% of consumers surveyed had at least one frustration with their dealer service department experience. As the chart below indicates, their reasons ranged from convenience to cost.
Top Dealer Service Frustrations
Took longer than expected
Pushed additional services
Scheduling an appointment
Price higher than estimate
Had to wait for available appointment
The Cost Factor
In 2023, the average age of vehicles on the road was 12.5 — an all-time high. While this increased the average number of service visits per year, consumers aren’t bringing older models or vehicles with expired warranties to dealers for service like they used to. The primary reason? Cost.
Consumers simply think they’ll end up paying more for service and repairs at the dealership. Four of the top five reasons they don’t go back to the dealer are cost related: they believe the cost is unreasonable, they’ll be overcharged, or that labor and/or parts charges cost too much.
Surprisingly, however, the Cox Automotive study found that the average amount spent per service visit is about the same for dealerships ($258) and the market overall ($251).
The Impact of Digital
The misperception in the cost of services highlights an important way dealer service centers can restore trust: Digital tools. Dealers who empower their service clients with multimedia tools and estimates for cost and time when they book online can improve the service experience and rebuild trust.
In the Vehicle Service Industry Study, consumers consistently highlighted three digital tools that created an ideal service visit: online scheduling, receiving an estimated cost of service at time of scheduling, and viewing photos or video of repairs.
Among the Gen Z and Millennial dealer customers surveyed, in fact, 54% said it builds trust when the dealer sends photos or videos of the repair work. The group also indicated they were more likely to approve service—and approve it faster—when they receive multimedia text messages from the dealer.
In the words of one study participant, “[the technician] showed where my brakes and tires were worn and told me what I should have done ASAP vs. What could wait, with pricing for each item. It made me feel more educated about the process and more trusting in my dealership.”
The Impact on Dealers
Dealers recognize the power of these tools, as well. In the 2023 Study, 65% of dealers offered videos or pictures to recommend services via text or email, up from 50% in 2021. And dealers who said multimedia capabilities are very impactful to the overall consumer experience agree that they’re seeing:
Higher gross profit
Higher customer satisfaction
Higher customer loyalty
Higher repair orders ($65 more on average)
The Cox Automotive Study also compared highly integrated dealers—those who have a single view of a consumer’s information at the dealership—to less integrated dealers. Those highly integrated dealers saw significant improvements in profitability, loyalty, and satisfaction compared to the 2021 findings.
Although the vehicle service industry is facing intense competition, dealers do remain consumers’ top provider. To maintain that position, it’s important for service departments to focus on the consumer experience and regain their trust. Digital tools that offer convenience and transparency—think online scheduling, cost estimates at the time of booking, and photos or video of repair work—will go far into rebuilding that trust and winning back customers.
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