Data shows double-edged sword for franchise dealer service departments
It’s a bit of a Catch-22 for franchised dealership service departments these days.
The number of repair orders continues to slow, but the amount of revenue a franchise dealer generates on each repair continues to break records.
That’s according to a report Tuesday from Cox Automotive that examines service department data from its Xtime subsidiary.
The Report Order Volume Index came in at 79.9 last month, which is off 9.0% December and 2.4% year-over-year.
Even more telling, the index fell 20.1% from January 2019.
“The overall volume of repair orders being processed at U.S. franchised dealerships continues to be lower compared to the months prior to the onset of the. global pandemic,” Cox said in its report.
“Research from Cox Automotive indicates many consumers continue to delay having their vehicles serviced, although this number is down significantly from the height of the pandemic.”
The data is indexed to January 2019, so the index for that month is 100.0. It remained above 90 for nearly the entirety of 2019.
In January 2020, it was at 98.7, eventually to below 60, before bouncing back and eventually settling at 81.9 in January 2021.
Meanwhile, there have been seven consecutive increases in average revenue generated per repair order, Cox said.
The Repair Order Revenue Index came in at 121.5 in January. That beat year-ago levels by 11.1% and was up 1.6% month-over-month.
Moreover, it beat January 2019 level (which is what the data is indexed to) by 21.5%.
“The overall trend line indicates revenue per repair order has taken a step change since the COVID-19 pandemic hit the auto industry,” Cox said in the report. “Each repair order generates more than $490 in revenue on average.”
So, while volumes are down, dealers are likely happier to be pulling in more money on each repair order.
Especially, when you consider how used-car sales began the year.
In a separate report Tuesday, Cox Automotive estimates that retail used-car sales (which it considers to be sales from franchise or independent dealers) fell 18% from January 2021.
Specifically, Cox indicates there were 1.32 million used retail sales in January, down from 1.61 million to begin 2021. January’s used retail sales were up slightly from December.
The used retail SAAR was 16.9 million in January, down from 20.5 million a year ago and 18.9 million in December.