DAYTONA BEACH, Fla. -

The two “forces of graying” detailed by DMEautomotive’s “The Changing Service Loyalty Landscape” white paper could prove to be rather troublesome for car dealerships.

One of those “forces” is the trend being spotted at the dealership service center, where it more common now to find consumers ages 50 and up, while the younger crowd is going elsewhere for their service needs. The other so-called “force” is the aging vehicle population.

So how exactly will dealerships be affected?

To explain what it discovered about dealership service centers, DMEa first detailed its three levels of service center customer loyalty, as follows:

—Loyalists: Those who both visit and spend most at a store type.
—Swing loyalists: Those who either visit, or spend most at, a store type, but not both.
—Disloyalists: Those who neither visit nor spend most at that store type.

What DMEa learned is that those who are “loyalists” for dealership service centers tend to be the oldest crowd, while younger consumers are heading to the aftermarket chains, slicing away at the share of dealers and independent shops, alike.

In fact, the proportion of dealership loyalists over the age of 60 was higher than the respective shares commanded by over-60 aftermarket chain loyalists and over-60 independent shop loyalists. In other words, "dealership loyalists are more likley to be over 60 than any other loyalist group."

Moreover, the proportion of aftermarket loyalists younger than age 34 was 47 percent. Conversely, 46 percent of dealership loyalists were 50 or older.

“Meanwhile, over a third of those most likely to be disloyal to a dealership service center are only 25–34,” DMEa stressed. “With a significant percentage of a dealership’s loyalists poised to exit the market, and as young aftermarket loyalists enter, the report’s findings have troubling implications for dealerships service centers, if more heartening signs for aftermarket chains.”

Doug Van Sach, DMEa’s vice president of strategy & analytics, added: “If dealerships don’t replace their aging loyalists, and aftermarket stores are successful in retaining their loyalists as they charge towards their prime spending years, a share-of-wallet sea-change is looming that would greatly favor aftermarket stores, while eroding dealerships’ lifeline service profits.”

How bad could it get?

Citing the Automotive Aftermarket Industry Association, DMEa said the dealership service market represents a $78 billion industry. The firm suggested that 62 percent of those revenues are from loyalists.

So the loss of the over-75 loyalists would mean a $310 million loss if these shoppers are not replaced. Likewise, the loss of the over-70 crowd would mean a $3.4 billion loss if they are not replaced.

Moving along, DMEa also touched on how the record-breaking vehicle ownership terms in the U.S. are affecting dealerships. The firm suggests that with consumers keeping cars longer, the “aging, out-of-warranty” car population is detrimental to dealerships but positive for the aftermarket.

“Consumers reported on their service center preferences for five ‘bread-and-butter’ services across their vehicles’ lifespan — and DMEa identified major dealership defection points around brakes, battery and tires,” the company suggested.

In an alarming statistic, only 45 percent of consumers said that during the first two years of ownership, they would turn to the dealership to have these core needs met. Typically, there is still a solid in-warranty dealership relationship at this point.

And during years three to six of the ownership period, less than a third (31 percent) said they would lean on the dealership for these core needs. That proportion dips to 13 percent once the vehicle age gets to seven years and above.

“DMEa’s survey reveals independents and aftermarket stores grab significantly more ‘core’ service business at vehicle-age-three, much earlier than many dealerships may imagine,” officials pointed out.

Van Sach added: “This white paper explores many serious, often surprising, shifts underway in the U.S. service market, where more than three in four customers, and 42 percent of dollars, are currently in play. And the ‘graying’ dealer loyalist base and vehicle population are two distinct forces poised to further color the market-share picture.

“Our next white paper will help every service category develop smarter communications and marketing programs to retain their loyalists, convert more of the ‘swing’ and ‘disloyalist’ customers and reach entirely new shoppers,” he concluded.