The rules and consumer behaviors we have lived with for decades have changed to such a degree that we will either have to adapt to this new marketplace or someone who is willing to take risks will replace us. Each of us must recognize and develop specific strategies to address these changes if we are going to be able to compete in the future.
Increased competition: You don't have to look too closely to see competition increasing among automotive service providers. Car dealers are more aggressively courting the consumer beyond the traditional warranty business and are successfully luring consumers back consistently - even beyond the standard warranty period. Traditional service "specialists" who targeted specific services, such as exhaust systems, brakes and tune-ups, are expanding their service menus to become "Car Care Centers," encroaching on the turf of other service formats. The "Fast Lube" or quick oil change specialist continues to aggressively compete for the preventive maintenance segment of the service provider business. Even large non-traditional retailers such as Wal-Mart are becoming a significant force in the tire, battery and oil change sectors.
This increased competition is taking place in an environment where the standard 3,000-mile oil change service interval is increasing to 7,500 and even 10,000 miles, which, in some cases, limits the number of opportunities a service provider has to diagnose other needed services.
More demanding consumers: More competition among service providers translates into more choices for consumers in determining where that vehicle will be serviced. As consumers get more selective, service providers will be forced to adapt their business practices to lure new customers to their businesses and retain existing customers over the long term.
Building trust, offering an inviting setting for consumers to come to, offering fair and competitive pricing and explaining the work that is to be performed are just a few of the ways service providers will have to distinguish themselves from their competitors in offering unsurpassed service. Consumers of the future will expect nothing less.
Higher operating costs: Like most businesses, the costs associated with the automotive service business continue to climb. Labor costs, insurance costs, utilities and cost of goods all put pressure on the service provider to generate the needed income necessary to reinvest into the business and maintain a viable business long-term.
Service providers need to look at each line item and every vendor relationship and find ways to cut as much non-essential cost as they can without sacrificing customer service levels.
Improving inventory management systems also can improve cash flow and give the service provider more flexibility without tying up excess capital in obsolete or slow-moving inventory. "Just-in-time" inventory systems can play a significant role in day-to-day operations.
The idea of "business as usual" is quickly becoming a formula for failure. There are the day-to-day pressures to attract and satisfy customers, compete effectively against mounting competition and manage rising costs. These things are necessary to generate sufficient operating income to survive all the ongoing challenges facing service provides, not to mention the whole industry, well into the future.
Non-traditional thinking in addressing these challenges will be the norm going forward and not the exception.
