Auto dealers’ service departments are being touted as a key way to shore up profits amid a churning sea of economic challenges, but recent research found they’re bleeding customers.
The Cox Automotive study uncovered a trend of declining customer visits to dealer service drives. Compared to 2018, dealerships are drawing 12% fewer customer service visits. Instead, many customers are tapping repair shops, quick oil change providers, and mobile services, according to its research.
The study uncovered dissatisfaction among dealer service customers that’s making them less loyal.
The loss in business comes despite the fact that dealers are taking in more revenue from service and parts as vehicles age, Cox said, citing National Automobile Dealers Association data that indicate dealers took in $156 billion via the revenue stream in 2024, or 13% of dealership revenue, up a percentage point year-over-year.
The average U.S. vehicle has been getting older for a while and is now at nearly 13 years, a trend that has helped boost dealer service revenue. But dealers are actually losing service business the most for vehicles 5 years old and newer, Cox found. This year, just 54% of consumers with vehicles 2 years old or newer returned to the dealership where they bought them for service, down sharply from 72% in just two years.
The phenomenon means dealers lose not only service business but also future auto sales, said Cox. It indicates that consumers who take their cars for servicing at a dealership are 74% more likely to buy their next vehicles at that store.
“These findings from our market data and surveys underscore the urgent need for dealerships to reassess their service strategies to recapture market share and enhance customer retention,” said Cox Director of Product Consulting Skyler Chadwick.
Of survey respondents, 45% expressed frustration with dealership service visits, primarily citing unexpected costs and lack of communication. That’s despite Cox data showing dealership repair bills this year average $261 versus $275 at repair shops. Consumers told it they want clear pricing, scheduling ease and service flexibility. More than half also value the ability to compare costs online.
In addition, the service lane can be a source of used vehicles to add to dealers’ inventories, especially harder-to-find models, Cox says. It advises them to share vehicles’ values with customers when they visit for service to facilitate possible purchases.
“Dealerships are sitting on a goldmine – over half of customers facing major repairs would consider trading in—yet most are never approached with an appraisal, leaving millions in inventory acquisition costs on the table,” Chadwick said.
Cox surveyed nearly 2,000 vehicle owners this past spring who had their cars serviced in the previous 12 months.
