Challenge Versus Opportunity
-Sally Whitesell for AutoSuccess Magazine
Tariffs will have a significant impact on the auto industry, influencing everything from production and parts costs to consumer prices and international trade. The long-term outcome is yet to be seen and there is a lot of speculation about how tariffs will affect sales, but have you focused on how they will impact service?
After 30 years of training service advisors, I have observed three crises that affected sales: 9/11, the crash of 2008, and Covid. If you were in business during these events, I am sure you remember that your service department quickly became your most profitable department. When car prices rise, consumers delay buying new cars, opting to service their current ones instead. Additionally, higher new car prices make our used car inventory vital, so PDIs must be processed quickly. With history in mind, I have one vital question for you.
Is your service team ready to make the most out of this opportunity?
To answer this question let’s consider how we can change each challenge into an opportunity.
-
- Increased Parts Costs: If parts are imported, costs will rise. Since we rely on parts for repairs and maintenance the increases will be passed on to consumers. It is important to train advisors how to handle questions about increases while building in value. In challenging times, it can be too easy to fall into negative patterns by using a negative tone or apologizing. These habits will spill over to your clientele which will ruin the impression of an excellent service experience. You risk losing clients, sales and getting poor surveys. Encourage your team to stay positive and encourage them daily. Consider getting professional training on how to handle questions and difficult situations by using simple word tracks and techniques that can completely change the outcome.
-
- Increased Labor Costs: If tariffs lead to higher operating costs, this could also create pressure to reduce labor costs by either cutting staff or reducing wages. This is the absolute wrong approach to take! When we know a department is going to be a key part of our success, we don’t want it to be understaffed, as this can lead to burned-out techs and advisors, and a lower quality of service. The last thing we want is to have a team that goes into survival mode because they are overwhelmed. We lose personnel and the opportunity for productive check-ins and quality MPIs which means a lot of money is being left on the table. Instead build your team so that service and sales are not compromised.
- Higher Demand for Used Cars: Have you ever considered an advisor and tech team just to handle your PDIs? If you have a busy store, this may be the time. I often see managers hand out PDIs to busy advisors and they either put them in a pile and delay getting them processed or their customers do not get the attention and follow up they deserve. If you handle any volume at all, this is the time to create that separate team so you can get cars out on the lot ASAP.
As I mentioned, there is much speculation about how long these tariffs will last and how to prepare. Many stores stock up on factory parts and are considering new sources for aftermarket inventory. Some supply chains are moving their plants but that could take years. Regardless of your strategy for addressing this situation, maintaining a well-prepared, well-staffed and motivated team is crucial for turning all the current challenges into a lucrative opportunity.