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Age of Vehicles in Operation Creates Opportunity

We learned this week at MBS from Polk Research that Americans are keeping thier cars longer these days.  The average age of vehicles in operation has risen from a pre-recession age of just over 9 year to the current age of 11.4 years.

So what does that say about the purchasing environment and what opportunities can we derive from that reality?

First and foremost, we continue to see some degree of economic uncertainity.  Despite the hype about recovery…there is still a strong concern and sense of foreboding coloring major purchase decisions.  And second…many Americans are just plain getting older and rethinking pre-retirement buying decisions. And of course there are two things associated with the baby boomers…buying power and connection with automobiles.  This conspires to stretch out the useful life of vehicles.

And then there is the matter of quality.  We all have benefited from greatly improved vehicle quality.  This even comes in the face of rapid, market driven porduct innovation and tremendous increases in product complexity.  Quality is up and the age of vehicles on the road clearly supports that point, despite noise over recalls that grab the headlines.  Major compliments to the suppliers and manufacturers!!

What we then realize is that there is a growing opportunity for service and parts sales post warranty period.  Automotive dealer and aftermarket repairers have long known this important fact…but now with the age of vehicles increasing the opportunity looms even larger and in fact much longer.  The need to repair vehicles correctly the first time for the price customers are happy with and the need for quality customer treatment either at automotive dealers or independent repair shops continues to increase in importance.

For franchised automotive dealers the need to serve, satisfy and retain customers after the warranty period has never been greater.  With new vehicle margins under extreme competitive pressure and manufacturers desires to curtail incentive payments the importance of the parts and service departments

continues to grow.  The importance is not only to service vehciles profitably but to keep the customer loyal to both the dealer and the Brand.

For independent repair businesses and parts operations the opportunity to win share of customers wallets is equally huge.  By delivering quality service and treatment, combined with the ability to do this at price points the customer appreciates, the independents can reap huge financial benefits and repeat business.

In either case the customer wins…and when you think about it so do the service providers!


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