Study: Drivers of older vehicles eschew buying tires at car dealers
The trends identified by the company favor increased patronage of aftermarket operations such as tire retailers and independent repair shops, according to Doug Van Sach, vice president of strategy and analytics.
Regarding purchases of replacement tires, 33.4 percent of the respondents will go back to the car dealer when the vehicle is under two years old. The dealership figure dips to 22.1 percent when the driver’s car is aged three to six and then falls to 8.5 percent after they’ve had the vehicle for more than seven years.
Data in the report indicates that the auto dealership service center is becoming a “senior center” as younger consumer segments are significantly gravitating towards aftermarket chains. And the report provides fresh evidence that the record age of the U.S. vehicle fleet is significantly benefiting independent stores and aftermarket chains, while taking its toll on dealerships.
“The Changing Service Loyalty Landscape” is based on a recent survey of 4,000 American vehicle owners.
DMEa’s white paper identifies three levels of loyalty for service center customers: “loyalists” (who both visit and spend most at a store type); “swing loyalists” (who either visit, or spend most at, a store type, but not both); and “disloyalists” (who neither visit nor spend most at that store type).
The company also analyzed loyalty, spending and service selection motivators by age, and revealed that car dealership “loyalists” represent the oldest service customer, while aftermarket chains – which are poaching the largest share of business from both dealerships and independent shops – are best capturing the younger wave of shoppers.
The report also shows that dealership loyalists are more likely to be over 60 than any other loyalist group. Roughly half (47 percent) of aftermarket loyalists are under-34, while nearly half (46 percent) of dealer loyalists are a “graying” 50+.
Meanwhile, over a third of those most likely to be disloyal to a dealership service center are only 25-34. 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, according to Van Sach.
“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,” he says.
Dealership service is a $78 billion market, and DMEa’s new data shows loyalists drive 62 percent of those revenues. Hence, if dealerships lost, and did not replace, loyalists over age 75, it would represent a loss of $310 million, and if over-70 loyalists exited the market un-replaced, it would represent a hit of $3.4 billion.
Despite economic recovery, Americans are still breaking records for how long they hold on to their vehicles. The data provides fresh confirmation that an aging, out-of-warranty vehicle fleet favors the aftermarket while taking a toll on dealerships. 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.
Less than half (45 percent) reported they’re likely to visit the dealership for these core services even within the first two years of ownership, when the in-warranty dealership relationship is still strong.
As vehicles hit three to six years, dealerships lose an average of 47 percent of that initial business, with only 31 percent reporting they would use dealerships for these services.
By seven-plus years, only 13 percent of customers will select dealerships for these services. 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.
“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,” says Van Sach.
The complete report is available at: www.dmeautomotive.com.
For more information, visit www.dmeautomotive.com.
