Lithia Motors Inc. wants to launch a new customer convenience initiative at its stores with an aim to raising revenues as well as profit. The move came after two of its dealerships in Klamath Falls, Ore., eight months ago started opening their service departments on Sundays and staying open three nights a week until 11 p.m.
While the moves were meant to enhance customer convenience, the dealerships were also able to boost their service revenue by more than 21 percent. The success of the moves prompted Lithia to implement a similar initiative at more of its stores. "If they can do it in that size market, then expanding our capacity through hours rather than brick and mortar, it's pretty boundless as to our upside growth," Lithia chief executive Bryan DeBoer told Automotive News.
Lithia and Sonic Automotive Inc. see substantial opportunities for revenue growth in 2014 by enhancing customer experience and boosting customer-pay. While they share a common goal, they have thought of different methods to achieve it. Executives at Sonic said its new customer experience initiative that will be launched in July should result to better customer satisfaction, increased loyalty and higher market share for its parts and service business.
Lithia was able to hike its customer-pay gross profit by 7 percent in the fourth quarter at the dealership group, DeBoer said. He expects Lithia will increase the number of service customers 5 to 8 percent this year, partly because the group’s increasing unit sales mean more potential service business.
DeBoer said that to entice and keep those customers, each of Lithia's 96 dealerships needs to improve responsiveness when setting up appointments, offer faster service times and provide perks like chance to prepay for service work. "We have to set ourselves apart from what we used to be seven or 10 years ago when we didn't wash their cars every time they came in or change their oil in 20 minutes.”