The Changing Vehicle-Ownership Cycle

The Changing Vehicle-Ownership Cycle

Repairs that once would send people running to the dealership are now acceptable investments for vehicle owners.

Repair shops can probably remember the pre-pandemic days when they gave a customer the bad news about their vehicle, and they might have declined repairs and said, “It’s time to trade it in.”

Today that’s becoming a rare scenario. With new cars in short supply and used-car prices going through the roof, often the better option is to keep their current vehicle on the road. 

According to a survey from CoPilot Research, the average time a consumer spends looking for a used vehicle is 171 days. This is up from 89 days in March 2021. Even if they could trade in their wounded vehicle, chances are a suitable replacement they can afford might not be sitting on the lot of the new- or used-car dealer.

Price is becoming another issue. The average price for a gently used three-year-old vehicle is $41,000. Some used models that are in demand can fetch prices that are 14% higher than the new-car price. According to a recent survey by CreditKarma, the average new car monthly payment is $644. The average monthly payment for a used car is $488.

Shops aren’t doing the customer any favors by not recommending a repair or trying to save the customer a few bucks by not advising them on services that will make the vehicle last. The reality is repairs that once would send people running to the dealership are now acceptable investments for vehicle owners. These high-cost repairs are high-value repairs for the owners.

Keep in mind it’s not your vehicle, and your price-point pain threshold is not your customer’s price point. A shop’s hesitancy to not advise the customer of the benefits of a repair due to a fear they might be overselling is unfounded. They’re advising the customer – not selling. Remember, your price point is not the customer’s price point.

Will these trends continue? It’s difficult to say when or if the supply of new and used cars will eventually meet demand, but the new higher prices will probably remain for years to come. 

There’s been a lot of talk about parts shortages. It’s a genuine concern for shops that want to be productive and keep the bays turning. It’s been a perfect storm that’s been brewing. During the past decade, many part suppliers started to carry less inventory, and they also stayed away from slow-moving parts. This has been a way to improve their profitability and share prices. Unfortunately, it has been made even worse because a lot of their inventory is sitting in ports that are locked down or stuck in containers waiting to be unloaded.

When will it return to normal? I don’t even know what normal is any more. The past 30 years have seen some of the significant changes to vehicles, consumers and our supply chain. The best advice is to be prepared for the next upheaval in our industry, whatever and whenever that is.

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