Whenever cars require repairs or service, this may easily become a stressful event for the customers and a logistical nightmare for dealerships. Service delays, outdated processes, and a lack of customer trust can lead to lost revenue and missed opportunities to build stronger relationships. Simply put, these issues can keep fixed operations from reaching their full potential.
The solution lies in modernizing processes, training service teams, and leveraging tools to make things easier for customers and more efficient for the dealership. With the right approach, the service department can go from being a support function to a consistent source of revenue and customer loyalty.
Stick around to see how fixed operations in dealerships can solve common challenges and drive long-term growth. Let’s break it down!
Understanding Fixed Operations
When you think of a car dealership, you probably picture the showroom floor, shiny new cars, and the sales team. That’s what the industry calls “variable operations,” an area of the business with many variables that can affect revenue, from weather and holidays to new promotions.
But behind the showroom is the dealership’s true financial engine: fixed operations.
Fixed operations (or “fixed ops”) includes the parts, service, and repair teams. It’s the body shop, the service offerings, and the parts replacement program. It’s called “fixed” because its expenses and revenue are much more stable. Customers will always need maintenance and repairs , even when they aren’t in the market for a new vehicle.
For many years, dealerships viewed sales as the primary breadwinner. That thinking has now shifted. Fixed ops is a profitability powerhouse. Based on a 2019 research from NADA, while fixed operations might represent only 12.4% of a dealership’s total sales, it can be responsible for a staggering 50.5% of the entire dealership’s gross profit. It is the real, consistent, and reliable profit center.
Strategies to Improve Fixed Operations Performance
Maximizing this powerhouse isn’t about one single solution. It requires a focused strategy that combines the right people, the best technology, smart pricing, and a deep commitment to customer convenience.
A. Recruit, Train, and Retain Top Talent
A fixed ops department is only as good as the people who run it. The entire foundation of success rests on recruiting, training, and retaining top-tier technicians and service advisors.
This is not a “one-and-done” training session. As vehicles become more complex, especially with emerging technologies like electric vehicles, continuous training is essential. Regular development is an assurance that your whole workforce remains fresh and abreast with all the new events happening in the industry. Standardized training programs are crucial to guarantee smooth, consistent operations.
In fact, the payoff for this investment is very huge. A 2014 presentation to Tire Business noted that the ROI for an ASE certification can be as high as a 40% increase in employee productivity. Investing in your people is a direct investment in your performance.
Ultimately, high performance comes from a the right mindset. As detailed in Top Fixed Ops Performers: What Service Managers & Advisors Do Differently, the best professionals take full ownership of their results, act on feedback quickly, and stay hungry to learn.
B. Leverage Modern Technology
Technology is the great enabler of fixed ops growth. Dealerships must utilize new tech to improve overall effectiveness. This starts with integration. It is wise to invest in a Dealership Management System (DMS) that fully integrates the service department. This supports real-time coordination of everything from parts ordering and invoicing to online appointment scheduling.
Technology also builds trust. Tools like Digital Vehicle Inspections (DVI) allow technicians to show customers photos or videos of what needs repair. Such transparency is powerful.
The customer-facing experience is also being upgraded. Self-check-in kiosks are quickly becoming standard in dealerships across the country. This trend accelerated after Reynolds and Reynolds acquired GoMoto in 2020, leading to pilot programs from major brands like Ford, Volkswagen, Honda, and Kia. Artificial Intelligence (AI) is also playing a larger role, assisting with diagnostics, streamlining service bay scheduling, and using predictive analytics to forecast service needs.
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C. Pricing and Billing Strategies
Pricing in fixed ops is a delicate balance. While it is tempting to compete with low-price independent shops, the real win is in communicating your value.
Be clear about why dealership service is a better choice: you offer OEM parts, warranty-backed repairs, and manufacturer-certified technicians. Customers are often willing to pay a slight premium for that peace of mind.
Transparency, however, is non-negotiable. Surprises are hated by customers. Offer transparent and direct pricing of services and packages. You should also focus on your “effective labor rate,” which is the actual value your team delivers per hour, and work to get it as close as possible to your “posted labor rate“.
D. Improving Customer Convenience
Modern customers are busy. They expect convenience, and if your service department is complicated to use, they will simply go elsewhere.
This means offering options that fit their lives. Consider adding express service lanes or mobile service options, such as on-site oil changes and minor repairs. Valet services and remote vehicle pick-up and delivery are also becoming highly popular amenities that support a high Customer Satisfaction Index (CSI).
The entire process must be streamlined. Simplify your scheduling by offering easy-to-use online appointment management. Finally, keep your customers informed. Using service update texts is no longer just a nice-to-have. J.D. Power’s 2023 U.S. Customer Service Index (CSI) Study noted the industry’s increased adoption of text communications over traditional phone calls.
Building a Strong Fixed Operations Team
A strong, well-trained fixed operations team does far more than just repair vehicles. It builds lasting customer relationships. Your service advisors are the “dealership image”. They set the tone for the entire customer experience.
(a) Creating Memorable Experiences: An excellent service experience is one that is personal and sincere. It means greeting customers by name and adopting a “customer-first” philosophy, like the Japanese concept of omotenashi (anticipating customer needs). This is the “human touch” that technology enables but cannot replace.
(b) Inspiring Future Purchases: This is the ultimate goal for most fixed ops strategy. A positive service experience builds trust that extends beyond the service bay. Customers who return to a dealership for service are 74% more likely to buy their next car from that same dealership. A well-handled repair can easily turn into a future trade-in or new vehicle purchase.
(c) Avoiding Liability: Your best line of defense is a solid team that is trained to respond with professionalism and address the concerns of customers. Effective communication and problem-solving behavior creates trust and may minimize liability of the dealership.
Benefits of Optimizing Fixed Operations
The “why” behind all this effort is transformative. A well-run fixed ops department is the key to a stable and resilient business.
- Massive, Stable Profits: As mentioned, boost fixed ops can generate over 50% of your dealership’s gross profit from only 12.4% of its sales. It’s a reliable, steady income stream that doesn’t care about sales quotas. Truly remarkable!
- Higher Profit Margins: When you improve fixed operations, you simply deliver a higher profit margin than vehicle sales. We are pretty sure that you don’t want to miss it.
- Customer Retention and Loyalty: This is the holy grail. A loyal customer base is your greatest asset. According to a study by Bain & Company, a mere 5% boost in customer retention can lead to a profit increase ranging from 25% to 95%.
- The “Recession-Proof” Metric: The most important metric is your Absorption Rate—the percentage of your total dealership overhead (rent, utilities, salaries) that is covered by your fixed ops gross profit. The U.S. average was around 70% in 2024, and NADA’s benchmark is 75%. The goal? 100% absorption. Once it has a 100% dealership, it is basically recession-proof; all cars sold by it are pure profit out of variable operations.
Turn Your Service Department into a Profit Machine
Are you struggling with technician turnover, underperforming bays, or leaving money on the table in your service drive? It’s time to turn those challenges into profits. Unlock the Secrets to Maximizing Technician Efficiency & Shop Profits with this free resource!
Here at Chris Collins Inc., we specialize in transforming service departments into money-making machines. We provide the leadership and accountability coaching to implement consistent, proven processes that increase customer retention and grow service revenue.
Ready to stop guessing and start winning? Book a 15-minute Opportunity Analysis today and let’s explore how to unlock your dealership’s real value.
Conclusion
Fixed Operations in dealerships are the driving force behind consistent profitability, customer loyalty, and long-term success in a rapidly evolving automotive industry. Through service optimization, investing in the latest technology, as well as creating high-performing teams, dealerships can access a reliable source of revenue and have meaningful interactions with customers.
Ready to revolutionize your dealership’s approach and stay ahead in this competitive field? Share this article with your peers and let us continue delivering valuable insights to keep your business thriving!
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Author: Maverick Steel is a writer and digital marketer who enjoys connecting the dots for strategy and engaging content. He spent 6 years in secondary education as a proud campus journalist, specializing in editorial and column writing. Holding a bachelor’s degree in Marketing Management, Maverick is also a devoted advocate for positive cyber citizenship and a certified pet lover. When he’s not busy writing, you can catch him hitting the gym or enjoying a matcha latte at the nearest aesthetic coffee shop.