In these times where vehicle sales margins continue to shrink, dealership service departments have emerged as the unsung heroes of automotive retail profitability. With sales margins under pressure, fixed operations departments often generate more than half of a dealership's gross profits, yet many continue to operate as if we're still in the age of carburetors and distributor caps.
It’s not difficult to foresee that the service departments of yesterday won't survive in tomorrow's automotive landscape.
"If it's not broken, don't fix it." This mindset is perhaps the most expensive philosophy in modern fixed operations. While your service department might seem to be running smoothly with traditional processes and paper-based systems, the real costs are from omissions rather than from doing it wrong. Examples are: missed opportunities in upselling services, eroding customer loyalty, and declining competitiveness due to an increasingly digital marketplace.
Consider this: while your service advisors are playing phone tag with technicians or customers and manually writing estimates, competitors are leveraging digital vehicle inspection tools that instantly share detailed photos and videos with customers.
While your staff shuffles through paper schedules, other facilities are optimizing bay utilization with real-time adjustments to changing priorities and workloads.
One of the most persistent misconceptions in fixed operations is that today’s customers make decisions primarily based on price. But the data tells a different story. Today's service customers prioritize convenience, transparency, and communication over cost alone. To maximize revenue and profits, we need to understand customer buying psychology and use it to enhance product features and sales.
For example, Smart Menus that offer all the right services with competitive prices at a good gross profit give dealers the opportunity to get a higher dollar gross per Repair Order, as opposed to just offering the customer low grossing maintenance menu packages.
Most dealers forget to offer even the most basic OEM maintenance recommendations, even those that are required for compliance with warranty terms. Customers, more often than not, will agree to OEM recommendations and mandates, because they are perceived as real OEM recommendations. They understand it’s required and could affect not only their resale value, but also safety concerns. Therefore it is not seen as an upsell tactic of an old school service department.
For years, service departments have measured technicians by billed hours. But there’s a better way: counting lost minutes.
Think about this, a technician spends 10 minutes waiting at the parts counter, 15 minutes processing warranty return parts, 5 minutes waiting for an advisor, 20 minutes waiting for an approval, or 30 minutes cleaning their bay. That adds up to 80 lost minutes.
If your store has an Effective Labor Rate (ELR) of $150 per hour, each lost minute costs $5.00 in Parts and Labor revenue. In this scenario, that’s $350, per technician, per day — a number that quickly multiplies across an entire service department. Eliminating these inefficiencies is crucial to maximizing profitability.
The role of the service advisor has evolved from simply writing repair orders to becoming a key relationship manager. Today’s service advisors focus on building trust, providing personalized service recommendations, and ensuring a positive customer experience. They are responsible for educating customers, explaining repairs in clear terms, and maintaining transparency to foster long-term relationships.
By shifting from order-takers to customer-focused professionals, service advisors contribute significantly to dealership success, strengthening loyalty and driving long-term revenue growth.
Resistance to digital transformation in fixed operations isn’t just about comfort with traditional methods — it has more to do with the challenge of adapting. As vehicles become more complex and customer expectations evolve, technology adoption is no longer optional.
Leading service departments are seeing remarkable results from investments in:
Data Analytics driven Smart Menus that are optimized for each brand
Digital Vehicle Inspection Systems that improve efficiency and transparency
Automated Parts Inventory Management that optimizes stock levels
Internal Management Reporting Dashboards that provide actionable timely reports and analysis for better decision making
Process Automation Tools that improve inter departmental operational efficiencies
Well-managed, technology-enabled fixed operations departments are achieving impressive metrics:
Service department gross profit margins range from 75-85%
Parts department gross profit margins from 45-50%
Effective labor rate realization from 75-85%
These numbers don’t just represent financial success — they indicate operational efficiency and high levels of customer satisfaction, which traditional service departments struggle to match.
Fixed operations continue to evolve rapidly with the rise of electric vehicles (EVs), advanced driver assistance systems (ADAS), and over-the-air updates, bringing both challenges and opportunities.
Service departments that invest in advanced technology and training will be better equipped to handle EV maintenance, specialized repairs, software management, remote updates, mobile service solutions, pick-up and delivery services, as well as predictive maintenance programs, ensuring long-term success in a changing industry.
Transforming fixed ops doesn’t happen overnight, but waiting isn’t an option. Start with these key steps:
1. Assess your current technology infrastructure and identify critical gaps.
2. Invest in digital tools that improve both efficiency and customer experience.
3. Train service advisors in relationship management and digital communication.
4. Implement data-driven decision making using key performance indicators.
The most successful fixed ops departments balance efficient processes, modern technology, skilled personnel, and customer-centric service. The future belongs to those who embrace this evolution, and deliver the experience customers demand.
The service department of the future isn’t just about fixing cars — it’s about creating an experience that keeps customers coming back. Technology makes this transformation possible, but the question remains: Will your dealership find its Mojo, or get left behind?
Joseph Minns the Head of FixedOps Operations at FrogData and is responsible for the operations of the FixedOps Platform, Consulting, Warranty Administration Services and Performance Consulting.
He has 34 years direct experience in Fixed Operations, with responsibilities that have spanned from a single point dealer, to over 800 employees in a single dealer group of 27 dealerships and 31 OEMs.
Joseph holds multiple OEM Master certifications in Service Management, Parts Management, Body Shop Management, Commercial Vehicle Management, and is a NADA Service Graduate. In his free time, he is a leader in the Boy Scouts, a lieutenant in the fire service, and certified underwater rescue diver.
