J.D. Power study reveals impact of driving, ownership on auto service sector

A new report from J.D. Power points to the shift in driving and vehicle ownership habits in Canada as having a significant impact on the automotive service industry.

According to the J.D. Power 2021 Canada Customer Service Index—Long-Term (CSI-LT) Study, which was released on September 9, the total size of the four- to 12-year-old auto service market plunged to $6.6 billion in 2021 from $9.2 billion in 2020.

“We’re seeing the effect of broader macro-economic forces in the automotive space,” said J.D. Ney, Automotive Practice lead at J.D. Power Canada.

Since fewer kilometres were driven during this period (and overall during the pandemic), and with a shortage of service availability in some major markets, J.D. Power said the industry experienced a drop in total service occasions of almost 20 per cent year-over-year, “with aftermarket locations capturing 54 per cent of those service occasions remaining, compared with 46 per cent for new-vehicle dealers.”

Furthermore, the share of overall industry revenue from aftermarket locations jumped to 44 per cent in 2021 from 40 per cent in 2020, representing a swing of more than $200 million in relative revenue share.

“This reverses a multi-year trend of new-vehicle dealerships steadily taking a greater share of revenue,” said J.D. Power in its news release.

The study also found that the average cost per service at dealerships also fell to $332 from $375 a year ago, during a period when these businesses experienced more than 3.5 million fewer service visits YOY.

J.D. Power also notes that total revenues declined in the aftermarket, with the average spend among non-dealer facilities decreasing to $226 from $241 in 2020. To sum it all up, dealer revenues decreased approximately $1.83 billion, while non-dealer service facilities were down $725 million.

But there is some good news.

“Besides the decline in service visits and revenue, there is a bright spot for the service business,” said Ney. “Many vehicle owners opted to make more expensive repairs to their current vehicle rather than to trade it in for a new vehicle or absorb the added cost of a pre-owned vehicle, where we’ve seen prices soar recently.”

The number of customer visits and spend per visit declined YOY, but overall satisfaction with auto service departments remains consistent. On a 1,000-point scale, the combined overall satisfaction with dealerships and non-dealers is 791—the same as 2020. Satisfaction with non-dealers averages 796, while satisfaction with dealerships averages 786.

Some of the key findings from the study point to the area of macro-economics, as earlier mentioned by Ney, and how it is forcing some owners into more significant repairs (some are opting for more expensive repairs).

Another finding points to the fact that effective communication increases satisfaction.

“Tracking the effect of dozens of diagnostic factors or key performance indicators (KPIs) across multiple study years reveals that actions such as keeping customers informed of the status of their repair have become much more effective over time,” said J.D. Power.

As for dealership rankings: Audi dealerships ranked highest in overall customer satisfaction for the second year in a row, with a score of 825, followed by Great Canadian Oil Change (823), and Volkswagen dealerships (817).

J.D. Power’s Canada Customer Service Index—Long-Term (CSI-LT) Study measures satisfaction and intended loyalty among owners with vehicles that are four- to 12-years old, and then analyzes the customer experience in both warranty and non-warranty service visits.

The company said their analysis for overall satisfaction is based on five factors: service initiation (24 per cent); service quality (23 per cent); service advisor (20 per cent); service facility (17 per cent); and vehicle pick-up (16 per cent).

The study includes the response of 8,101 surveyed vehicle owners, and was conducted between April through June 2021.

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