Service expenditures down $1.4 billion: Study


A new study says stagnant economic conditions and improved vehicle reliability are behind the $1.4 billion drop in what Canadians spend annually on vehicle repair and maintenance services.

According to J.D. Power and Associates, which released the service study today, annual vehicle service expenditures decreased to $9.8 billion in 2010 from $11.2 billion last year.

The study found that Certigard (Petro-Canada) ranks highest in satisfying automotive service customers.

Toyota/Lexus ranks sixth in satisfying automotive service customers and is the only dealership to finish above the industry average

Revenue from repair work has remained stable from 2009, with revenue from routine maintenance declining considerably in 2010

“It seems Canadian vehicle owners are becoming comfortable with the notion that they don’t need to do as much to maintain their vehicles as they once did,” explained Ryan Robinson, director of the Canadian automotive practice at J.D. Power and Associates.

Robinson says there are a number of factors contributing to this decline including “longer manufacturer-recommended service intervals, improved vehicle reliability and a slight decline in the average age of the three to 12-year-old vehicle fleet, due to strong new-vehicle sales during the 2006 and 2007 calendar years.”  

Fostering high levels of customer satisfaction with maintenance and repair service has a strong positive effect on loyalty intent. Among customers of brands with the highest levels of overall satisfaction, nearly 80 percent indicate they “definitely will” return to the service facility for work they will pay for (outside the scope of their vehicle warranty). In contrast, among customers of less-satisfying brands, only 45 percent say the same.
“High-performing brands enjoy nearly twice the rate of customer retention than the industry average,” Robinson said.

“Given the degree of hyper-competition for vehicle maintenance and repair business in Canada—with more than 40 branded networks competing, in addition to thousands of independent providers—the business case for an individual service facility to improve the customer experience is compelling. Considering that service expenditures average $287 per visit, the revenue and profit enhancement from increased retention is significant,” 
The study also finds that educating service customers about future vehicle maintenance and repair needs positively impacts both loyalty intent and the amount customers spend per visit.

Among vehicle owners who indicate that their service advisor discussed other service work their vehicle may require in the future, 65 percent say they “definitely will” return to that facility for their next service visit. However, among customers whose service advisors did not mention future service needs, only 47 percent indicated they “definitely will” return.  

The 2010 Canadian Customer Commitment Index Study is based on responses from more than 14,500 owners in Canada whose vehicles are between three and 12 years old. The study was fielded between January and February 2010 and June and July 2010.