Importance of automotive service pricing: How to price it
Market Scope:
In automotive world, after-sales plays a very important role in terms of generating revenue and customer retention. It’s the after-sales phase where most of the margins are discovered and according to some studies, automakers earn close to 25% of the gross profit through after-sales. This profit margin is subject to risk when car owners are not satisfied with the after-sales which makes it vital for OEM’s and dealerships to invest in post car sales.
One of the important after-sales services is the maintenance and repair and the price associated with it. This article focuses on the importance of repair service pricing, why it’s crucial to study your competitors and their prices in order to stay relevant and competitive?
Differentiating factors:
It’s true that while purchasing a car, customers tend to look for quality, safety and performance of car but those are also being offered by other premium automakers with slight differences, so in contrary when considering aftersales market, price and customer experience takes over quality and product as the key differentiators between OEM’s. According to studies, on an average a customer spends at least 15 hours buying a car and spends 50 hours investing in all service and after sales processes which sums up as being on par with the competitors in terms of quality and performance of the product will allow you to stay in the game, but only superior pricing strategy in your aftersales service can lead to having competitive advantage.
Navigating the Challenges and fostering differentiating factors:
The competition is already intense in after-sales and is likely to become more intense over the next three to five years and the differentiating factor will always depend on who can bring the most value to the customer at a suitable price which makes price analysis vital to ensure cost efficiency, market competitiveness, and informed decision-making through which the consumers get the best value. When OEMs and dealerships don't invest in price analysis for repair services, they risk overpricing or underpricing services, leading to customer dissatisfaction and loss of growth opportunities. Overpricing can drive customers to IAM players, while underpricing can erode profit margins.
On the other hand, the role of OEM dealerships is increasingly relevant. The number of people who consider customization a very important element is growing (+8%) compared to 2023. Customization is also one of the major elements that would contribute to increasing the perception of innovation. Our latest research projects on repair services show that some IAM players have started to offer new solutions, such as packages based on mileage or vehicle age. This also means losing part of your market share to IAM competition for repairs and maintenance.
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Seizing Opportunities: Fueling Growth and Profit
To stay relevant OEMs and dealerships should invest in repair service pricing to enhance customer satisfaction, boost revenue, and stay competitive. Fair and transparent pricing fosters trust and loyalty, driving repeat business. It also strengthens brand reputation and ensures operational efficiency by managing costs effectively.
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Key Takeaways:
To learn more about MarketingPRO's services and how we can help your automotive business navigate the changing landscape, visit the website at https://www.marketingpro.it/it/ or contact us by mail at [email protected] and follow us on all our social networks.