The waiting rooms attached to auto service departments tend to be dismal places, with stale coffee, patched seats, cable news on a flickering TV and last week’s copy of Sports Illustrated, if you’re lucky.
At some dealerships, that no longer passes muster. Today, you can get blackened chicken or grilled salmon on the lunch menu at Honda of Fort Worth, or a complimentary workout at the fitness center attached to the Lincoln-Mercury/Land Rover-Jaguar store in Merritt Island, Fla. — assuming you wouldn’t rather play pool or watch a movie.
This amenity-laden shift can be traced straight to dealers’ bottom lines. At the end of 2018, half a typical dealer’s gross profits came from the service department (including parts and the body shop), according to Patrick Manzi, senior economist at the National Automobile Dealers Association.
“Service and parts are very important to dealerships right now,” Mr. Manzi said. “Cars are selling on the internet, and there’s more competition and more access to vehicle prices than ever before. Margins from selling new cars have been consistently on the decline, so dealers are focusing on service. They’ve realized they can help grow customer loyalty by standing out in the amenities.”
Lexus might be the pacesetter in this cushy new world.
“In one of our stores in San Antonio, Tex., we have a free coffee bar with snacks, a manicurist and a masseuse,” said Kimberly Sherron, the dealer facilities manager and design leader at Lexus. “In Wichita, Kan., you can drop your vehicle off at the service department, get taken to the airport and then picked up when you come back. In the Tampa area, we have a store that features a manned barista bar, with free macchiatos, croissants and sandwiches.”
Ms. Sherron added, “They go above and beyond.”
That may be understatement, but this new twist on the waiting room is not just for luxury brands like Lexus. A range of dealerships have been adding amenities.
A Toyota dealer in Chesapeake, Va., has a play area for children, a movie theater, a hair salon and a shoeshine area. On Wednesdays, it provides free manicures.
It doesn’t stop there. Automakers are also supporting their brands with “experience centers” that are even more over the top.
At Intersect by Lexus in Manhattan, which opened last fall after similar centers in Dubai and Tokyo, there’s an auto parts wall installation, fine dining with rotating chefs (currently, one cooking avant-garde tapas from Chile
“It’s an homage to the cars,” said Kirk Edmondson, the general manager. “We reference the brand’s legacy of hospitality, design and craftsmanship — but we don’t scream about it.”
The brands and the dealers have most likely been spurred to act thanks to declining customer traffic, as well as intense competition from used-car vendors like Carvana and Shift, which let shoppers test drive and buy without heading to a dealership.
Shift had $135 million in revenue from used-car sales last year (but is not yet profitable over all). “It’s highly likely more and more dealerships will offer alternative models for the sales and service experience,” said George Arison, Shift’s co-chief executive. “It’s going to evolve and change dramatically.”
The 2018 Cox Automotive Service Industry Study reported that dealers were making less profit per vehicle on car sales, and view servicing as a growing profit center. But, the study also said, customers get frustrated when servicing takes longer than expected, they’re forced to wait in line even though they had an appointment, and no loaner vehicle is provided.
Most of that displeasure goes away when dealers pick up the car for servicing (at home or work), leave a loaner, then deliver the car back. It’s a huge time saver for busy people, and it’s an amenity available nationally to owners of 2017 or later Lincolns as part of their warranty coverage.
Anika Salceda-Wycoco, Lincoln’s communications manager, said the concierge service, which includes an app to check on the car’s progress, was intended to set the brand apart and “give our customers some time back.” The service has provided more than 250,000 rides since its introduction in 2016.
Stores that want to farm out that service will find entrepreneurs ready to help. RedCap Technologies in Florida, in partnership with Lyft, offers concierge services to dealers, and claims an average increase of more than 30 percent in customer retention for service when pickup and drop-off is offered.
David Zwick, managing director of RedCap, said his company provided services to Lincoln and to Hyundai’s Genesis brand. He expects that at least two more auto manufacturers will soon add pickup and delivery to their offerings, and predicted that most luxury brands would have to follow suit. “The least likely scenario will become bringing the car in yourself,” he said.
Mr. Zwick said auto companies feared that consumers would defect to independent garages — perceived as cheaper and more honest — when their warranty periods were up.
The alternative to giving consumers a reason to linger at the dealership is streamlining their visits so the wait isn’t so long.
“Ironically, even as the dealers are spending a fortune on upgrading facilities, putting in cappuccino machines and video game consoles, they are also trying to radically reduce the amount of time shoppers have to spend there,” said Mike Ramsey, senior research director for automotive and smart mobility at Gartner. He said the industry was pushing to handle financing for buyers before they got to the showroom.
Most dealerships aren’t going to become destinations the same way Tesla and Apple stores are, but it’s clearly beneficial to upgrade the waiting room experience from its typical purgatory.
In a Beepi/Harris Poll from 2016, consumers listed things they’d rather do than negotiate at a dealership: Clean the house (56 percent of respondents ages 18 to 34); wait in line at a state motor vehicle office (34 percent of the same age group) and get a root canal (24 percent of 35- to 44-year-olds). More than half of those surveyed (52 percent) said they felt “anxious or uncomfortable” when visiting a dealer.
Lunch and a movie might not take all the sting out of needing a new catalytic converter, but at least the wait won’t be so bad.