Parts and Services Bounce Back
Most categories of dealership service and parts businesses have recovered from COVID-19 shutdowns, especially customer-pay work.
“Obviously, miles driven is up,” says Chris Holzshu, executive vice president and chief operating officer for Lithia Motors.
In a separate call, Michael Manley, CEO of Fort Lauderdale, FL-based AutoNation agreed, saying, “Our service and parts business is clearly showing the benefits” of increased miles traveled.
According to the Federal Highway Admin., vehicle miles traveled on all U.S. roads in February was 235.7 billion—an increase of 10.6% over 2021, when vehicle miles traveled increased 11.2%, to about 3.2 trillion miles.
Holzshu said increased miles traveled creates opportunities for parts and service sales in a lot of ways, in a first-quarter earnings conference call.
When customers drive more, they wear out their cars faster and have more collisions thus need more body work. Also, he said many customers also are coming in for service work they postponed during the shutdowns.
For Medford, Oregon-based Lithia Motors, customer-pay service work increased 15% and body-shop work increased 5% year-over-year in the first quarter. But warranty work continued to lag, down about 3%.
Warranty work fell because new-vehicle volume is down, Lithia reported. In total, Lithia service, body and parts revenue on a same-store basis was $437.4 million in the first quarter, up 13.3% vs. a year ago.
At AutoNation, same-store revenue for parts and service was $966.6 million in the first quarter, up 15.5% year over year. AutoNation also reports an increase in internal service work, in part because it’s reconditioning more used vehicles. Manley also notes warranty work in parts and service is down.