New Industry Studies Expose Growing Retention Challenges for Dealership Service Departments

Passenger fleet aging is driving an unprecedented service demand that franchises are failing to capture effectively enough due to increasing competition. Light vehicles have reached an average age of 12.8 years in 2025, while the total revenue from dealership service and parts departments exceeded $156 billion in 2024. However, despite having a large customer base, dealerships lose service clients to independent repair companies, mobile shops, and quick-lube chains. The franchise vehicle service market share has shrunk to 29%, while general repair independent companies have attracted even more owners becoming their first choice.

The problem of customer retention becomes especially noticeable in the case of newer cars where traditionally dealerships are closer to their clients. Only 54% of owners of vehicles two years old or younger returned to the dealership where they purchased their car in 2025, while in 2023 the number of such owners reached 72%. Besides, there are many other obstacles that interfere with dealerships’ relations with customers including service problems, pricing, appointment availability, repair errors, lack of communication, and EV technician shortages. The findings of the Cox Automotive, NADA, Drive Sure, and J.D. Power studies reveal several areas for dealerships to work on including digital conveniences, improved communication, better service execution, and better sales-to-service collaboration.

1. America’s Aging Vehicle Fleet Is Creating More Service Demand

The rapid aging of America’s passenger fleet creates many challenges and opportunities for the automotive service industry. The Cox Automotive Service Industry Study revealed that the average age of light vehicles in the country increased to 12.8 years in 2025 compared to 12.6 years in the previous year. Old vehicles need more maintenance and repairs. Besides, the owners tend to hold onto their cars longer than before, which also provides the industry with more financial opportunities.

The Aging Fleet Effect:

• Average vehicle age reached 12.8
• Vehicle age rose from 12.6
• Older cars need more upkeep
• Owners are keeping cars longer
• Service demand continues generating growth

The aging of the passenger fleet has already brought many benefits to the automotive service industry. The franchised dealership service and parts departments earned over $156 billion in revenues and performed over 270 million repairs in 2024. According to the National Automobile Dealers Association, service and parts operations made up 13.2% of total dealership revenue in 2024 compared to 12.4% in 2023. At the individual level, the average annual service revenue jumped by 33% since 2018, reaching $9.23 million per store. Consequently, the fixed operations become increasingly significant for the dealership viability as the profit margins from new and used vehicles’ sales continue shrinking.

2. Dealerships Are Losing Service Market Share Despite Record Revenue

High service revenues mask the retention problem that dealerships face today. They process 12% fewer service visits today compared to 2018. Cox Automotive research reveals that franchised dealerships currently capture just 29% of the vehicle service market. At the same time, independent general repair shops have surpassed dealerships in owners’ preferences. 33% of the surveyed owners prefer to visit the general repair shops compared to 31% preferring to go to the dealerships.

The Retention Gap:

• Dealership visits fell 12%
• Dealers hold 29% market share
• Independents now lead preference
• Independents attract 33% of owners
• Dealerships attract 31% preference

The decline of the preference becomes especially significant among owners of newer vehicles whose owners traditionally are expected to remain loyal to the dealership that sold their cars. According to the Cox Automotive data, only 54% of the owners of vehicles two years old or younger visited the dealership where they bought their car. The number became significantly smaller in comparison with 72% of 2023. Among owners of vehicles aged from two to five years, the percentage of those who visited the same dealerships for maintenance and repair reduced to 51% compared to 70% in 2018. Therefore, the problem of customer retention is not about attracting older vehicles, but even relatively new-car owners.

3. Service Retention Directly Influences Future Vehicle Sales

The loss of service customers affects not only one failed maintenance service. The Cox Automotive research highlights the connection between service facilities that owners use and their future purchase decisions. The owners who use dealership service tend to be much more loyal to the dealer and are more likely to visit the same dealership in the future when they need to buy another vehicle. The service departments play an essential role in maintaining the relationship with the customer after the original purchase.

Service Builds Sales Relationships:

• Service customers show stronger loyalty
• Dealership service influences future purchases
• 74% Favor their same dealership
• Outside service reduces purchase intent
• Service relationships support future sales

Namely, 74% of owners who visit dealership service claim that they are likely to purchase another vehicle at this same dealership. Comparatively, 44% of owners who use service outside the dealership where they bought their car say that they want to buy another vehicle from this same dealership. The Drive Sure retention study confirms the same fundamental connection between services and future vehicle sales. The 2026 Dealership Service Retention Report based on the survey of 1,277 vehicle owners in 2025 showed that almost half of the service customers are planning to purchase their next vehicle at the same dealership that performs maintenance and repairs. Bill Springer, President of Drive Sure, said that customers have changed their preferences, becoming price-sensitive and having new communication and value requirements.

4. Poor Service Experiences Are Driving Customers Away

Dissatisfied customers are another major reason why the problem exists. Cox Automotive research shows that 45% of the owners are not satisfied with their dealership service experience. The main complaint among dissatisfied customers relates to the longer time needed to perform service, cited by 24% of dissatisfied owners. Other complaints include unexpected charges, aggressive sales techniques, and higher repair costs. These barriers create friction during the experience that needs to be used for the building of the long-term relationship with the dealership.

Major Service Frustrations:

• 45% report service dissatisfaction
• 24% cite excessive service time
• 13% report unexpected costs
• 13% dislike aggressive upselling
• 12% cite higher final bills

The pricing perceptions become an especially interesting aspect because the consumers’ concerns do not match the industry spending. Four of the five reasons why owners avoid using dealership service are related to their pricing concerns including overcharging fear and unreasonable labour or part charges. However, Cox Automotive data reveals that the average amount spent on one visit to the dealership service amounted to $261 in 2025. It was even lower compared to the $275 that customers spend at the independent general repair shops. The 2024 consumer market update conducted by Cox Automotive also showed that when the prices were the same, 45% of respondents preferred the dealership service compared to 32% preferring independent shops.

5. Appointment Delays and Repair Errors Hurt Customer Loyalty

J.D. Power’s U.S. Customer Service Index provides additional data on the operational problems of the dealership service departments. The overall customer satisfaction with the dealer service departments grew for the second consecutive year, but there are still some shortcomings. The availability of appointments is the main problem for the owners, who suffer from longer wait time compared to pre-2023 levels. When people already wait long to make the appointment to get service for their vehicle, their experience becomes unpleasant.

Service Execution Challenges:

• Appointment availability remains problematic
• Wait times exceed pre-2023 levels
• 12% of repairs fail initially
• Parts shortages cause incomplete repairs
• Underlying problems can remain

Errors during the service become another major reason why the customers are dissatisfied with their experience. J.D. Power research revealed that 12% of repairs are not performed correctly during the first attempt. The two main reasons for incomplete repairs are the unaddressed underlying problems and the lack of the required parts. The poor repair execution has a direct impact on retention as only 50% of the owners who experienced the failure on the first attempt decide to visit the same dealership again and only 5% go to the non-dealer facility right away. Thus, one repair error can easily disrupt an already fragile relationship.

6. Communication and Customer Welcome Still Need Improvement

Another problem at the service departments is basic customer service and communication protocols. The J.D. Power data reveals that the service employees greet the arriving customers just half the time. The dealerships are also not providing their customers with timely information about the progress of the repair, pay little attention to their needs, and do not provide any follow-up to check their satisfaction with the service received. These aspects can seem like simple operational issues, but in fact, they can influence customers’ perception of their service experience.

Communication Gaps Matter:

• Customers are greeted half the time
• Repair updates are often insufficient
• Customer needs receive limited focus
• Post-service follow-up is neglected
• Better service builds loyalty

Also, the J.D. Power findings point to the importance of providing the customers with such an experience that will encourage them to come back. John Tenerovich, Director of Automotive Retail at J.D. Power, said that the good service will make clients loyal to the dealer regardless of the service type. Whether it is oil change, repairs, tires or brakes, complimentary maintenance programs drive strong customer retention. However, the intention to come back for customer-paid service depends on the service provided by the dealer.

7. EV Service Adds Another Major Retention Challenge

The transition to electrified vehicles adds another challenge for the dealership service departments. J.D. Power research reveals that the customer satisfaction among the owners of electric vehicles and hybrids is much lower than the satisfaction among the owners of internal combustion engine vehicles. In terms of 1,000-point scale, the difference in satisfaction is 51 points for mass-market EVs and 57 points for premium ones.

EV Service Challenges:

• EV satisfaction trails ICE satisfaction
• Mass-market gap reaches 51 points
• Premium gap reaches 57 points
• EV technician shortages remain
• Specialized training needs continue

The large difference in customer satisfaction for the electrified vehicles is directly connected to the staffing and technical skills. The officials from J.D. Power identified the industry-wide shortage of EV technicians and service advisors as the main driver of the lower customer satisfaction. As the electric and hybrid vehicle adoption becomes more widespread, dealerships will need to invest in the specialized training of technicians to prevent the further alienation of their clients. Therefore, the challenge goes beyond the vehicles. The service departments should be able to handle the electrified models properly to retain their clients.

8. Top Service Brands Show Strong Satisfaction Is Possible

Despite the general retention problem that affects the dealership service departments, the leaders of the automotive market demonstrate that good customer satisfaction is achievable. In the premium segment of the J.D. Power Customer Service Index, Porsche ranks first with 912 points out of 1,000. Lexus is the second leader with 900 points, and Cadillac occupies third position with 888 points. Porsche also leads in the premium car segment with 906 points and premium SUV segment with 917 points. Among the premium SUVs, Lexus follows Porsche with 902 points and Cadillac ranks third with 891 points.

Premium Service Leaders:

• Porsche scored 912 overall
• Lexus scored 900 overall
• Cadillac scored 888 overall
• Porsche led premium cars
• Porsche led premium SUVs

Among the mass-market segment leaders, there are even bigger differences in terms of customer satisfaction. Subaru holds the first place with 896 points out of 1,000 followed by Mini with 888 points and Honda with 881 points. Subaru also ranks first among the mass-market cars with 886 points followed by Honda and Mini that are tied with 879 points. Among the mass-market SUVs and minivans, Subaru leads with 897 points, Honda ranks second with 884 points and Buick is the third with 878 points. Among the trucks, Chevrolet ranks first with 877 points, GMC second with 876 points and Nissan ranks third with 873 points.

9. Digital Convenience and Modern Communication Could Rebuild Loyalty

Research demonstrates that the customers are interested in digital options and modern conveniences as dealerships try to overcome the problem of retention. 55% of the vehicle owners find the ability to compare service costs online very important according to Cox Automotive data. Also, 51% of respondents expressed interest in vehicle pickup and delivery services for maintenance appointments. 61% of people interested in these services are willing to pay extra money for it. Thus, customers are looking for more transparent service and more convenient way to make the appointment.

Customers Want More Convenience:

• 55% value online cost comparison
• 51% want pickup and delivery
• 61% would pay for convenience
• Text messaging is increasingly preferred
• Mobile service offers growth potential

The modernization of communication is another area of opportunity for dealerships. DriveSure’s report reveals that text messaging is becoming one of the fastest-growing communication channels among service customers. Also, Drive Sure identifies mobile services and video multi-point inspections as one of the most promising growth areas despite the low awareness of consumers in general. Road hazard tire protection is the most appreciated amenity among surveyed vehicle owners alongside with maintenance and tire sales opportunities.

10. Service Departments Could Become Major Sources Of Future Inventory

Another unused opportunity lies within the dealership service departments apart from performing repairs and maintenance. Cox Automotive revealed that more than half of the customers experiencing serious repair expenses would consider trading in their current vehicle. The average threshold above which people start to think about trading is $3,195. It creates a potentially valuable link between the service bay and the future inventory of the dealership.

Service Can Support Inventory:

• Major repairs trigger trade-in consideration
• Average threshold reaches $3,195
• 33% want formal appraisals
• Only 14% receive valuations
• Service can support inventory acquisition

However, despite customers’ willingness to trade in their cars, dealerships fail to capitalize on this opportunity. According to Cox Automotive, 33% of customers are eager to receive trade-in appraisal during their service visit, but only 14% of owners receive valuations for their vehicles during the servicing. This means that the opportunity of getting some valuable pre-owned vehicles remains unused while dealerships spend lots of money on their acquisition. Skyler Chadwick from Cox Automotive said that this is a good opportunity for dealerships to engage with their dissatisfied customers, improve communication and coordinate the work of sales and service departments.