Let’s be real for a minute. The sales floor is getting tougher. Margins are getting squeezed tighter, and customers are holding onto their vehicles longer than ever. We’re talking an increase from 4.3 to 6.5 years on average for a new car. That’s a long time between handshakes on a new car deal.
So where’s the money? Where’s the stability?
It’s right under your nose. It’s in the service drive. It’s in the parts department. It’s your fixed operations.
For too long, we’ve treated the back of the shop as just the back of the shop. But that’s where the game is being won right now. It’s the sale after the sale, and if you’re not all-in on it, you’re leaving a lot of cash on the table.
Look, I know you know your business, but let’s just break it down so we’re on the same page. When we talk fixed operations (fixed ops), we’re talking about three key players:
The Service Department: This is the heart of the dealership. It’s where the real, lasting relationships are built. This isn’t just about oil changes and tire rotations. It’s about being the trusted expert your customers come back to again and again.
The Parts Department: This is the cash cow. Think about it: lower labor costs and every single repair order from service and the body shop needs something from them. When you’re selling to your own service department, you’re selling at full retail. That’s why parts is an absolute profit machine.
The Collision Center: This one’s the wild card. Not everyone has one because the margins can be tight and dealing with insurance companies is its own kind of headache. But if you have one, it’s a big client for your parts department and an important source for used car inventory when a vehicle gets totaled. It’s a tough game, but it can be a valuable piece of the puzzle.
It’s easy to see the whole dealership as one unit, but Fixed and Variable Ops run on completely different business models. Understanding this is the key to improving your profitability.
This is your sales floor. New cars, used cars, and F&I. It’s fast-paced, exciting, and transactional. The primary goal of Variable Ops is to bring new customers into the dealership. It’s about the acquisition.
The Financials: This is a game of high revenue but razor-thin margins. Profitability depends heavily on volume, hitting manufacturer incentives (“trunk money”), and what the F&I office can produce.
The Inventory: New vehicles are financed on a floor plan. That means every day a car sits on your lot, it’s costing you money in interest. It creates this constant pressure to move units quickly. The sale is often an emotional, one-time event for the customer.
This is your service department and parts counter. It’s the steady, reliable engine that powers the whole dealership. The goal of Fixed Ops is to cultivate a long-term relationship built on trust. It’s a needs-based business that creates loyal customers who come back again and again. It’s about retention.
The Financials: The revenue per transaction is lower than a car sale, but the gross profit margins are huge. This is your consistent, predictable income stream. Customer-pay repair orders are the backbone of your profitability.
The Inventory: Your parts inventory isn’t financed; it’s paid for with your cash. Every part on that shelf is a stack of dollar bills you can’t spend. This demands smart, efficient inventory management to maximize cash flow.
The magic happens when you realize they aren’t separate. They’re symbiotic. A great sales process feeds your service drive with customers. And a great service experience is your best tool for selling that customer their next car.
This isn’t just a “nice to have.” Your Fixed Ops department isn’t just another revenue stream. It’s the foundation of your entire dealership.
You’ve probably heard about the fixed absorption metric. The goal is to get to 115%. That means your service and parts gross profit covers all your dealership’s fixed expenses, plus an extra 15%.
Every single car your sales team moves off the lot becomes pure gravy. With new car margins getting thinner every year, this is how you build a strong business. The numbers prove it. In 2018, fixed ops made up a staggering 49% of dealership gross profit. It’s insane not to focus on increasing your fixed ops revenue.
The stats don’t lie. 74% of customers who service with you are likely to buy their next car from you. If they go to Jiffy Lube? That number plummets to 35%.
Every oil change is an opportunity to keep that customer in your ecosystem. You sell them tires, you do their maintenance, and when it’s time for them to trade up, who are they going to call? You. You’re building a relationship, not just fixing a car. That's how you improve dealership retention.
The car service industry is a $400 billion monster. Right now, dealerships are only capturing about a third of that. Think about that!
There is so much room to grow. You already have the certified techs, the OEM parts, and the facilities. You have the advantage. You just need to press it.
Before you can really improve, you need a rock-solid foundation. A dealership that crushes it in fixed ops focuses on three things: their people, their processes, and their parts.
Your biggest challenge is finding and keeping good people. Good techs are like unicorns, and a great service advisor is worth their weight in gold.
Rethink Your Pay Plans: The old 100% flat-rate system can burn people out. The best shops are moving to hybrid models that offer a salary base plus bonuses tied to the right behaviors, not just speed. Understanding the nuances of flat-rate pay for mechanics is key to designing a plan that motivates. A happy, well-paid team is a productive team.
Invest in Your Team: It’s not just the money. Investing in training and showing your team a clear path to make more money next year than they did this year is the ultimate retention tool.
“That’s how we’ve always done it” is the most expensive phrase in the dealership world. You have to know your numbers cold and have an efficient process to reduce the bottlenecks in your fixed ops.
Your parts department isn’t a warehouse. It’s a bank. Every part on the shelf is cash you can’t use.
Obsess Over Fill Rate: What percentage of the time does your tech have the part they need, right now? A low fill rate means bays are tied up and jobs are delayed.
Kill Obsolete Parts: That part for a car you haven’t seen in two years isn’t an asset. It’s a boat anchor on your financial statement.
Own the Tire Game: You don’t sell tires to get rich on the tire sale. You sell tires to own the customer. 75% of customers service their vehicle where they buy their tires. It's your number one defense against losing them, so make sure this tire-swapping season is your best yet.
Once you have a solid foundation, you can pour gasoline on the fire with modern digital strategies.
Your service lane is a goldmine, but you can’t dig for gold with a plastic spoon. The modern customer expects a seamless, digital experience. If you’re still relying on phone calls and paper, you’re falling behind. It's time to take advantage of auto dealer tools. This is where a dealership engagement system like Kimoby becomes the core of your strategy, digitizing every key touchpoint.
The biggest bottleneck in any service department is communication. Phone tag is a profit killer. It's time to improve dealership customer communication on their terms.
Automate the Easy Stuff: Stop wasting your advisors’ time on repetitive calls. Automate your appointment confirmations and reminders. A tool like Kimoby can slash your no-show rate and free up your team to focus on customers who are actually in the shop.
Show, Don’t Just Tell: This is the ultimate trust-builder. When your tech finds a worn belt or a leaky gasket, have them shoot a quick video as part of a multi-point inspection. Text it to the customer. It’s undeniable proof that builds instant credibility and gets approvals in minutes, not hours.
Embrace the Text: People prefer texting. It’s faster and less intrusive. Enabling efficient two-way texting means quicker answers, faster approvals, and happier customers who aren’t stuck waiting for a call back.
A great customer experience is impossible without a smooth internal workflow. Chaos in the shop leads to delays and mistakes that cost you money and customers.
Create a Central Hub: Get rid of the paper ROs and sticky notes. Use a digital hub where every customer file lives in one place: estimates, invoices, photos, videos, and internal notes. When it’s integrated with your DMS, everyone from the tech to the advisor to the parts counter is on the same page, in real-time.
Accelerate Your Estimates: Don’t make customers wait for a quote. Digital estimate tools, especially those that can pull details from a tech’s video, are a game-changer. An advisor can build a professional estimate with visual proof and text it to the customer. When they can approve the work with a single tap on their phone, you’ve just turned a 2-hour delay into a 5-minute approval.
Tame the Loaner Fleet: That loaner fleet doesn’t have to be a nightmare. Integrated management tools like Kimoby Go centralize your bookings, track your vehicles, and manage agreements so you always know where your assets are.
The final step of the service visit should be the easiest. If a customer has to wait in line to pay, you’re ending a great experience on a sour note.
Your job isn’t done when the car leaves the drive. The follow-up is where you build loyalty for the next service and the next vehicle purchase.
Master Your Online Reputation: A few hours after service, automatically text the customer a link to leave a review on Google. Happy customers will do it, and you’ll drown out the occasional negative comment. With so many customers checking reviews before choosing a business, a strong 4 or 5-star rating is your best form of advertising. This is how improving your CSI can increase your reputation and bring new customers.
Automate Your Marketing: Don’t rely on a customer remembering their next oil change. Set up automated maintenance reminders. Have a slow Tuesday coming up? Use a tool like Kimoby to send a targeted text campaign to customers due for a tire rotation, offering them a small discount. It’s the cheapest, most effective marketing you’ll ever do.
You can’t manage what you don’t measure. Gut feelings don’t cut it. You need hard data to see what’s working and where the leaks are.
Live by Your Metrics: Track your team’s average response time to customer texts. Monitor your ROs to see the “Video Lift,” which is the average increase in revenue on repair orders where a video was sent. When you can show an advisor or tech that their actions are directly making the dealership more money, you create a culture of performance.
Get Weekly Progress Reports: Use a platform that sends you a weekly email with the key stats: communication, efficiency, CSI, and even how you stack up against other top-performing dealerships. This is how you move from being reactive to being proactive, making smart, data-driven decisions that grow your business.
Look, the game has changed. You can’t just rely on selling more cars to make more money anymore. The real, sustainable profit is in your service drive and your parts department.
Fixed operations isn’t the back of the house. It’s the foundation.
Start treating it like the goldmine it is. You’ll not only survive margin compression, you’ll crush it.
Fixed Ops is your service drive, your parts counter, and if you have one, your body shop. It's the predictable revenue engine that runs every single day. It builds relationships and generate proft after the sales team has moved on to the next deal.
Fixed Ops pays the bills, keeps customers coming back, and is a big untapped goldmine. It's your path to 115% fixed absorption, your customer retention machine. 74% of your service customers are coming back to you for their next car, and it's your shot at a $400 billion market.
Variable Ops is the sales and finance department. Fixed Ops is the service lane and part. Variable Ops is a high-revenue, low-margin sprint to get new customers. Fixed Ops is a high-margin marathon to keep customers for life. One runs on floor plan interest and a handshake; the other runs on your cash and the trust you build every day.
It comes down to three things: People, Process, and Parts.
Digital tools like Kimoby let you stop playing phone tag and start making money. They automate the boring stuff (like reminders), let you send video proof of needed repairs to get instant approvals, and give your team a single place to track everything. It's about working smarter to boost profits and make customers happier.
It's all about trust and speed. Texting is how customers want to communicate. It's fast, easy, and gets you answers now. Sending a video of a worn-out part isn't a 'nice-to-have,' it's the ultimate trust-builder. It turns a phone call debate into a 10-second 'yes' and gets your tech back to work.