Aging and Tech-Enabled Vehicles Present Opportunities to Increase Service Revenue

By: Jason Jordhamo, Product Management Director, S&P Global Mobility

In this November issue of the Polk Automotive Marketing Monitor, we dive into the service bays; Vehicles on the road continue to get older and rack up miles while new launches rolling into lots are laden with new systems, semiconductors, and software. For dealers, the service bay is a leading profit center, and using audience data to target consumers who are in market for specific types of service (oil changes, brakes, tires, etc.) can help drive traffic and service revenue. Additionally, targeting car owners at specific vehicle ages presents an opportunity to amplify the features and technology in your messaging to capture new buyers. 

Average age of light vehicles in the US is now 12.6 years

The average age of light vehicles in the US has reached a record high of 12.6 years. Additionally, Americans are on track to drive over 13,000 miles on average in their vehicles this year — a 7% increase from 2023.

As more vehicles enter the aftermarket sweet spot (ages 6 to 12), coupled with a modest scrappage rate of 4.6%, the demand for maintenance and repair services increases, creating a lucrative opportunity for retailers. However, these aging vehicles are sharing the roads with increasingly tech-enabled cars, bringing more complexity — and a need for diverse technical skill sets — to service bays.

Navigating the complexity of an aging and tech-enabled fleet

The technology composition of vehicles is shifting. Consider this: In 2016, the average number of semiconductors used in new vehicles was under 200. That number has since grown 11x, with today's new vehicles averaging more than 1,900 semiconductors per vehicle. By 2030, the number could rise to over 2,800 per vehicle, according to S&P Global Mobility estimates.

Meanwhile, many aging vehicles are equipped with outdated technology, which can complicate repairs, parts availability and maintenance. However, concerns about new vehicle affordability has owners weighing the costs of new vehicle ownership compared to increased maintenance and repair costs on their current vehicles, with many choosing the latter.

Gas, hybrid and electric powertrains add to the complexity, leading to staffing and training challenges in the auto repair industry. This presents an opportunity for dealerships and OEMS to position their service department as a hub of expertise, increasing customer loyalty and strengthening CRM databases along the way.

With the rise of software-defined vehicles (SDVs) on the horizon, dealerships must also adapt to a market where consumers expect advanced features like AI-driven object detection and sophisticated infotainment systems. This shift requires service bays to be equipped not only with traditional tools and the latest technology to diagnose and repair complex systems.

Additionally, the transition to SDVs and the rise of subscription-based services for software updates require ongoing customer engagement. Dealerships can leverage these trends to create value propositions that emphasize the benefits of regular service visits, for repairs and enhanced feature updates.

Strategic marketing for an evolving consumer base

As vehicle types and features expand, dealerships must rethink their marketing strategies. Targeting owners based on vehicle age is essential to tailoring messaging and offers that best match specific car types. Utilizing vehicle loyalty and powertrain data will also be valuable in developing communication strategies that connect with customers across diversified products.

For example, a household loyal to EVs won't need oil changes, but they will still need tire and brake repairs and to pass state inspections where required. Educating customers about the importance of maintenance across different vehicle types will strengthen the brand and build long-term loyalty. Marketers can implement programs that inform customers about their vehicle's evolving capabilities and the value of regular check-ins and maintenance to ensure optimal performance.

By knowing their customers and vehicle types, dealers and their marketing partners can position themselves as trusted advisors through the service bay, fostering stronger relationships that lead to repeat business, referrals and increased revenue. A great customer relationship with a service department also provides more opportunity for repeat business in the showroom when the customer returns to market for their next new vehicle.

Polk Auto Direct helps dealers and their marketing partners find and target the best households that are in-market for service.

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This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.