The service department at most dealerships is facing more volatile conditions than in the past when it comes to price and performance pressure. However, most of these cost and performance pressures have little to do with how the dealership operates the service departments, and instead come from forces outside the dealership’s control.
Tariffs on new cars and automobile parts have become more common in recent years. The Federal Register shows that 25% tariffs on automobiles have been in effect since April 3, 2025, with additional tariffs on automobile parts since May 3, 2025.
Figures from the Bureau of Labor Statistics demonstrate that some of this price pressure can be seen in product categories that directly impact dealers. The BLS release that provides the Consumer Price Index for December 2025 showed that prices for motor vehicle parts and equipment were up 3.5% year over year. The Producer Price Index for automotive parts was more than double that, up 7.5% from the previous year.
But these figures do not directly capture every vendor price change that a dealer might have seen in recent years.
What This Means For The Broader Dealership Industry
Cox Automotive’s Q4 2025 Dealer Sentiment Index survey results reveal that declining dealer confidence comes from rising costs, higher prices and economic uncertainty that combine to suppress demand. Fixed operations has become more important for dealers because they can deliver more reliable profit contributions.
Dealers often measure fixed operation profitability using a metric known as fixed absorption. When costs rise and dealers face volatile business conditions, plans must be developed that can make a positive contribution to stay above these figures.
Two fixed ops areas have become more material in this higher-volatility environment:
- Warranty administration, where reimbursement accuracy and speed can materially affect cash flow and gross.
- Appointment capture, where missed calls and scheduling gaps can create revenue loss that is difficult to recover later.
Warranty administration and appointment capture are fixed operations that are difficult to scale with headcount. For many fixed operations managers, these two areas are among the most challenging aspects of their role. For those dealerships having challenges with hiring, solutions that do not depend further upon hiring are especially useful.
How Dealerships Are Addressing Warranty And Appointment Pressure
Dealerships often focus on the profit drivers within their control. Within the parts and service department’s role in dealership profit leadership, warranty processing and appointment capture are often among the first areas evaluated for efficiency improvements.
Automating Warranty Claims to Protect Fixed Ops Profit
According to WardsAuto, OEM warranty revenue has increased nearly 20%, with dealerships earning $28 billion from warranty claims in 2024. While this may sound promising, this means more work and room for error for your staff when handling these claims.
In fact, WarrCloud, a platform for processing OEM warranty claims, states that dealerships lose as much as 15% of the gross profit associated with warranty revenue due to the manual processing of these claims.
However, dealerships that use the platform have seen a 15.1% increase in warranty parts and labor sales. For dealerships that have struggled to hire and maintain staff for these positions, there is automation and outsourcing available.
WarrCloud can reduce the manual effort in processing warranty claims by automating the most tedious elements of the process. Software alerts users to missing information, errors and claims that are easy to overlook in a high-volume environment.
For most dealers, this increased automation will improve the submission process while requiring fewer dedicated or replacement staff to process warranties.
WardsAuto shared one example of a dealership group wherein one large store paid about $7,000-$8,000 per month to WarrCloud versus up to $12,000 per month to employ a person to process claims. Those fees could be spent in other areas of your dealership that can’t be automated – It doesn’t mean losing that person, but reallocating them and improving the business at the same time.
Closing the Gap on Missed Service Calls
The other side of the fixed ops revenue equation is appointment capture. If a customer calls a dealership for a service appointment and the call is not answered, the customer will likely go somewhere else for their appointment.
Consider this example. Numa, an automotive consulting company, found that dealerships miss 158 appointment calls per month, resulting in an average annual loss of $853,000.
When factoring in revenue per Repair Order, estimated at $450 per order, this results in a potential annual loss of $1.17 million.
According to CallRevu, an automotive call analytics platform, 42% of inbound service calls go unanswered. This equates to millions of lost appointment calls each year. With so many missed calls across the industry, it is no wonder that dealerships are turning to call analytics and coaching platforms to increase their appointment capture rates.
CallRevu reduces appointment loss through automatic reporting on missed calls, holds, abandoned calls and booked appointments. With call analytics and coaching tools in one package, service managers can maintain uniform scheduling across teams and boost appointment capture without spending time listening to calls or building processes from scratch within the dealership.
How Dealer One Stop Helps Dealerships Protect Fixed Ops Profit
In a market facing ongoing cost increases driven by external factors such as tariffs and vendor repricing, many dealers are adopting a group purchasing organization (GPO) model to manage cost pressures and improve their bottom line.
A GPO is an entity that negotiates pricing with trusted vendors who offer pre-negotiated rates and increased pricing transparency within its network of select vendors, such as WarrCloud and CallRevu.
Since many dealers don’t have the time or resources to change their procedures or create new ones, leveraging existing resources makes more sense.
Join Dealer One Stop For Free
External conditions will continue to influence dealership profitability, whether driven by tariffs, vendor repricing, parts inflation or changes in consumer demand. At a minimum, a dealer’s fixed operation manager needs to be as efficient as possible in procuring parts at the best price and managing all aspects of operations to generate the greatest possible returns.
Dealer One Stop aids dealers in evaluating cost categories and operational opportunities using a free membership model combined with proprietary software and cost savings tools like pre-negotiated vendor programs.
When you work with Dealer One Stop, the nation’s largest group purchasing organization, you get over 30 years of experience from experts who have helped dealerships increase profitability. Explore our dealer-focused GPO programs and start saving as soon as today!
This blog was originally published on Dealer One Stop’s blog – you can find the original here.
