One of my favorite times of year is looking at all the stats we track for an annual benchmark on customer engagement with our products and dealers. 2024 is a special year for this as we developed a deeper view of the customer. In years prior, we were very strong on things related to the vehicle, but not perfectly accurate on how a customer interacted across multiple vehicles and how they serviced different cars. It made 2024’s data much more compelling.
I have had some time to digest and theorize on what we found. Much of this will continue to be a factor in 2025 because 2024 was a transition year from large dealer profits on the backs of lower inventory to normalization. 2024 is the year where we began heading back down a road that takes us to where the automotive industry has been for a hundred years. It marks the end of what came after COVID.
2024, 2025, 2026 will probably be similar years for the car business. Once we have fully overcome the new car supply issues of 2021, 2022, and 2023 things will be solidly normal. Of course, this assumes nothing drastic happens in the economy again.
Here are some things that stood out to me:
Dealership Loyalty
From 2020 to 2023 we saw incredible increases in vehicle prices. This was due to limited supply and it forced consumers to buy vehicles they may have not considered before. It also marked the rise of the EV (Electric Vehicle) where we are now seeing lease deals that may only happen a few times in a lifetime. This explains the change in brand loyalty and is also a factor on dealership loyalty, but there is another factor for car dealers.
Bad customer experience. While inventory was short, there was no need to practice good selling etiquette. “If you don’t want this car for $5,000 over sticker, there’s a dude standing behind you ready to pay.” This way of selling did not sit well with many who bought cars in 2021, 2022, and 2023. To make matters worse, the sales team grew overly accustomed to it. As we close-in on March of 2025, many dealership sales people still have not found the selling skills of the past.
This is why we see dealership loyalty benchmarks off by 12%. There is a lot of room for improvement here.
Service Expense is driving significant frustration
Some consumers are trapped in an older vehicle because prices and rates are too high to trade it on something newer. Thus, the average age of cars on the roads went from 11 years old and is on track to hit 13 years by the end of this year. Fortunately, we do not see the volume of major repairs that we used to, but the cost of maintenance and repair has inflated massively!
Prior to COVID the average repair order was under $300. In Q4 of 2024 it was $521. As $515 was the average for all of 2024, you can see that it is still going up. I just saw a luxury dealership raised their hourly rate to $270. There are no signs of service expenses plateauing at the moment.
We have been monitoring the amount someone paid on their last service before trading that car back to the dealer they just serviced at. In 2023 that amount averaged $564. In 2024 the number came way down. It is now $518. This is noteworthy because it is now inline with the average repair order. In fact, it is less than what people paid in Q4 of 2024.
What is noteworthy about a $518 repair order being the average before someone trades that car?
I think this is huge! It isn’t the amount that matter anymore. It is the number of times someone paid over $500 in service on that car. And this is purely psychological because they’re going to pay far more in monthly car payments to overcome those few times a year they pay over $500 in service. But I get it because my wife did this last year. We had a few large expenses on her old car that wouldn’t have to be paid again. The car had maybe another repair (in fact, the wholesaler who got it had to do it) before being fairly bulletproof for a many more miles. The hassle of taking the car to the shop began to erode her confidence in the car. And she, as everyone else, likes newer things. So, what was roughly $3,500 in repairs one year turned into FAR MORE expense in payments. As the saying goes “happy wife, happy life.”
You never know which service will be the straw that breaks your customers’ back. Be sure you’re there to convert them when that time comes – TRADEiQ automates that by the way.
Equity is still high
The used market has shifted. Trade figures aren’t as high as they once were, but the number of people with equity is growing! We run the numbers on every dealer’s database when they first sign up and then we do an annual check on everyone’s for this report. Over 65% of the customer in the dealer’s database have equity. And nearly half the customers playing with TRADEiQ are manually using a $0 payoff when they view payments on cars they can buy.
Dealers don’t realize how much opportunity exists in their own databases because nobody ever showed them. The trick is having a post sale process that stays in touch with these customers to nurture them back to you when the time is right.
Straight Acquisitions (street buys) is waaaaay up!
It had nowhere to go but up. Dealers were seldomly buying cars from customers without that customer buying something else. There were some rare cases where the dealer bought what would have been a trade on an incoming new car in 2022. That peaked and is very rare now.
We launched TRADEiQ at the end of 2021, and have watched our dealers acquire more cars from their past sold and service customers every year. In 2024 that growth blew me away. 30% of all deals attributed to TRADEiQ were straight acquisitions. And nearly 40% came from the service drive. That’s incredible. Our dealers averaged 12 deals a month from TRADEiQ in 2024, so you can do the math on how many extra cars were coming from automations.
I anticipate this will continue to grow in 2025 because we have some big plans to increase relevance and volume.
Conclusion – work on fixing the loyalty issue
The name of the game is Loyalty. Advertising has changed. A dealer has to be everywhere to break through the noise in order to bring more shoppers in. When it comes to the buyers who have already spent a dollar at the dealership, there is less noise to break through. These people know the dealership and will engage with an email, text, call, etc. They’re expecting you to be a good steward of the relationship and are happy to reciprocate by giving you more gross and less hassle in earning their business again. It is far easier to stick with the business you know than start the process all over again.
Get your loyalty numbers up! In 2025, invest in solutions that help you establish consistent processes and communications with your current customers. Reward them and they will reward you.
We are one of those solutions.
