Dealership service departments face significant challenges with service visits dropping to just 30% of all U.S. service visits in 2023, down from 35% in 2021. As consumer trust declines and competition from independent shops intensifies, dealers must leverage strategic service plan upselling across traditional, electric, and connected vehicle segments to maintain profitability and customer loyalty.

Key Takeaways

• Service departments generate highest profit margins for dealerships, especially crucial during sales downturns

• Customer trust has declined by 8% in two years, requiring transparent service approaches to rebuild confidence

• EVs create unique service opportunities despite requiring 40% less maintenance over their lifecycle

• Connected digital service plans offer recurring revenue streams beyond traditional maintenance

• Effective upselling requires vehicle-specific strategies across ICE, EV, and digital service plans

The Evolving Service Landscape: Why Dealers Must Adapt

Service departments consistently deliver the highest profit margins in dealership operations. While new and used vehicle sales fluctuate with economic conditions, fixed operations provide steady revenue that's especially crucial during downturns. However, the landscape is shifting dramatically.

Independent repair shops are steadily gaining market share, with dealerships losing 5% of service visits between 2021-2023. This troubling trend coincides with a decline in customer trust—only 54% of customers cite "trust" as their reason for choosing dealer service, down 8 percentage points in just two years.

These challenges require dealers to adapt their service strategy. Fixed operations remain the financial backbone during vehicle sales slumps, making service plan upselling not just profitable but essential for long-term survival. By developing targeted approaches for traditional ICE vehicles, electric vehicles, and connected digital services, dealers can rebuild trust while securing reliable revenue streams.

ICE Service Plans: Maximizing Traditional Revenue Streams

Internal combustion engine vehicles continue to dominate the market, with the global ICE market reaching 181,836,000 units in 2022 and projecting a 9.2% CAGR through 2030. These vehicles require extensive maintenance schedules that create natural service opportunities.

ICE maintenance plans should highlight comprehensive service needs including:

• Regular oil changes and fluid replacements

• Transmission service and diagnostics

• Spark plug and air filter replacements

• Engine and emissions system maintenance

• Brake system service

Prepaid maintenance plans create predictable revenue streams while locking in customer loyalty throughout ownership cycles. These plans should include value-added benefits that independent shops can't match, such as complimentary loaner vehicles, convenient pickup/delivery options, and multi-visit discounts.

Successful ICE service plan upselling emphasizes cost predictability and peace of mind. By bundling necessary maintenance into affordable monthly payments, dealers can increase service retention while protecting customers from unexpected repair expenses.

Electric Vehicle Service: New Opportunities Despite Maintenance Myths

The EV market is expanding rapidly, with U.S. sales surpassing 1 million vehicles in 2023. This growth presents unique service challenges and opportunities for dealers. While conventional wisdom suggests EVs require less maintenance, current data shows EVs actually require more frequent service visits than ICE vehicles, often for specialized repairs and software updates.

Dealerships are investing heavily in this transition—71% have trained high-voltage technicians and 67% have installed EV-specific infrastructure. These investments enable dealers to provide specialized services that independent shops often lack:

• Battery health monitoring and optimization

• High-voltage system diagnostics and repair

• Software updates and digital performance tuning

• Thermal management system maintenance

• Regenerative braking calibration

While EVs cost up to 40% less to maintain over their lifecycle, they require different expertise. Service plans for EVs should emphasize specialized capabilities and technology advantages rather than frequency of standard maintenance. By focusing on battery optimization, software performance, and specialized diagnostics, dealers can create compelling value propositions despite fewer traditional maintenance needs.

Connected Digital Services: The Next Frontier in Service Revenue

Connected vehicle technology creates entirely new service opportunities beyond physical maintenance. Major manufacturers like Toyota now offer subscription-based digital service plans including Service Connect and Drive Connect ($15-$25/month) that provide ongoing revenue streams.

These digital plans include features that create continuous customer connections:

• Proactive maintenance alerts based on actual vehicle data

• Over-the-air software updates and enhancements

• Remote diagnostics and troubleshooting

• Performance monitoring and optimization

• Navigation and connectivity services

The most powerful aspect of connected services is their ability to trigger automatic dealer appointments based on vehicle diagnostic data. This creates a seamless experience for customers while ensuring dealers capture maintenance opportunities before independent shops can intervene.

Digital service plans represent recurring revenue that continues even between physical service visits. By bundling these subscriptions with traditional maintenance plans, dealers can create comprehensive vehicle care packages that enhance both the ownership experience and dealer profitability.

Creating Customized Upsell Approaches for Different Vehicle Types

Effective service plan upselling requires tailored approaches for each vehicle type. One-size-fits-all strategies fail to address the unique maintenance profiles and customer expectations across different propulsion technologies.

For ICE vehicles, successful upselling emphasizes the comprehensive maintenance requirements and cost predictability of service plans. Customers understand the necessity of oil changes and regular maintenance, making value-based bundles an easier sell.

EV service plans require a different approach focused on specialized expertise. While highlighting battery health monitoring and software optimization, dealers should educate customers about unique EV service needs they might not anticipate, such as battery thermal management and high-voltage system maintenance.

Connected digital plans complement both ICE and EV maintenance with technology-focused benefits. These plans appeal to tech-savvy customers who value convenience and continuous vehicle optimization.

Service advisors need specific training on the technical differences and value propositions for each vehicle type. This enables them to confidently communicate benefits in ways that resonate with different customer segments.

Service Software: The Technology Driving Successful Upsells

Behind effective service plan upselling lies sophisticated software that enables personalized customer engagement. Platforms like Xtime process over 10 million service appointments monthly, providing data-driven insights to maximize upsell opportunities.

These digital systems enable:

• Personalized promotions based on vehicle history and customer preferences

• Automated service reminders with upsell messaging

• Targeted service plan offers based on ownership cycle position

• Integrated communication across sales and service departments

• Real-time data on maintenance needs and service history

Modern service software identifies the ideal timing for service plan renewals and upgrade opportunities. This data-driven approach replaces obsolete high-pressure tactics with consultative recommendations based on actual vehicle needs.

Building Trust Through Transparency and Expert Service

The declining trust in dealer service (down 8% since 2021) requires a renewed focus on transparency and expertise. Dealers must emphasize their unique advantages over independent shops while creating clear value propositions.

Factory-trained technicians with specialized certifications provide service quality that generic repair shops can't match. This expertise should be prominently featured in service communications, especially for complex vehicle systems like high-voltage EV components.

Transparent pricing and clear explanations of service value are essential for rebuilding trust. Digital service tracking, real-time updates, and video inspections allow customers to see exactly what work is being performed and why it's necessary.

Loyalty programs with points, discounts, and exclusive perks create tangible rewards for service plan members. These programs generate psychological investment that encourages continued dealer service rather than trying independent alternatives.

Executing Effective Service Plan Presentations Across the Customer Journey

Successful service plan upselling begins during the vehicle purchase process when customers are in an investment mindset. Finance managers should collaborate with service departments to introduce maintenance plans as part of the ownership package rather than an afterthought.

During routine maintenance visits, service advisors should leverage vehicle-specific data to demonstrate the preventive benefits of comprehensive plans. Showing customers real-time diagnostic information creates compelling evidence for maintenance needs.

Service advisors require training in consultative selling techniques rather than high-pressure tactics. By positioning themselves as vehicle care experts rather than salespeople, they build the trust necessary for long-term service relationships.

Digital marketing between visits reinforces maintenance needs and available service plans. Targeted communications based on ownership cycle position ensure customers receive relevant service offers at optimal decision points.

By implementing these comprehensive strategies across traditional ICE, emerging EV, and connected digital service plans, dealers can reverse declining service trends while building profitable long-term customer relationships built on expertise and trust.

Sources:
Cox Automotive - 2023 Service Industry Study
Frikintech - All the Stats: Dealer Loyalty, Service Expenses & Customer Engagement Benchmarks of 2024
Grand View Research - Internal Combustion Engine Market Size, Share Report, 2030
Toyota - Connected Services Plans
Cox Automotive - January 2024 Xtime Metrics