After analyzing a year of service department performance data from dealerships across the country, one thing became clear: Some of the industry’s most common assumptions about profitability don’t tell the whole story.
While many service departments focus on increasing labor rates, the data revealed a different trend. The dealerships delivering the strongest results were improving technician productivity, increasing hours sold, and eliminating inefficiencies that limit service drive performance. To uncover the factors driving those results, check out the
Fixed Ops Golden Metrics Report.
The report’s findings highlight key performance trends and opportunities to improve service drive profitability.
Metrics That Matter
The dealerships in this study were grouped by location and repair-order volume so performance could be compared against similar operations.
Once grouped, we asked the following questions to provide a clear view of a service drive’s overall health:
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Are you selling enough labor hours?
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Are you maximizing the value of every repair order?
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Are you collecting the appropriate value for the work being performed?
These questions are answered through three golden metrics: Hours Sold, Hours Per RO, and Effective Labor Rate (ELR). By analyzing them together, the report uncovered an important trend: increasing labor rates alone doesn't guarantee higher profitability.
Opportunities for Growth
Success depends on understanding market elasticity and balancing rates with demand. The average ELR rose in all 18 area-by-volume segments in this cycle, but profits still fell in some of them. Why is this?
The reason comes down to hours per RO. When repair orders carried fewer hours, higher labor rates couldn’t offset the lost work. The data suggests rate increases have a ceiling, and profitability depends on hours sold and job mix, not labor rate alone. So how do we increase profit?
By increasing efficiency and productivity through:
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Automating manual quoting and parts-lookup processes.
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Eliminating workflow bottlenecks that slow technicians and advisors.
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Improving technician productivity through better training, processes, and supporting technology.
When comparing shops that handle roughly 675 repair orders per month, the shops that use an
automated tool to quote recommended work performed the best:
The Takeaway
The biggest lesson from this year’s report isn’t that dealerships need to work harder. It’s that the highest-performing service departments equip technicians with the right tools to work efficiently, helping them outperform dealerships that still rely on manual processes and outdated workflows.
