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GM dealers see service offerings as key to growing profits

With sales of new vehicles continuing to wane in the U.S., what can a car dealer do to entice customers onto those bright and shiny car lots? How about install a "scent-pumping" box that spews that new car smell into the service area in hope of recruiting the olfactory senses of browsing customers?

Take that and the fact that some Chevy dealers are installing flat-screen TVs, providing free wireless internet service and having a full coffee bar available, and the service department at your local General Motors Corp. (NYSE: GM) sounds like it is becoming Starbucks Corp. (NASDAQ: SBUX) or something. But, like most goofy marketing moves, the public loves it. A Chevy dealer in Pittsburgh, Pa. has seen service business increase 10% since adding all the amenities along with using new, bright colors and having repainted and sealed the floors. In other words, don't let the service department area look like one, but more like a high-end hotel lobby bar.

And this isn't just a fad; it's estimated that many auto dealers make increased profits from service (as in, half the profit), with the other half coming from used and new vehicle sales. When sales are lacking (such as truck and SUV sales), you have to make it up somewhere, right? Service just may be the key to getting many dealers out of a hole. Remember, new trucks and SUVs are among the most profitable; smaller, gas efficient cars are among the least profitable. That future profit needs to be made elsewhere -- and that area is service and routine maintenance.

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Last updated: October 08, 2008: 05:34 AM

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