Up until this week’s snow storm that hit parts of Canada, it has been a milder-than-normal start to winter -- good news for drivers, but bad news for dealers, who rely on busy service bays to make up for the lull in showrooms.
“There hasn’t been as much of the normal cold-weather issues motorists face with winter starting and cars breaking down and accidents due to snow,” Steve Chipman, CEO of the Birchwood Automotive Group in Winnipeg, said in a recent interview.
Chipman said the weather was a factor in his stores' parts sales declining 14 per cent and total service hours falling 21 per cent in January compared to the same period last year.
Winter is typically the slowest time of the year for new-vehicle sales in Canada, underscoring the importance of fixed operations and service to a dealership’s bottom line. For many dealerships, the winter months bring about a spike in revenue from that side of the business, as icy, snowy weather causes a rise in fender-benders, vehicles not starting and a host of other problems.
This winter has been milder than usual across much of the country, however. Winnipeg, for instance, on 28 days in December and 25 days in January reported high temperatures that were above the daily average, according to AccuWeather. In Calgary, 24 days in December were warmer than usual, while 26 days in January were warmer than normal in Montreal.
DRIVERS AREN’T DRIVING
The weather has added an extra wrinkle to what has been an unusual year as more Canadians work from home during the pandemic. People driving fewer kilometres means less wear and tear on the average vehicle and, thus, fewer customers in need of service and maintenance.
“People already aren’t driving to work,” said Robert Karwel, senior manager of automotive at J.D. Power Canada. “There are probably fewer accidents. I have little doubt that [dealers] are probably getting less body-shop and minor-collision business now versus what they would see in heavier winters.”
The good news for dealers? If any aspect of their business could afford to absorb a small hit during the COVID-19 pandemic, it is the service department, said Tim Reuss, CEO of the Canadian Automobile Dealers Association.
“All aspects of the business have been impacted during the pandemic,” Reuss said. “The business area that has been the least impacted has been service and parts — but it still has seen an impact.”