Automotive dealerships understand that long-term profitability goes beyond vehicle sales. As consumer behavior shifts and broader socioeconomic factors reshape the industry, dealerships are placing greater strategic focus on the profitability of every department, not just the showroom floor.
Fixed operations, in particular, is well-positioned to become an even more powerful revenue driver. With the right support from purpose-built automotive AI solutions, the service drive can evolve into an even more efficient, consistent, and high-performing revenue and profit generator.
Is this a departure from the traditional view that labels fixed operations as a supportive function? Without a doubt. Yet the departure makes sense. Given that customers are keeping cars for longer (hitting a record 12.6 years on average in 2024), dealerships can’t lean on auto sales to fuel the bottom line like before. And dealerships don’t have to if they’re willing to rethink and invest in fixed operations.
Reframing the role of fixed ops
The reality in 2025 and beyond is that the gross margins of fixed operations versus vehicle sales simply aren’t what they used to be.
On average, the gross profit margins of dealership fixed operations across the country have risen by 5.4% even as sales have leveled off or fallen.
Let’s face it: The closer dealerships can get to 100% service absorption (where fixed operations cover a dealership’s operating expenses), the better. A dealership with the highest possible service absorption percentage is effectively recession-proof. That’s peace of mind for the dealership and its leadership team, especially with unpredictable markets and volatile demand.
As of 2024, the average fixed absorption rate among United States dealerships was around 70%. That figure hints at an untapped opportunity for dealerships to re-position their business models to become customer service centers that happen to sell cars. Doing so can create sustainable long-term profit growth, new levels of customer retention and loyalty, and greater resilience to market fluctuations and economic headwinds.
That said, making the shift requires more than just the willingness to change mindsets. It requires understanding use cases for AI and implementing sophisticated automotive AI solutions in the most effective way for your dealership.
Key strategies to boost service revenue and profitability with AI in auto dealerships
Currently, many dealerships are using some form of AI or AI-related automation in their tech stacks. And a hefty 68% report that AI has been beneficial for them. However, the automated products some dealerships are using may be outdated and therefore not able to help the dealership get more revenue out of its fixed operations.
Dealerships can achieve optimal performance through the most advanced AI tech. designed specifically for automotive industry businesses and customers. Any other technology will be subpar and unable to fully perform the actions needed to bring the following strategies to life.
Strategy 1: Enhance AI-driven personalization and customer engagement
Customer satisfaction and loyalty are foundational goals of any fixed operation. In today’s market, customers expect personalized and timely attention. When people feel like they’re getting individualized attention and support, they’re more likely to respond positively; in the case of a service department, that usually means booking appointments there instead of going somewhere else.
The only problem? Most dealership service center teams are stretched thin. They don’t have the time or capacity to handle large volumes of service inquiries (particularly the ones that come after hours or through digital channels).
But AI agents can.
These aren’t like chatbots, which many businesses use as a staple in their tech stacks. AI agents are light years ahead of the car dealership chatbot that was once the mainstay of AI tools for the automotive industry. Smart AI agents are equipped with the power to sound more humanlike, hold full conversations, and perform many more operational functions when compared to legacy chatbots.
Rather than making customer interactions sound stilted, robotic, and automated, AI agents draw on conversational generative AI. This allows the software to continuously learn how to respond to questions and enables it to send the right message at the right time to each customer based on a variety of nuances.
However, it’s important to note that choosing AI agents that only use open-source or foundational models isn’t the most effective approach. Specialized, highly-considered industries such as automotive retail need AI agents that blend those models with domain-specific, verticalized LLMs to deliver more accurate and relevant interactions.
From automated service reminders to follow-up checks, Automotive AI agents can handle most customer engagement needs until a hand-off to a human makes sense.
Strategy 2: Automate service 1:1 outreach with AI Agents
It bears repeating that “AI automation” in this context isn’t limited to a simply constructed one-size-fits-all exchange. Advanced AI technology leverages agents to perform outreach services without being manually created or scheduled. They can independently advise customers about upcoming service milestones or VIN-specific repair recommendations based on their unique driving patterns, without human intervention.
This completely changes the game for service departments that might otherwise rely on mass emails, generic blanket reminders, or direct mailers for customer outreach — or neglect outreach entirely.
The AI agent can do it all, including automated conversational scheduling through email, SMS, and chat, efficiently bringing customers back to the same dealership service center. And the more often a customer returns, the higher the dealership’s average customer lifetime value (CLV) climbs.
Many of the repetitive tasks that are done by humans can be offloaded to AI software. As this kind of software continues to evolve, humans will be able to focus more on building relationships with customers that result in long-term loyalty.
Strategy 3: Improve technician efficiency
AI isn’t just useful as a means to interface with customers. AI-assisted software can be used in a back-office capacity to improve the efficiency of service departments.
For instance, AI-assisted systems can help diagnose problems. The faster a problem is identified, the faster a quote can be created and shared with a customer. Dealerships that can offer lightning-fast diagnoses have the opportunity to differentiate themselves from those that take hours or days to resolve customer issues.
AI can also help streamline logistics and service drive scheduling. For example, automotive AI can help with bayloading by scheduling appointments at the most efficient times of the day, avoiding early-morning rushes and helping technicians be more effective and efficient.
Strategy 4: Make smarter operational decisions
It can be challenging for even seasoned auto dealership leaders to know that they’re making the right judgment calls, particularly at times of economic and political uncertainty.
AI software leans on predictive analytics to forecast a dealership’s likely service needs and can make recommendations based on analytical findings. For example, a dealership’s parts orders likely have a seasonal influence. AI can pull historic weather data and reported trends from prior years. The software’s forecast isn’t just based on outside trends, either. The latest AI for car dealerships is capable of using a dealership’s own DMS data and service history during this process.
This is as close to having a crystal ball as a dealership can get. And calling all the shots with confidence — and doing it quickly — can reduce customer and employee churn.
An AI-driven customer experience can drive transformative fixed operations growth
What do all the aforementioned strategies have in common? They all help transform the customer experience. At a time when customers tend to prefer independent repair shops as opposed to seeking maintenance services at the dealership where they bought their vehicles, offering a concierge-level customer experience is critical — and one of the biggest emerging trends in the automotive industry.
A red carpet customer experience in the sales department (while essential) should only be the beginning of the customer relationship. To drive the kind of individualized engagement at scale that consistently increases retention, dealerships must leverage AI-based automotive sales and service software within their fixed operations.
Does this require a new way of thinking? Yes, but it’s exciting to think about how much goodwill can be created between dealerships and customers when specialized AI software can remove common friction points, deliver hyper-personalized interactions at scale, and enable staff to do what they do best: focus on white-glove service with a human touch that unlocks loyalty – including repurchase.
For instance, an AI system can know when to send video repair explanations to customers who are waiting on their vehicles. Or, it can get in touch with customers based on their particular service cycles and driving patterns, rather than on a set schedule. The latest software can tailor communications in a way that simply wasn’t possible just a few years ago. And it can do it in a manner that feels natural to consumers who are accustomed to getting what they want, when they want it.
Technology is the enabler of fixed operations growth
More service appointments. Fewer customers are driving away from the showroom, never to return to the service bay. Greater and more reliable revenue.
These are the promises of the newest generation of AI software for the automotive industry.
Impel is leading the way — and delivering on these promises — by offering solutions that drive measurable increases in service revenue for dealerships that are ready for a true digital transformation.
Turning your fixed operations into a record-breaking profit center
The automotive industry is undergoing massive changes. Some are driven purely by economics; others are a result of cultural and consumer dynamics.
To successfully and profitably navigate those changes, dealerships owe it to their futures to reimagine the possibility and potential of their fixed operations. With the assistance of AI software for car dealerships, auto retailers can generate greater revenue, retention, and profitability from their fixed operations departments. And that’s a roadmap for scalable success.
Interested in learning more about ways AI can transform your fixed operations? Contact the team at Impel to see how Automotive AI can increase sales conversions, customer retention, and repurchase.