U.S. auto retailers have had a longstanding relationship with local commercial and business fleet customers, especially in the servicing of vehicles in the fleet. Rapidly changing updates to connected vehicle data is offering an opportunity for retailers to further grow this business, but their technology proficiency to properly leverage this data poses great challenges for the success of this business opportunity.
Recent survey findings underscore the urgent need for better communication, advanced predictive and diagnostic tools, customized offers and improved access to connected vehicle data if dealerships are to remain relevant and profitable in the years ahead.
Margin Compression and the Search for New Profit Pools
The days of record profits driven by supply shortages and high demand are over. Dealers now face challenges with rising inventories, increased floor-planning costs, and rapidly changing average transaction prices. Consumers, squeezed by higher interest rates and affordability concerns, are shifting their preferences toward less expensive vehicles and fewer premium features. This has forced dealers to rethink their business models, seeking operational efficiency and diversification to offset shrinking margins.
Because of this, the service and parts department has become an even more important profit center. For many dealers, commercial fleet service represents a growing portion of this business. According to a recent industry survey, 31 percent of auto retailers currently service commercial and business fleets, with most handling between 11 and 100 fleet vehicles per month. For nearly half of these retailers, fleet service accounts for 11–25 percent of their service business, providing a vital revenue stream at a time when sales margins are under pressure.
Fleet Service: Opportunities and Obstacles
Despite its promise, the commercial fleet segment is not without hurdles for retailers. Communication between dealers and fleet managers is often sporadic or nonexistent, nearly 60 percent of surveyed dealers report rarely or never communicating with their fleet customers. This lack of engagement hampers fleet customer retention and limits opportunities for upselling or proactive maintenance.
Geography and price competitiveness also present barriers to acquiring new fleet customers. Many fleet operators cite distance to the dealership and concerns over service costs as reasons for seeking alternatives. For dealers, overcoming these obstacles requires a renewed focus on customer experience, including streamlined scheduling, transparent pricing, and proactive outreach.
The Data Dilemma: Connected Vehicles and Predictive Maintenance
As fleets become increasingly connected, the ability to leverage vehicle data for predictive maintenance and operational efficiency serves as a key differentiator. Yet, the survey reveals that 60 percent of retailers face challenges accessing and utilizing connected vehicle data for maintenance and repair. Most rely on OEM-specific or third-party tools, but integration and usability remain pain points. Predictive maintenance alerts and vehicle health reports are the most commonly used data types, but only a small fraction of dealers store this data for future use in total cost of ownership (TCO) analysis, a capability that will become critical as fleets transition to EVs.
Dealers recognize the need for improvement. Over 40 percent express a desire for better tools to capture and analyze connected vehicle data, while a similar proportion are unsure of how to proceed. The complexity of diagnostics and repair, particularly as vehicles become more technologically advanced, is cited as a top challenge by nearly a third of respondents. Advanced diagnostic tools and more efficient scheduling systems top the list of desired improvements, highlighting the importance of digital transformation in the service department.
The EV Transition: Readiness and Reluctance
While the broader retail market deals with the slow pace of EV adoption, the commercial fleet segment lags even further behind. Only 19 percent of surveyed dealers currently service EVs for fleets, while 60 percent do not and 20 percent are unsure. This lack of readiness is a significant concern, given the growing emphasis on sustainability, reliability and lower TCO and the inevitable shift toward electrification in fleet operations.
For dealers, the transition to EVs is not just about technical capability but also about data. As fleets weigh the TCO (total cost of ownership) of electric versus internal combustion vehicles, access to comprehensive maintenance and performance data will be essential for informed decision-making. Yet only 10 percent of retailers currently store connected vehicle maintenance data for future TCO analysis, underscoring a critical gap that must be addressed if dealers are to support fleet customers through the EV transition.
The Path Forward: Digital Tools, AI, and Customer-Centricity
To thrive in this evolving landscape, dealerships must embrace digital transformation and invest in AI-driven solutions that enhance operational efficiency, customer engagement, and data-driven decision-making. AI-powered tools can help optimize inventory management, personalize customer interactions, and streamline service processes, from online scheduling to predictive diagnostics.
For the commercial fleet segment, these innovations are not optional. Dealers must develop robust systems for capturing and leveraging connected vehicle data, improve communication with fleet managers, and offer seamless digital experiences that meet the expectations of modern business customers. This may include integrating scheduling platforms, offering transparent pricing, and providing comprehensive TCO analysis tools that help fleets navigate the complexities of electrification.
At the same time, dealers must continue to diversify their service offerings, exploring new revenue streams such as EV charging, mobile repair, and fleet servicing. The industry is still in an experimentation phase, but those who move quickly to adapt will be best positioned to capture emerging opportunities.
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