Service departments and F&I offices are both critical parts of a dealership’s ability to retain customers and generate revenue throughout the ownership lifecycle. Yet while F&I has spent recent years refining how it trains, incentivizes, and measures its customer teams, service departments have largely stayed the same. Service advisors are rarely trained or compensated to identify additional revenue opportunities the way sales and F&I staff are, and that lost opportunity is becoming bigger every year.
The result is a disconnect between where customers increasingly spend money on their vehicles and where dealerships are positioned to capture that business. As vehicles remain on the road longer, the service relationship has become an important part of the overall customer relationship.
Cars Are Staying on the Road Longer Than Ever
The root cause is straightforward economics. New vehicle prices have climbed to levels that push many buyers toward longer loan terms and longer ownership periods, and the vehicles reflect it. The average age of a car or light truck on American roads climbed to 12.8 years in 2025, a figure that has now risen for eight consecutive years as new vehicle sales struggle to keep pace with the aging vehicles already on the road.
That trend should be good news for dealership service departments. More vehicles are aging out of their factory warranty and into the years when maintenance and repair needs multiply. Instead, many dealerships are watching much of that business walk out the door.
Why the Service Drive Keeps Losing Ground
The warranty period functions as an invisible leash. While it is active, customers return to the dealership because repairs are mostly covered, and risk feels low. Once it expires, that psychology flips, and price sensitivity spikes at the same moment competitors sharpen their pitch. Recent industry research shows how sharply retention falls once that leash disappears, with dealership service retention among owners of newer vehicles falling from 72% in 2023 to just 54% in 2025, and dealerships now handling 12% fewer service visits overall than they did in 2018.
Independent shops are not necessarily winning this fight on price. Dealership repair costs remain broadly competitive with independent shops on average, but customers still perceive dealerships as more expensive, less transparent, and more likely to spring surprise costs on them. Dealerships are also simply outnumbered, with independent repair shops now outnumbering franchise dealership service departments by more than 10 to 1 nationally, giving customers no shortage of alternatives once loyalty cracks.
The cost of that migration extends well past lost labor hours. It can cost up to 10 times more to acquire a new customer than to retain an existing one, and the connection between service and future vehicle sales is direct. Customers who continue servicing their vehicle at the dealership where they bought it are significantly more likely to return there for their next purchase, which means every lost service customer is also a quietly lost future sale.
Rethinking What Happens in the Service Bay
The service department’s underperformance is not primarily a marketing problem, but in fact a structural one for the business. Traditional service departments were built to move vehicles through bays quickly, not to build long-term financial relationships with customers the way F&I offices are trained to do. Closing that gap does not necessarily require turning service advisors into salespeople. It requires designing the service experience so retention happens automatically, without an uncomfortable sales conversation at the counter.
That does not mean asking service advisors to become salespeople. It means recognizing that the service department has a role in the larger customer relationship and giving its teams the tools, information, and processes to support that relationship.
In practice, that starts with proactive communication well before a warranty expires rather than after, since the 90-day window on either side of expiration is when most customers quietly decide whether to stay or leave. It can also mean building protections directly into the ownership experience, such as extended coverage on completed repairs, so customers have less reason to price shop or walk away when something goes wrong. Furthermore, since service already contributes close to half of a dealership’s total gross profit in many stores, even modest improvements in retention translate into outsized returns.
A modern approach also means treating every service visit as a data point rather than a transaction. A customer bringing in a vehicle for a costly repair is often a customer who would consider trading it in, yet few dealerships proactively surface that option at the point of service, leaving an entire category of inventory acquisition and sales opportunity untouched.
This creates another opportunity: using the service relationship to better understand when a customer’s needs may be changing. A vehicle requiring significant repairs, for example, may prompt a customer to consider whether continuing to own it makes sense. A dealership that can recognize those signals has an opportunity to begin a conversation about the customer’s next vehicle before that customer starts the process somewhere else.
The New Service Opportunity
The dealerships that treat the service department as a true second retention engine, rather than a cost center that occasionally sells an air filter, are positioned to capture a growing and largely uncontested share of aftermarket revenue over the next several years. The vehicles are staying on the road longer and the need for maintenance and repair is not going away. The opportunity for dealerships is to make the service relationship as intentional as the sales and F&I relationships that come before it.
The dealerships that can turn service visits into stronger, longer-lasting customer relationships will be better positioned to retain more of the revenue generated throughout the vehicle ownership lifecycle. The question is no longer simply how many vehicles a dealership can sell. It is how much of the customer’s journey it can continue to own after the vehicle leaves the lot.
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