Thriving Through Tariffs: Five Strategies for Fixed Ops Profitability

Understanding the Impact of Tariffs

The potential impact of U.S.-imposed tariffs on imports from key suppliers like China and Mexico continues to shape the automotive industry. While most understand that tariffs could drive up the costs, it's less commonly understood how and why this is the case.

Tariffs could require OEMs importing parts or materials to pay steep duties, which are typically passed along the supply chain. As a result, parts purchased by dealerships may become more expensive, adding pressure to fixed ops departments.

By raising prices across the industry, tariffs could challenge fixed ops teams to stay competitive amid affordability concerns and price-sensitive customers. However, a well-planned profitability strategy can help departments protect their margins while maintaining customer loyalty.

Dealership Fixed-Ops Profits Strategies

If you're looking for ways to improve your profit margins and promote a positive customer experience at your dealership, here are five fixed-ops focused strategies to consider:

1. Alternative Sourcing Strategies

One way to counteract rising costs is to diversify your supplier base. Exploring domestic alternatives or international suppliers outside of tariff zones could potentially allow you to mitigate the impact of tariffs on your bottom line. Building strong, long-term relationships with reliable vendors—those who prioritize your needs and can offer consistent pricing—can also help give you leverage during times of volatility.

Speaking of leverage, another option for reducing costs via alternative sourcing is to join cooperative purchasing or buying groups that provide access to better terms and volume discounts. Lastly, don't overlook remanufactured or OEM-equivalent parts. These can offer high quality at a significantly lower cost, especially for routine repairs where margins matter most.

2. Optimizing Your Pricing Model

Consider adopting a dynamic pricing model which allows you to adjust pricing in real-time based on part availability, cost, and service demand. This allows you to create a tiered pricing structure based on these factors. For instance, critical parts may carry a premium, while high-margin accessories can be bundled for value.

It's equally important to make sure your team knows how to communicate pricing effectively. Train your advisors to emphasize the value of timely repairs, the cost of waiting, and the quality of the parts used. Customers are more receptive to higher prices when they understand the “why” behind them.

The potential for increases in vehicle costs means some customers may keep their car for longer periods of time. Vehicle service contracts and pre-paid maintenance become more appealing when customers understand that they can serve as a hedge against expensive repair bills. Encourage your team to present all products as usual and explain the benefits for consumers.

3. Service Upselling Without Undermining Trust

Upselling in a high-cost environment requires a careful, strategic approach. Your goal isn’t just to increase revenue—it’s to do so in a way that builds long-term customer loyalty.

Start by focusing on high-margin services like fluid flushes, brake repairs, and preventative maintenance. Use digital vehicle inspection (DVI) tools to highlight needed services transparently. Photos and videos sent to the vehicle owner also help reinforce trust and clearly communicate the value of the service you're offering.

The service drive also provides a prime opportunity to introduce customers to F&I products such as Vehicle Service Contracts and Pre-Paid Maintenance plans. In times of uncertainty, these products can gain added value to customers, as they help offer protection against future repair costs. With media attention focused on rising prices, there’s an opportunity to educate customers on these offerings as a hedge against inflation and an investment in long-term cost savings.

When executed properly, upselling becomes an act of service, not sales. Train advisors in timing, tone, and transparency so that upsells don't feel like a sales pitch but rather a consultation with the customer where their needs take center stage.

Free Guide: 6 Ways to Boost Profitability, Performance & Service in Fixed Ops →

4. Boosting Operational Efficiency

By streamlining service workflows whenever possible, you can handle more volume with fewer delays. Cross-training staff can also help boost operational efficiency by making your workforce more flexible and ensuring that everyone is capable of stepping up and filling different roles when needed.

To evaluate your operational efficiency and its impact on profitability, you can track KPIs such as technician productivity, effective labor rate, and parts-to-labor ratio. Be sure to also check out our Fixed Operations Proforma Calculator to estimate your costs and help uncover efficiency gaps.

• Technology such as advanced scheduling platforms and automated parts inventory systems help speed up turnaround times and reduce waste, enabling the kind of efficiency needed to keep margins profitable in the face of rising costs.
• Utilizing an Online Claims Service is another way to streamline operations, reducing friction and saving time in the customer’s repair approval process.
• Online Claims Submissions exemplify the connection between service drive optimization and customer-centricity.
• This tool not only enhances the customer experience by ensuring a smooth, accurate claims process but also saves valuable time for service writers, allowing them to focus on other critical tasks.