When ‘Service’ Became a Profit Center- and Lost Its Purpose

Your check engine light comes on.
Your stomach drops.
Not because of the car problem - but because you know what comes next: the sympathetic head tilt, the “while we have it open” upsells, and the final bill that’s somehow triple the estimate.

In that moment, you’re not a customer. You’re a target.

It’s a familiar story, one that plays out across dealerships and service bays worldwide. After-sales has become the new profit engine for OEMs, but somewhere along the way, the purpose of service was lost. What was meant to build trust now tests it.

Once, after-sales was about relationships. Today, it’s a profit center, but not necessarily a growth engine.

As vehicle margins shrink and differentiation blurs, OEMs have turned to service for stability. After-sales now contributes up to 50% of automotive profit (Spyne, 2024). Yet, while profits rise, customer experience ranks only ninth out of thirteen industries (Capgemini Research Institute, 2024).

Service is moving toward a profit center but most leaders are focused on extracting revenue rather than creating it. Targets revolve around upselling and cost recovery, not customer lifetime value.

This isn’t what Service-Led Growth was meant to be. True Service-Led Growth isn’t about billing more; it’s about building more - more trust, more relevance, more retention. But today, every upsell feels like an invoice, not an insight.

OEMs may be counting service revenue but customers are counting down their patience.

The Loyalty Erosion: Customers Are Voting With Their Feet

The numbers tell the story:

• Only 35–40% of buyers in the US and Europe intend to repurchase the same brand (BCG, 2025).

• Even in the US, loyalty rates hover around 52.5% (S&P Global, 2024).

• And 57% of customers unhappy with post-purchase service switch brands within 6–18 months (Capgemini, 2024).

In other words, nearly half of all customers are open to switching, not out of anger, but indifference. They’ve stopped believing that “premium service” means premium care.

And the youngest generation of car buyers, who view loyalty as optional, will define the next decade.

The Value Perception Gap

The industry calls it servitization. Customers call it squeezing more out of me.

Paid diagnostics. Subscription features. Premium parts at opaque prices. OEMs see predictability and recurring revenue. Customers see dependence and diminishing value.

The infographic illustrates the widening value perception gap in automotive after-sales service, where OEM intent often collides with customer reality. While manufacturers design programs around recurring revenue, predictability, and brand control, customers perceive rising costs, opaque pricing, and limited choice.

This misalignment explains why service satisfaction and loyalty continue to erode, even as after-sales revenue grows. Understanding these opposing views is key to building service models that balance profit and trust.

OEMs see structure, customers see strain - the same service model viewed from two different sides.

The Breaking Point: Customers Are Living With It… For Now

Most customers aren’t walking away yet, they’re waiting for alternatives.
Right-to-repair regulations, open data laws, and new digital-first service networks are already eroding OEM dominance.

A FIA Region I study warns that restricting data access limits consumer choice and fuels dissatisfaction in Europe’s aftermarket. And EVs, requiring fewer service visits, are amplifying the pressure.

“Customers are living with what they get, but waiting for someone to give them a reason to leave.”

The window for trust is narrowing. And that’s exactly where disruptors are stepping in.

Tesla’s mobile service vans have redefined convenience. They eliminate downtime and deliver repair confidence without the traditional dealership dance.Independent repair networks are winning back trust through radical transparency, fixed-rate pricing, and a “no surprises” experience. Even subscription-based models, when they genuinely deliver ongoing value, are proving that customers don’t mind paying more if they feel treated fairly.

Every gap between price and perception is an opening for disruption.

From Extraction to Experience: Turning Service Back Into a Value Engine

If every service conversation starts with a target instead of a truth, customers will eventually stop listening. OEMs have optimized their financial KPIs such as revenue per repair order, upsell conversion, labor margin, while ignoring trust KPIs such as repeat-visit rate or issue-resolution time.

When every advisor’s KPI is in dollars, the experience will never be in loyalty.

Many service advisors now push add-ons customers don’t need because that’s how success is measured. The problem isn’t bad intent; it’s bad metrics.

The following examples illustrate how manufacturers can shift focus back to value creation, not by sacrificing profitability, but by earning it through transparency, relevance, and genuine customer trust.

Transparent Pricing

Publish real-time service pricing and parts costs, let customers see before they book.
Example: Hyundai Europe’s online booking tool offers instant cost visibility, building trust and reducing billing disputes. Customers reward clarity with loyalty; transparency is the new retention strategy.

Contextual Upselling

Move from “sell everything” to “offer what matters.” Use AI and telematics to make personalized recommendations based on driving behavior, mileage, and maintenance patterns.
Example: Volvo’s predictive maintenance approach recommends condition-based repairs, increasing acceptance while reducing perception of overselling.

Measure Loyalty, Not Just Margin

Integrate customer experience metrics such as repeat-visit intent, post-service NPS, time-to-resolution into advisor incentives.
A balanced scorecard (financial + experiential) aligns the team around trust, not just transactions, leading to higher long-term retention.

Build a Post-Service Care Loop

Transform post-service silence into proactive engagement. Follow-up calls, digital surveys, and predictive check-ins demonstrate care beyond the invoice.
Manufacturers that maintain communication post-service see higher repeat rates and stronger brand advocacy.

Revenue follows relevance. But relevance only comes from trust.

Don’t Wait for Disruption - Be the Disruption

The next shake-up in automotive won’t come from electrification or autonomy. It will come from trust - from whoever redefines what “service” truly means.

After-sales profitability is vital, but when customers feel exploited instead of supported, loyalty decays faster than margins. That’s why Service-Led Growth matters now more than ever. It’s not about how much revenue you extract, it’s about how much lifetime value you create. After-sales profitability is essential. But if your customer experience depends on who walks in, not what values walk out, loyalty is already gone.

Consider this as a test of service: If your teenage daughter brought her car to your service department - without telling them who she was - would you be proud of how she was treated and what she was charged?

That’s the difference between service and serving.

Customers are living with what they get but waiting for something better. Don’t wait for your business to be disrupted. Be the disruption.

How would your customers describe your service experience - as care or cost?

If the answer makes you pause, it’s the right time to start a conversation.

Author Info

Written by Mihir Joshi

After 15 years working with leading manufacturers, I created SmartServiceOps to share practical insights for the field service industry.