Dealers, factories cooperate to capture repair work
Reprints
Print
Respond
"People often don't feel close to the dealer," Lynch says. "Sometimes they feel like they are just a number. They call trying to find out about their cars and often can't get answers to their questions.
"An individual shop owner like myself is more attuned to taking personal care of the customer and getting to know them. It helps me with repeat business."
The service departments of franchised dealerships are in a fight for customers' dollars. Independent repair shops such as Lynch's, quick-lube stores and body shops are capturing more business, as harried drivers look for ways to speed up maintenance.
But dealerships and factories are battling back, with customer-friendly initiatives aimed at ensuring that buyers return for service where they purchased their cars and trucks.
Service profits down
Last year, the nation's 22,089 franchised auto dealers recorded $85.2 billion in service and parts sales, the National Automobile Dealers Association says. That's an average of about $3.8 million per dealership, down slightly from 2004.
Overall, 46 percent of the typical dealership's total profit comes from the parts and service department, says NADA analyst John Thomas.
Those profits could be in jeopardy. While dealerships must keep raising salaries to keep highly trained technicians, their warranty work is declining. And specialized independent shops that whiz customers in and out are taking more business away from dealerships.
General Motors says it considers profitable, well- run service departments vital to the company's future.
"The stronger the service department, the better the dealer will be at weathering downturns in sales and the more competitive the dealer can be at selling new vehicles, because they can operate on smaller margins," Peter Lord, GM's executive director of service operations, told Automotive News.
"It is very, very important to us that we have dealers with strong parts and service businesses."
GM has introduced a line of budget-priced repair parts that give dealership service customers a choice between the original part and a less-expensive aftermarket part. Some GM dealers also sell tires, Lord notes.
UnitedAuto's example
Alan Starling, a former NADA chairman and a multifranchise dealer in Florida, says dealerships can increase service business by paying closer personal attention to customers.
At independent shops, Starling says: "Normally the guy who owns the shop is running the place. When he sees a customer squirming in the waiting room, he goes over and says, 'May I help you?' I do believe that is the major advantage that an independent shop has."
Starling says UnitedAuto Group Inc. provides an example that dealerships can follow to improve customer satisfaction in the service department.
The public dealership group has targeted key areas to improve the service department experience - technicians' work areas, communication with customers and convenience - says UnitedAuto spokesman Tony Pordon.
Many UnitedAuto stores have service departments with tiled floors, grid ceilings and big windows, so consumers can see their vehicles being repaired. Technicians have large, flat workbenches. Hoses for lubricants and air are installed in their workbenches, instead of dangling from the ceiling. Exhaust hoses are routed underground.
"This is their office," Pordon says. "Everyone has the same look. It's neat and clean."
Many UnitedAuto stores give technicians their own break rooms and locker rooms. In hot-weather states such as Arizona and New Mexico, service departments are air-conditioned. Such amenities help reduce turnover among service technicians, Pordon says.
"When we have less turnover, we have more consistency of people working period to period," he says. "They know the customers. Someone may have worked on the same vehicle multiple times."
Many UnitedAuto stores, Pordon adds, maintain a fleet of loaner cars that customers can use while their vehicles are being repaired.
Factory help
Several automakers - notably GM, Ford, Toyota and Nissan - have developed programs in recent years to help dealerships compete with independent garages. Ford Motor Co.'s Quick Lane program and GM's Mr. Goodwrench campaign have been especially aggressive in trying to steer customers back to dealerships for service.
About 10 percent of Ford and Lincoln-Mercury dealerships have added Quick Lane operations. They encourage consumers to return to the dealership for oil changes and other light maintenance work, without having to make an appointment. Ford says prices for Quick Lane service are competitive with those charged by independent stores.
Ford is working with its dealerships on what it calls a "fix it right the first time" initiative. The company also is encouraging dealers to get into the tire business with its Around the Wheel program.
Even with these programs, dealership service departments may be in for rough times. Ironically, the rising quality and improved durability of vehicles are keeping customers away from the service department.
"As quality rises, consumers' need to come back for unscheduled repairs diminishes," says GM's Lord. "Dealers have capacity and have the interest in growing the customer-pay business.
"In an era with high product quality, you need a different skill set. You must look for needed services and counsel with the customer."
Dealer Starling points to the obsession of GM's Saturn brand with customer service as proof that even brands that have struggled can build consumer loyalty. Starling operates a Saturn dealership.
"Most dealers understand that you sell a customer the first car," he says. "But the second and third are the result of how well you do in the service department. Customers think about you when it is time to replace their automobiles."
If a buyer's service experience is unpleasant or too expensive, Starling says, "it is less likely that you will sell them another car."
You may e-mail Richard Truett at rtruett@crain.com
You can reach Richard Truett at rtruett@crain.com.
