Ford Motor Co.'s dealer-owned satellite service centers have gained prominence because Ford believes they are critical to the success of the company's radical retail plans for Indianapolis and Salt Lake City.
Ford started testing the Ford Auto Care program with a handful of dealers in 1992. In 1994 the company said it planned to have about 500 of the dealer-owned centers by 1998.
Currently, only two Ford and one Lincoln-Mercury Auto Care stores exist. Jim Klous, who took over as Ford Auto Care project manager in January 1997, said Ford and its Customer Service Division have not focused exclusively on Auto Care since it was created.
While Ford has backed off its goal of 500 of the satellite centers by next year, Klous said the company is committed to expanding the program. Two centers are under construction and are scheduled to open this year.
Despite the low numbers, Klous and the dealers who operate the satellite service centers say the stores have accomplished what they were set up to do: They are profitable and customer-friendly, and they perform more nonwarranty repairs than the average dealership.
In May, Ford announced that it wants to replace the 20 Ford and Lincoln-Mercury dealerships in the Indianapolis market with five or six Ford superstores, two or three Lincoln-Mercury superstores and five or six satellite service centers. Ford also has said that it wants to replace 17 dealerships in Salt Lake City with five multibrand superstores and 10 satellite service centers.
The proposal outlined by Ford includes stores with no-haggle pricing, salaried salespeople and extended service hours - many of the hallmarks of Ford Auto Care.
INTEGRAL TO INDY PLAN
Ron Goldsberry, vice president of Ford's Global Customer Service Operations, said the satellite service centers are an integral part of the retail plan.
He said Ford's research shows that the major reason customers don't come back to the dealership for service is convenience, followed by price and customer treatment.
All three issues are addressed in the Indianapolis and Salt Lake City proposals, he said. For instance, Ford would place the centers wherever they are most convenient for customers - from shopping centers to airports to office complexes.
In 1992, when Ford opened its first dealer-owned satellite service centers in Tucson, Ariz., and Naugatuck, Conn., company research showed that 70 percent of Ford customers did not come back to the dealership for service after the warranty expired. Currently, that number is about 61 percent.
In addition to the three service centers already in operation - the Arizona and Connecticut locations, and one in Jacksonville, Fla. - two other centers are slated to open this year. The new centers are in Topeka, Kan., and Irvine, Calif. Klous said other dealers' applications for Auto Care stores are being processed.
TESTS IN CANADA
Ford of Canada is testing three dealer-owned service outlets, called Fast Lane, in Toronto. Fast Lane provides the same type of fast, no-appointment service and maintenance as national chains.
According to Klous and the dealers who have the U.S. satellite service centers, the stores are profitable and regularly service 1985-90 models. The stores are in busy retail areas within the dealer's market area and do not siphon business from other Ford dealers, Klous added. 'Studies we've done show that the dealers in the general area of the Auto Care centers had increases in their business as well,' Klous said. 'We are confident that it's not taking business from other dealers.'
The centers' waiting rooms have glass walls that enable consumers to watch their vehicles being repaired. There are telephones and desks for consumers who want to work while they wait.
Consumers are encouraged to talk to the technicians, and each center has a walkway that leads from the customer waiting area to the service bays. To encourage consumer interaction, all center employees are required to participate in a two-day training session on customer relations.
'We're very pleased with (the service center); it makes us money every month,' said Dick Shaker, owner of Lincoln-Mercury Auto Care in Naugatuck, Conn. He writes approximately 45 repairs orders a day at his service center; about 90 to 95 percent of those repairs are customer-paid. At his dealership, the split between warranty and customer-paid work is about 50-50.
Stan Newton's Ford Auto Care in Tucson services about 10,500 vehicles a year and has a mix of 30 percent warranty work and 70 percent customer-paid. The split at his dealership between warranty and customer-paid repairs is 50-50.
His store is near a Wal-Mart, a Super Kmart and a muffler shop. A local chain tire store is in the same complex as his store. 'If you're going to do this, you have to get right there with them. That's what we've done,' Newton said.
Joe Key, general manager of Mike Shad Ford in Jacksonville, Fla., said 70 percent of the 800 vehicles a month serviced at his service center are customer-paid and 30 percent are under warranty. At his Ford dealership, 60 percent are customer paid; 40 percent warranty. He said his store shops the competition such as Sears and Pep Boys every month.
'We may be $19.95 on an oil change and Pep Boys is $15.95, but then we might have a $39.95 brake job and theirs is $59.95,' Key said. 'When you add all prices of the services, we're at least equal to or lower than the competition.'
One part of the initial Auto Care experiment failed. In March 1994, Ford persuaded seven Ford and Lincoln-Mercury dealers in San Antonio to pool their resources and open a large service center downtown. The dealers contributed $50,000 each toward the 10-bay facility; Ford contributed $200,000. Ford owned no equity in the store; it was fully owned and operated by the dealers.
The jointly owned store closed in June 1995.
Klous said the multiple ownership made the San Antonio store a complex business venture from the start, and its downtown location complicated matters further.
'In retrospect, it didn't lend itself to extended and Saturday hours when all the traffic leaves at 5 p.m.,' he said. 'We learned from it.'
Staff Reporter Harry Stoffer contributed to this report.