When Jim Wheat took the helm at Penske Auto Centers last October, he immediately set in motion dramatic changes to reinvent the retail service outlets. Today, he says he can see the payoff of those changes.
Wheat joined Penske Auto Centers, in Troy, Mich., as president and CEO after serving as president of Jiffy Lube International. In less than a year on the job, Wheat has revamped completely the services Penske Auto Centers offers, as well as its advertising and marketing campaign and the number of stores in operation.
Wheat's first major move was
to simplify Penske's menu of services offered. He eliminated detailed engine repair, which he says is better handled by a dealer, and exhaust work.
Today, services offered at Penske Auto Centers focus on three core areas. Preventive maintenance includes primarily oil changes and fuel injector service, as well as transmission and air-conditioning unit replacement. The ride-control segment consists of brakes, shocks, wheel alignment and tires - the Goodyear and Penske brands. The auto energy category includes batteries, alternators and starters.
'We wanted to be able to provide quality products and services every day in every store,' Wheat says. 'If you look at the complexities of engines today, we couldn't do that work consistently throughout our 650 stores in 40 states.'
In addition, Wheat points out, the trend in the aftermarket business is for specialization of services and convenience for the customer. He cites retail outlets that focus on tires exclusively, operations that sell only batteries and facilities that provide only fluid changes.
'A retail automotive service provider has to be specialized. It can't be everything to everybody,' says Wheat, who has worked in the retail end of the car business since he was 17.
A unique niche
The Penske Auto Centers, he claims, fill a unique niche by offering three specialized services.
'We think being specialists in all three categories creates a niche for us that is not out there today. There are a lot of retailers in parts of our business, but no one company is
a direct competitor because none offers all three services in one facility,' Wheat says.
Instead, Penske Auto Centers has tens of thousands of competitors. The oil change business alone has 60,000 providers; tire retailers number nearly as many.
Wheat says he thinks Penske Auto Centers will attract time-constrained, convenience-minded customers who don't want to go from shop to shop for their basic maintenance services.
'If we bring more customers in for fluid changes, they are more apt to purchase their tires there,' he says.
The paring down of Penske's service menu also allows the retailer to focus on its 'Right Now' philosophy. The goal is to give immediate service to the customer who comes into the store for an oil change, for instance.
'We are focused on exceeding customer expectations,' Wheat says. 'We focus on taking care of the customer right now because we understand they pay the bills for everything we do.'
The simplified menu of services was in operation in all Penske Auto Centers by Jan. 2 this year. While Penske Auto Centers, a subsidiary of privately held Penske Corp. in Detroit, does not reveal financial figures, Wheat indicates business is improving.
'So far, the new menu has taken very well,' he says, adding that the oil change and tire segments are showing year-over-year increases in revenues.
Transmission services are gaining, Wheat says. In general, individual Penske Auto Centers outlets are showing year-over-year increases in revenues and profits. Only the stores more heavily geared toward engine work have struggled to make the shift, he says.
`The right number'
In conjunction with revamping its menu of services, Penske Auto Centers closed a number of stores. When Penske purchased the service outlets from Kmart in 1995, it had 863 stores. Since Wheat came on board, the number of stores has been narrowed to 650. The stores that were closed were ones for which volume was low and no growth had been shown for several years.
'Most were in outlying areas far from metropolitan hubs, operations that were difficult to service and staff,' Wheat says. 'We believe the current population of stores is the right number. The stores we have now have the opportunity for growth in the future.'
That's not to say Penske Auto Centers won't add stores. It could add some freestanding outlets. In fact, it is refurbishing its 48 freestanding stores. The flagship of this program has opened in Warren, Mich. With more road appeal, the new 'Pure Penske' image is colorful, clean and uncluttered, focused around the heritage of automobiles and racing.
Penske Auto Centers also will expand services selectively, if they fit into its three core categories. For instance, this fall, Penske Auto Centers will begin to offer radiator fluid replacement, a first for the centers.
`No. 1 asset'
Wheat also has initiated a more aggressive marketing campaign to promote Penske Auto Centers. The program includes Penske Auto Centers' first national TV advertising campaign to complement its local print and radio ads, which have been expanded. The TV spots, launched in February, feature a toll-free number to call to locate a Penske Auto Center.
The response, Wheat says, has been overwhelming.
Another marketing effort is to leverage the Penske name. 'We have a great vehicle with the Penske name,' Wheat says. 'Our research and the research other auto service providers have conducted show the Penske name is synonymous with quality, credibility, trust, fairness and integrity. The American consumer is very high on the Penske brand. It's our No. 1 asset to use to speak to the American consumer.'
As it raises its profile with consumers, Penske Auto Centers also is looking for more relationships such as the one it has with Daewoo Motor America to build a steady customer base.
Penske Auto Centers provides the basic warranty work for Daewoo automobiles, a business that will grow as Daewoo expands nationwide and the two companies continue joint marketing promotions.
'The opportunity is there for similar arrangements with other companies,' Wheat says. 'It complements our core menu strategy because we're still offering basic car care.'
Meantime, Penske Auto Centers, like virtually every other retail facility offering car service to consumers, is struggling to attract and retain qualified technicians, in extremely short supply now. To that end, Penske has initiated two strategies.
A recruiting program targets students at vocational schools, community colleges and technical schools to promote the Penske brands. 'Anyone out there interested in working on a car knows the name Roger Penske,' Wheat says. 'That gives us a step up to attract quality performers.'
To retain employees, Penske Auto Centers pays bonuses to those who stay on the job. The bonuses are paid every six months and can amount to between $300 and $1,000 a year. Says Wheat: 'It's important for us to communicate to our employees that their tenure here is important to us.'
Michelle Krebs is a free-lance reporter in West Bloomfield, Mich.