Francisco Codina: Fixing cars correctly the first time is a priority for Ford Motor.
What are your top goals for Ford's service and parts operations?
There are four: customer satisfaction; increasing our parts and extended service plan (sales); mutual profitability of our business and our dealers; and (enhancing) relationships with our customers, our dealers and our (UAW) partners.
What are you doing to increase customer satisfaction?
Fixing it right the first time, on time, is the No. 1 criterion. There are two major components that drive that: the technical ability of someone to fix it, and the parts being there.
Describe your distribution system.
We have 21 (distribution) locations. We have what we call the Daily Parts Advantage. We deliver every single day to every single dealer within one hour of the prescribed time. That's how we measure ourselves.
(Dealers) put the part (order) in on a daily basis. We pick the parts overnight. We deliver the parts the next day, within one hour of when we promised that we would deliver. We do that 98 percent of the time. It has probably improved by somewhere between 12 and 15 percent over last year.
How much profit did service and parts contribute to Ford in 2004?
We don't separate the profits for the division from automotive, but we are a meaningful part of the company's profitability. We have improved (profitability) every single year for the last three years at a very high clip.
Can you give me percentage increases of service and parts profitability?
I think the figure that we have quoted to our dealers is a 23 percent increase in the last two years. We're up this year.
What is your biggest challenge?
I can't fix or repair what's not sold. As we've lost some (market) share, it becomes a challenge to be able to sell more. We have to do a better job on a per-unit basis.
Another big challenge for the industry is material costs. Oil affects everything - resins, transportation and the steel price. We continue to look at that very carefully and maintain our margins.
Tell me about your customer satisfaction scores.
We know that 85 percent of our customers say their vehicle was fixed right the first time, on time. It's not good enough. If you're one of those 15 out of 100, you wouldn't be happy. Our goal has to be 100, but 85 is a good figure.
How satisfied are your technicians with warranty work labor rates?
I have been in the business for 28 years. The first shop that I went to, the dealers and the technicians complained about two things: You don't pay me enough on warranty, and you don't have enough margin on your parts. Those two things are always somewhat of a struggle.
We brought in over 40 technicians from across the nation to deal with the issue of labor time standards. If any technician thinks that we don't have the right rate, we go out and look at it again.
And now we're trying to use the (tech panel) for future products, so that as we develop new products, we make the vehicle even more accessible for serviceability.
What are you doing to help dealerships' service departments compete with aftermarket shops?
Our advertising is part of that. We make sure we're very competitive with all our prices. Most repairs that people can judge are frequent repairs: oil filter changes, brakes, batteries, tires.
Those are the ones you have to make sure you are very competitive with. Those are the ones we advertise the most.
The other thing that drives consumers away from the store is not being convenient. So we established Quick Lanes. They're doing extremely well.
How profitable are Quick Lanes for dealers?
At an average Quick Lane, which is about five stalls, you're looking at $67,000 a month, on average, of sales. That makes it profitable.
How are tire sales going?
We expect this year about 3 million tires, and that's huge. It should be up somewhere about 10 (percent) to 12 percent on tire sales.
What percentage of repair work at dealerships last year was warranty work?
Nationwide it's around 25 percent, and it's dropping. I think the ratio should settle around 80 percent retail, 20 percent warranty. I'd like it to be even lower than that.
You may e-mail Gail Kachadourian at [email protected]