With units in operation declining, Steve Messina turned his focus to older cars.
Messina, service manager at Land Rover North Scottsdale in Phoenix, is now aggressively marketing to owners of 8- to 13-year-old vehicles. To bring more 1999-2004 Land Rover Discovery IIs into the shop, Messina cut the dealership's labor rate from $145 to $99 an hour specifically for those customers.
"All my guys are comfortable working on them; it's easy to get parts," Messina said of the Discovery IIs. Even after cutting his labor rate by nearly a third, the dealership still makes money. With the shop's warranty work off by about two-thirds in the past couple of years, it helps keep the techs busy.
"I may not be making 80 percent gross on labor, but I'm making 65 percent gross, and I'm filling the shop with good work, and I'm selling parts," Messina said.
Moreover, the dealership, a Penske store, gets a chance to bring old customers back into the fold and gain new customers who are second and third owners. With the dealership's fixed-operations profits flat in 2011 and projected to be flat again in 2012, any incremental customer-pay business is welcome.
"We try to romance them just like if they were buying a $100,000 Range Rover and try to lock them back into the dealership as a nice place to do business," Messina said.
In early April, the dealership sent out about 1,500 e-mail and mail messages promoting the labor discount at a cost of about $1,500. The promotion generated $25,000 in additional sales that month, Messina said. He plans to repeat the mailer two more times this year and is contemplating widening the labor discount to other vehicle nameplates.
In addition to the Discovery II promotion, Messina has launched another strategy that's paying dividends.
In February, service advisers began closing the sale of extended service contracts in the service drive.
Previously, the advisers were spiffed to pitch the product, but the dealership's finance and insurance department had to process the deal.
Since allowing service advisers to close the deals on service contracts, Land Rover North Scottsdale has gone from generating the sale of one or two a month from the service drive to about 18, Messina said.
"The finance people are our biggest cheerleaders now," he said. "They're making money for watching."