Since he became Subaru's fixed ops chief in July 2017, Michael Knipe has been responsible for the automaker's aftersales parts and service business and North American parts and accessory supply chain planning and distribution, among other duties. He previously was Subaru's director of parts logistics. Before that, he spent two decades in various positions at Hyundai Motor America and its Mobis Parts America affiliate.
On learning from dealership innovations
Retailer visits are something that all of us engage in. We're very close to the retailer network, and a good deal of what we do comes from them.
Our new certified collision network was something we discussed over time with our national retail advisory board and then with individual parts managers and service managers across the country. The enthusiasm for that project provided the impetus internally to take on a pretty big initiative — maybe 800 to 1,000 body shops ultimately.
On enhancing fixed ops growth and profitability
Last year, Subaru parts and service [volume] grew 22 percent. This year, we're tracking to be close to 20 percent. From the standpoint of retailer revenue and profitability, the key is to make sure we have the capacity to deliver on the ownership experience. Over the last four years, we've had a program called FOX — Fixed Operations Expansion — that's helped participating retailers invest in expanding their service capacity.
We're launching a tool for the retailers that will help forecast labor and facility plan needs over the next five years. It's not only going to provide recommendations for a technician count you're going to need to meet labor demand, but also stalls, advisers, etc. It will calculate the estimated gross revenue, gross profit and retained profit that will result from meeting that demand.
This way, we make the conversation more about [return on investment] for a retailer and doing the expansion necessary to meet this coming demand, as opposed to it being about requiring a minimum commitment.
On keeping service customers after the factory warranty expires
It's just doing the right thing from the start. We have to offer them value that they would expect in their ownership experience. Pricing is certainly a consideration, but demonstrating value is the key.
Successful Subaru retailers are in the business of providing their service customers what they need when they need it, at a reasonable value. That's what our customers expect, so if we want to earn their loyalty we've got to be consistent in meeting and exceeding those expectations. If we do that, then our owners are going to stay with our service departments.
On selling tires
It wasn't that long ago that many retail dealerships considered the tire business to be more a nuisance than a viable opportunity. Now it's pretty universally accepted that tires are an essential offering and help keep owners loyal to our service departments.
If we send them down the street to a tire shop, it's offering most of the other services we do. Why would we want to push away our customers and have them try out another service source when we should be providing all those things ourselves?
On providing service loaners
Our retailers need to provide those things that owners want and need, including loaners. We offer a program that gives retailers a purchase discount on vehicles entered into loaner car service and a daily credit amount when the vehicle is in use by service customers, within certain guidelines.
From retailer to retailer, it's somewhat different. We have retailers that have a very adequate number of loaner cars. Some can't keep a big pool because they may be space-constrained, so Subaru will reimburse retailers for third-party rental car expenses, up to a set amount.
On the value of dealership quick service
Express service is the most immediate way that a retailer can increase service capacity and improve customer satisfaction. Around 40 percent of our retailer network offers express service, and we've seen a metamorphosis in many of these retailers.
The inspection [during express service] allows the adviser to point out things that maybe the vehicle owner didn't know about. It has to be a true, disciplined express process where there's plenty of oversight. You have to stick with the process, but our dealers have done great.
On maintaining a supply of well-trained service technicians
My area of responsibility is everything parts and service [business]. We have a separate division, technical service and quality, that's responsible for technician training. They have intense training programs for existing technicians and three years ago started Subaru University, which works to connect retailers with students in local learning institutions for technician careers.
The students apprentice with the retailer. The levels of the classes vary depending on the partnership and the curriculums the schools offer. We are partnered with 220 secondary and postsecondary programs across the country, with about 3,000 students in training.