Automotive News - May 5, 2008 - (Page 34)

34 • MAY 5, 2008 The resilient dealer INSIGHT Prepaid plans spark service visits beyond oil changes Jenny King autonews@crain.com Dealer Bill Stasek says prepaid maintenance isn’t an especially profitable part of his business, but “it predisposes customers to coming back to us.” When Josi Brodbeck of Lake Zurich, Ill., bought a used 2000 Ford Explorer last year from Bill Stasek Chevrolet, her parents gave her a one-year prepaid maintenance plan from the dealership for Christmas. Brodbeck appreciated the gift: “I do like it. I can go to the dealership for anything I need; I don’t have to worry, and they know my car.” On the other hand, Detroit area painter Dan Koelzer walked away from his business purchase of a 2008 Dodge Grand Caravan without a prepaid maintenance plan. “I don’t re- member being offered one,” he says. That omission by Koelzer’s dealer may have been a missed opportunity. Selling customers prepaid maintenance plans can generate service business, some retailers say. The plans, available from many automakers as well as from insurance providers, generally cover such things as oil changes, tire rotations, items that wear down and sometimes transportation reimbursement. Some are transferable. Most can be worked into customer payment plans. Jeremy Stasek, of Bill Stasek Chevrolet in Wheeling, Ill., says sales of prepaid maintenance plans are brisk — especially plans developed by the dealership, which give the service departments more latitude than the stricter General Motors plans. Stasek, son of dealer Bill Stasek, says the dealership plans can cover a vehicle from one to five years. A typical one-year plan encompasses four oil changes, a tire rotation, a new air filter and a detailed 19-point inspection. It costs $185. Bringing ’em back Bill Stasek says the type of plan offered is often tailored to the deal. “With our lease vehicles, we may choose to offer a General Motors prepaid maintenance plan. For sales, our third-party plan may be better.” The senior Stasek says prepaid plans don’t generate a lot of profit for his business. “It’s a small part, but more importantly, it predisposes customers to coming back to us,” he says. Toyota has had similar results with prepaid auto care plans. In addition to maintenance, the two plans, classic and premium, offer roadside assistance with towing, tire changes, lockout protection and jump-starts. The premium package also covers Toyota’s recommended services in the scheduled-maintenance guide. The cost of the packages varies by store, says Kerry Rivera of Toyota Financial Services in Torrance, Calif. A recent service retention survey showed that 62 percent of Toyota Auto Care plan customers had five or more service visits, compared with 25 percent of non-Toyota Auto Care customers, Rivera says. Rivera says internal data show that Toyota Auto Care customers generated an average of $766 in additional labor sales for the dealership beyond the cost of the prepaid packages, compared with $383 for non-Toyota Auto Care customers. Rivera adds: “Typically, Toyota dealers see 10 to 11 percent Toyota Auto Care penetration on new Toyotas. However, many dealers see penetration percentages over 40 percent by choosing to offer TAC consistently and involving all areas of the dealership in the TAC process.” Maintenance contracts do keep customers coming back to the dealership, agrees Jeff Laethem, president of Ray Laethem Pontiac-GMC-Buick in Detroit and Richmond, Mich. “We created our own maintenance contract,” Laethem says. “It works well for lease vehicles. We can keep track of mileage as well as maintenance, and it helps us keep vehicle service records.” And vehicles cared for at the dealership are likely to become good tradeins. Just like the car business, banking is about relationships. I know I can rely on KeyBank. JIM BROWN Classic Auto Group Mentor, Ohio There’s no such thing as an ordinary, everyday ﬁnancial challenge for your auto dealership. That’s why, at Key AutoFinance, we’ve never offered ordinary, everyday ﬁnancial solutions. For more than 50 years, we’ve crafted ﬁnancing strategies for our clients without any formulas other than to leave no stone unturned. Rely on our dedicated Key AutoFinance professionals to help you get the most growth out of your business in all these ways: New, used and program inventory ﬁnancing Working capital term loans, acquisition ﬁnancing and lines of credit Real estate loans to construct, improve or acquire dealership properties Deposit accounts and cash management, including automated ﬂoor plan sweep service Key’s Inventory Management System: secure online access to ﬂoor plan information and transaction initiation Additional services like Investment Management, Equipment Leasing and Payroll Services To learn how Key AutoFinance solutions can help strengthen your dealership, call 1-888-288-6539 or visit key.com/KAFdealer. Used cars, too The process is attractive to usedvehicle stores, too. Advantage Certified Auto Group, a dealership specializing in selling and servicing preowned BMWs in Manassas Park, Va., is about to launch its own prepaid maintenance plan. Advantage co-owner and partner Bill Moss thinks he will make it available to customers beginning in midJuly. A two-year maintenance plan is likely to cost $1,800 to $2,500, depending on the vehicle model, he says. Says Moss: “We figure by the 18th month of a plan, three out of four customers will still be using it.”c Credit products are subject to credit approval. ©2008 KeyCorp. http://key.com/KAFdealer http://key.com/KAFdealer

Table of Contents Feed for the Digital Edition of Automotive News - May 5, 2008

Automotive News - May 5, 2008 Dodge dealers battle to bust Ram logjam Used-car price slump slams luxury makes INDUSTRY IN DISTRESS Tesla opens first dealership in L.A. Los Angeles Top auto execs to talk marketing at seminar Nader and the Corvair: GM edition tells whole story Dealers take Tundra to the people UAW official expects American Axle buyouts Ford plans more UAW buyouts at 2 plants Honda to some dealers: Upgrade or else Hyundai: Powertrains will take us halfway to mpg target Diesel dynamo Daimler cuts Chrysler value, again Ford domestic dealer count dips below 4,000 Seems like old times: More cash on the hood Toyota sister car poses a challenge for Subaru Suzuki to offer standard navigation in $16,000 car Mpg plan fuels states-rights battle Kerkorian interest buoys Ford stock Henderson: GM will keep tight rein on inventory Is it real, or is it just temporary? Ford Motor must stay focused on recovery 'Have you lost your mind?' Dealers are victims of Axle strike Federal oversight? Good heavens, no Geoff Polites: A salute Save a board seat for the UAW A car for everyone or cut, cut, cut, cut? Think of Buick as part of B-P-G Costs up in China, but bargains still abound Mexico sales fall 17% in March Obituary Hyundai reworks Sonata sooner rather than later Nissan's Dominique gets to the big dance Dana seeks new business with Japanese companies ZF will supply Nissan Certified Tool closes a plant German engineering company plans Ala. factory Dealers A Lexus colossus Used-vehicle leasing boosts showroom traffic Certified buyers opt for extended service contracts Repossessed vehicles offer dealers a profit opening Prepaid plans spark service visits beyond oil changes Key to managing floorplan costs: Be realistic Long-term loans: Convenience or bad deal? Dealers hunt upside-down buyers with leases, incentives and long-term loans Where have all the investors gone? Dealer rebounds from contract mess Dealers must choose: Reynolds, GM — or start over AutoTrader.com makes big pitch to bump up new-vehicle sales CAW, Ford reach extensive early labor deal Infiniti asks: Do you smell something? Sure, Nissan GT-R is impractical — but what a rush Faurecia: We'll break even in N.A. Suppliers join carmakers' charge into Russia Chrysler small cars, Jeep crossovers are hot A dreary April in Detroit Penske earnings rise in 1st quarter Lithia posts $1.9 million loss GM makes 2nd ethanol deal Group 1's earnings slip Magna profits down; sales rise AIADA picks dealer of the year Vox(wagen) populi — plus a sales pitch Wagoner's pension shift: More earlier, less overall COMMENT: Bargaining barbs will sting for a long time Bugging the boss: Who's listening to Porsche CEO? New models from the post office Critics have kind words for Pontiac's G8 Ford can't picture kids at design studio

Automotive News - May 5, 2008

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