Fixed Ops Journal - August 2017 - 32

FIXED OPS JOURNAL

MONEY MARKET

 Leading dealership groups for fixed ops revenue tell how they stay on top

ALYSHA WEBB
foj@autonews.com

hen Red McCombs Automotive invites its service customers to shoot the works, it isn't
kidding.
At its flagship Ford store in San Antonio, the
six-dealership group is piloting a quick-service program called The Works. The package
includes oil and filter changes, fluids top-off,
wheel rotation, checks of tire pressure and
wiper blades, and inspections of the brakes,
battery and cabin air filter.
The dealership charges $39.99 for The
Works. And if everything isn't done in 39 minutes, it's free.
Since Red McCombs Ford launched the
program seven months ago, it has sold more
than 7,300 of the service packages. Doug LaCroix, the fixed operations director at McCombs Automotive, says: "We have not met
our goal 54 times." He won't say whether McCombs plans to offer The Works at its other
dealerships.
That kind of focus has helped make McCombs a leader among dealership groups in
parts and service revenue per store, according
to an Automotive News compilation. In 2016,
McCombs Automotive averaged $18.4 million
per dealership in such revenue.

$10 million club
The most successful groups on the Automotive News list rack up more than $10 million a
year in parts and service revenue per dealership. They pursue varied strategies to maximize
fixed ops profits, from offering superquick service to driving shop customers to the airport.
They agree that service departments' bottom line is increasingly crucial to their dealerships' financial health. NADA Data 2016, the
National Automobile Dealers Association's
annual report on franchised new-vehicle
dealerships, notes that parts, service and
body-shop revenue accounted for 47.3 percent of the typical dealership's gross profit in
2016, up from 45.4 percent the previous year.
By contrast, profit from new-vehicle sales
accounted for 27.8 percent of total gross profit
last year, down from 29.5 percent in 2015.
Profit from used-vehicle sales dropped to 24.9
percent of total gross profit, down from 25.1

PAGE 32

AUGUST 2017

cian teams when needed
to work on vehicles in
those lanes, LaCroix says.
In June, the group booked
more than $1.1 million in
revenue from its dealerships' quick lanes -
nearly 12 percent of its total fixed operations sales.
"We do everything we
can to get the customer in
and out quickly," LaCroix
told Fixed Ops Journal.

Howard
Hakes of
Hitchcock
Automotive
Resources
says a movie
theater at the
group's
Puente Hills,
Calif.,
dealership
helps attract
service
customers.

Growing techs
and space

ALYSHA WEBB

Club rules

These are some of the fixed ops
strategies pursued by dealership
groups that made more than $10
million in parts and service revenue
per store in 2016.
 Quick-lane specials
 "Grow your own" technician training
 Wholesale parts emphasis
 Online parts sales
 Vehicle customization/accessories
sales

percent the year before.
"Parts and service isn't the back end of your
business," says Jeff Bakich, an industry consultant who moderates NADA 20 Groups that
emphasize fixed operations. "It is the backbone of your business."
Each McCombs Automotive dealership
routes as many service customers as possible
through its quick lanes, assigning two-techni-

Mac Haik Auto Group in
Houston averaged more
than $11 million in parts
and service revenue at its
16 dealerships last year.
Jeff Heath, the group's
CFO, identifies "a shortage of people and a shortage of space" as the two
factors that do the most to
hamper the growth of

fixed ops revenue.
To address the former, Heath says the Haik
group's technician training program provides a
ready supply of service techs at its dealerships.
On the latter, he adds that the group has remodeled or rebuilt all of its dealerships in recent
years, including expansion of parts and service
areas. The $4 million overhaul of its Ford-Lincoln dealership in Georgetown, Texas, includes
a new service shop for heavy-duty trucks.
The Haik group does "gigantic" business in
wholesale parts in its markets, with a parts inventory worth $18 million. A service customer
knows that "I don't have to wait at Mac Haik
because they carry a large amount of parts, or
they can get it right away," Heath says.

Movie dates
Hitchcock Automotive Resources, in City of
Industry, Calif., outside Los Angeles, operates
just three franchised dealerships. Yet those
stores each averaged more than $16.5 million
in service and parts sales last year, a 13 percent
see REVENUE, Page 33

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