Fixed Ops Journal - December 2017 - 42

FIXED OPS JOURNAL

RIPE FOR
REINVENTION

 'Same same' won't cut it ---- fixed ops need radical efficiency push

ere are three troubling statistics
 Scheduling: I always viewed the early morning lineup of cars outside
about service departments at
my dealership service department as a positive sign. I'd think: "It's going
franchised dealerships.
to be a good day."
1. These dealerships typically reI have a different perception today. To me, the line of cars may be the
tain only about half of the customers who
ultimate sign of a service department's inefficiency.
buy a new or used vehicle from them or visit
Xtime research suggests that only 54 percent of customers would
their service department with no prior expeschedule service before 11 a.m. if they were given the choice. The long
rience with the dealership.
line of vehicles, and related customer frustrations, largely represent a
2. The dealerships handle only 30 percent of
dealer's choice that bears reconsideration - particularly if you'll see
service work performed each year across the
only half or fewer of those customers in line ever again.
country.
 Productivity: At a recent Automotive News event, dealer Don Flow
DALE
3. Service and parts department revenue innoted that dealers expect 40-hour workweeks of service technicians,
POLLAK
creased about 13 percent between 2014 and
just as they did in 1973. With all of the advanced diagnostic technoloGuest columnist
2016, according to the National Automobile
gies and tools available today, you have to wonder why techs' effective
Dealers Association. That's in line with revelabor rates don't reflect a higher level of productivity.
nue increases in new (13 percent) and used (11 percent) vehicle departI suspect dealers who ask this question will realize that the root cause
ment sales.
is inefficiency that results from outdated ways of managing customers
Why are these stats troubling? After all, they show a rise in service and
and service business.
parts sales commensurate with other dealership operations.
 Transparency: A dealership's customers want to know more than
And NADA reports that, during the same period, dealwhat they'll pay for a new or used vehicle. They'd also
ers also saw their service and parts gross profits rise by
really like to know what's wrong with their vehicle, and
Xtime
research
roughly 2.5 percent.
how much it'll cost to fix it, sooner than many dealerHere's the problem: I view these statistics as a sign
suggests that only 54 ships are prepared to tell them.
that "same same" is largely the norm in dealership
I hear from friends and relatives about recent dealerpercent of customers ship
fixed operations across the country.
service visits that made them feel they were left in
Too many dealers view these results as OK. Too few
the dark about the status of maintenance or repair work
would schedule
are asking how we can make them even better, particuntil they called to find out.
service before 11 a.m.
ularly when margins and sales volumes in variable operations are flat or waning.
if they were given the Beyond the status quo
There are other areas of inefficiency dealers would be
choice.
wise to address in their fixed operations. These include
Long-standing inefficiency
reducing the customary seven to 10 days to recondition
Stats 1 and 2 signal a long-standing level of accepted
used vehicles, introducing new- and used-vehicle buyers to service deinefficiency that will become more costly and harmful in the months
partment personnel more consistently, and aligning marketing efforts
and years ahead.
to the needs of individual customers and their vehicles.
Similarly, you have to wonder whether Stat 3 will continue to improve
Dealers who address these inefficiencies proactively will see the benif the natural flow of new- and used-vehicle customers' service departefits of moving beyond the "same same" in fixed operations. They'll atments - both customer-pay and internal - begins to diminish.
tract and retain more customers, provide a better service experience -
Some dealers get it. I've had more dealers ask me for guidance about
for their customers and employees - and bring a larger share of their
ways to increase service customer retention and profitability in recent
service revenue to their bottom lines.
months than I've heard in the past few years combined.
I urge dealers to pursue these improvements in operating efficiency
These dealers recognize that if new- and used-vehicle sales and marsooner rather than later, before the pain of a declining retail market for
gins continue to decline, they had better step it up in fixed operations.
new and used vehicles makes it harder to do so.
My guidance essentially boils down to increased efficiencies in the processes they use to capture and serve their service customers.
Dale Pollak, executive vice president of Cox Automotive and founder of
vAuto, is the author of Like I See It: Obstacles and Opportunities ShapReinvention trio
ing the Future of Retail Automotive.
I offer three areas of fixed ops that are especially ripe for efficiency reinvention.

PAGE 42

DECEMBER 2017

Table of Contents for the Digital Edition of Fixed Ops Journal - December 2017