New revolutionary idea for all dealers regardless of manufacturer

[Rovin4life]

For all my time at a dealer I have seen parts prices skyrocket for no reason then to overcharge customers because the dealer is the only place for miles. But to be frank I believe its a complete bs move by dealers of all manufacturers. If you come to the dealer for service you are giving them business not just in parts but service. If you chose to not buy the part from them and go to an independant the indy has the choice of selling you the part cheaper then what the dealer would charge. Finally if you the customer just pays for the part you pay for the part as if you were installing at the dealer. I propose the client that gets their vehicle serviced at the dealer pays the cheapest price. After them the indy pays the next lowest price. Finally the customer that pays for it themselves to install themselves should pay the highest price. The honor of the cheapest price should go to the customer getting their vehicle serviced at the dealer. Not the other guy. I believe if dealers adopted this policy they would garner alot more customers then indys could and more importantly give their service departments more then just warrantee. If a dealer says this then by all means they can say they are putting the customer first in both sales and service. BTW keep the service dept service charge the same. Reason is the cost of doing business changes. We have to pay for alot of stuff that we may use very little of and the cost of doing business including rent and insurance changes alot more then manufacturer parts pricing. Plus it costs alot to run all those computers with their constant updates and tools that we have to have no matter what.

[Spike555]

The local Honda dealer here offers $14.95 oil changes and if you buy a brand new Honda from them, and have it serviced by them everytime and perform all of the recommended service they warranty the engine for life.
Not to bad of a deal if you ask me.
Guarantee's return business and how long do people actually keep their cars? 5-6yrs on average so how many engines are they likely to replace for free?
Not many.

[Rovin4life]

Actually, I believe owner loyalty points from a manufacturer should be only a small fraction but loyalty the owner shows the dealership as far as proper maintanance and tires and brakes should count for alot more. Hell, you should have an owners loyalty program that gives you money for servicing your vehicle at the dealer. Things like oil changes should count for pennies where as brakes and tires should count for alot more. Sorry but oil changes at the dealer mean nothing. Most dealers loose money on them and if all you want is an oil change then you don't deserve any loyalty points from the manufacturer if all you did was required maintenance.

[Savannah Buzz]

Dealer repairs should be higher.

The dealer has an almost endless list of expenses that must be covered by something, from 401K and health care for the sales weasels, to environmental impact fees, trash collection, haz mat disposal, security, interest on the floorplan loan, insurance that goes up, up, up; etc. If you are selling a slow mover, like Rovers, that better not be your only line of vehicles. The dealer system is American free market at work. The cars are now designed where they cannot be serviced without complex equipment, sometimes available only at the dealership. You select that car, you are "married" to that line of dealers for the life of the vehicle in some cases.

There is nothing wrong with that, it allows the factory to specify a high level of service to be available at the dealers, and a level of inventory to support it. You get what you pay for. You decide if you want the very best, which is factory supported dealer technicians. Drop down to an indy shop, where they don't want to take shortcuts, but might have to (or have to charge more) due to parts or equipment availability. Get the part yourself, and do your own work - may look inexpensive, but you may find it is expensive tuition. And you might do it wrong and do more damage or place your family in danger.

A dealership has to make a profit in each area (sales, service, parts, loans). The screwed up banking system (thanks, elected Washington officials) has pinched down on the profit on loans, and fewer cars are moving (unemployment will do that), so to keep the lights on parts and service have to go up. And if service is not making what the dealer management system thinks it should, they will reduce staff to cut costs.

My dad was a zone manager for Pontiac Motor Division of GM when I was young. He decided to not travel after years and worked as manager for a Pontiac dealer in our town. Then he opened his own dealership, with Dodge, Volvo, Fiat, Mercedes, and Dodge heavy trucks. I seem to remember that a "big day" would be about 13 cars sold. In high school I hung out there and washed used cars after school (got to drive some "big iron"). There were four sons in the family, all of us left home for college and greener pastures, and Dad finally sold the dealership and retired to dabble in real estate. Dealers today have all the problems that existed in the 60's, plus new rules, regulations, laws, and technology induced complexities. There is no way for them to be "discount."

A skilled sales weasel at a dealership will see his existing customer coming in for service. He will make sure that customer is taken care of, and he will make a follow up call in a few days to be sure the repairs are "working OK." Because he wants to keep a positive image of himself in that customer's mind, so that when the subject of cars comes up, they will recommend him and the dealership. Word of mouth is one of the most powerful marketing tools ever. A dealership or indy shop that does not make followup calls, send thank you notes, service reminders (based on the miles they know you drive) etc., is missing out. The customer experience must be top rate - and they will tell 2 - 5 people about it. If it stinks - they will tell an average of 13 people about it.

IMHO the best thing a dealership service manager or indy shop owner can do is get a copy of any Zig Ziglar book and mandate that all employees read it. The half ass attitude of one employee can sour the customer relationship and cost business in the future. "Service Sells" - and some companies have that embriodered on every technician's uniform. If the sales weasels won't coddle an existing customer, the service department should, and as a result they will have more service.

The dealership repairs should be the most costly, because of the most skilled techs, best most up to date equipment, etc. The indy shop fits in the space between dealer and DIY. People who love their vehicle and can afford it will come to the dealer, if they are reasonable, not full of surprises, and do what they say they will. If they can't afford the dealer, they are not coming anyway. If they are die-hard shade tree DIY (dat b me), they come only for a part from time to time. I paid $4.95 for a 45 cent O ring I need for my Mercedes water pump. No way I was going to spend 9 hours (and you though Rovers were bad) to swap it out and use something from the blister pack aisle at Auto Zone. So a dealer should do everything to make that "normal" customer base of theirs so dang happy they would never go anywhere else. And those loss leader oil changes? That's the same as the $45 home HVAC tune up - an opportunity to find something that really should be taken care of. Won't find it everytime, but it is a percentages game. I suppose dealers could sell parts used on their work orders at one price (loyalty), parts sold to indy shops at a little higher (volume), and parts to over the counter DIY at a little higher.

[Spike555]

Nobody is brand loyal anymore, as a kid we always bought Chevy's and Buick's from the local dealer.
Our test drive lasted 2 days, meaning we took the car home on Fri, drove it all weekend and either returned it and took out another or bought it on Mon.
The next dealer was 20 miles away.
We only went to the dealer for warranty repairs.
Now, my dad owns a '98 Corrola with 80,000 miles on it and a '04 Civic with about 60,000 miles on it.
And he still lives in the same one stop light town.

[Chris-bob]

Yay...let's up the cost for DIYers and continue to crush the American spirit! I'm all for that. You wanna do it yourself, well, it's gonna cost you...dearly. But if you want to rely on someone else for everything, then it's free.

[nevada ben]

The problem with your reasoning is that oftentimes dealers do not want the business. Parts and service are a low-margin, high risk operation. Service personnel, problem vehicles, uncertain diagnosis... it's all a costly headache. Just selling new vehicles is far simpler, with much better margins. If the dealers could close their parts and service departments, a lot of them would, but they are required by their license from the manufacturer to provide warranty support. Beyond that, they can price service for what it's worth to them within certain limitations by State's bureaus of automotive service -- usually they price it very high because of how much it costs them and their not having any desire to run a low margin operation. They don't gouge customers because the customer has no other option. They gouge them because they really don't want the business, and if they have to take it, they're going to make it worth their while.

The automotive industry is not the only one like this. If you buy a Cisco router or switch for example, you can get a good price from Cisco if you do a lot of business with them. A few years later, go and price a memory upgrade for it... Cisco's price will be something like 10 times higher than aftermarket. Why? Obviously they don't want the business. They would prefer you take your little low-margin purchases and bother someone else. Talk to the salesman about replacing 100 routers with new ones, and he'll probably throw the same memory in the deal at no additional cost, because his margin makes it all worthwhile.

[Savannah Buzz]

And another "part" of the parts puzzle is inventory costs. Someone paid for that stuff on the shelf, so there is a cost that goes with it every month, space for it to sit on, HVAC for the parts guys, depreciation, and inventory tax from the local city hall, etc. And you want parts that that move quickly (that's called "turns" in the distribution business). So having slow moving stock costs more, and those costs have to go somewhere. It would be OK if you bought your truck at that dealer, and you get a little better price on over the couter parts that just some shade tree like me that walks off the street. It is a huge investment in a parts operation, with low profit unless priced high. But low stock level = longer repair times, techs don't earn money for waiting on parts, and customers don't like to wait either.

[antichrist]

Originally Posted by Spike555

Nobody is brand loyal anymore

I must be nobody.
Been driving, and working on, Land Rovers for 35 years.

[Chris-bob]

I have never been in an indy shop or dealership that didn't pay the bills through the service and parts departments. The Sales department was just the icing on the cake.