Bob Cawley has been fixed operations director with the Horne Automotive Group in Arizona for nearly two years, managing operations at six stores that cover 11 franchises, and employing approximately 150 parts and service employees.
Cawley earned his stripes at South Bay Ford in Hawthorne, Calif., where he was responsible for moving the fixed-ops department away from warranty work to a business model based on retail customer pay in the late 1990s. He's taken the lessons he learned there and applied them to Horne's operations.
What are some of the parts and service strategies you've employed at Horne that you utilized while you were in California?
I family price all parts going into any operation we're doing for the maintenance menus:
filters, all the oil, the fluids, brake pads, that type of stuff. We establish a family price cost for our parts, and we build all service codes up from those costs. By family pricing, I can come up with a pretty stable gross for the parts department. The parts department grosses 30 percent on all maintenance, and all of that is through smart parts acquisition. Its what you pay for it, not what you sell it for. We're very aggressive about doing creative things and purchasing things in bulk and in value packs.
The other thing in parts that has been a big part of what we've done is that in order for us to be competitively priced with the aftermarket shops, we have had to introduce to some dealerships an aftermarket or generic parts line, and that hasn't always met with a lot of happiness and joy by the manufacturers. But, it has allowed us to give customers a dual-priced system.
Generally speaking, that just leads to conversation about why there is a difference in the price between the generic and the OE brake pads, for instance. More often than not, they actually buy the more expensive part. But it ensures that I don't have anybody leaving me to go to Brake Masters to get their $96 pads.
Has that been a difficult transition for the staff at these dealerships?
It's a huge, huge culture change. Stores that have understood it and embraced it are making money, selling to customers and keeping customers in our dealerships. It has a lot to do with overcoming concerns about quality. I just train and train guys and go over and over it. I make sure that they understand if they offer a customer brakes, and they are in need of doing them, if they don't buy from you, where are they going to go? They are going to drive down the street and put those generic pads on that you won't put on.
My theory behind all of this is to not have the customer answer a yes or no question when I'm selling to them. I'm presenting a service to a customer. I want to offer them generic and OE. Which one would you like to service your car with today? The customer gets to make that choice.
What other service strategies have you employed?
We simplified pricing menus at the stores, across all stores. We have gone to a standardized 5,000 service schedule for all makes and models, and we have a consistent and stable marketing strategy behind it. Five thousand miles is a proper interval. We educate our customers to the fact that there are components on vehicles that should not go up to 7,500 miles without inspection. We need to look at brake pads and check for tire wear, especially in the Phoenix area because we have so many conditions that can impact the vehicle.
What would you say is your biggest challenge?
I believe that at one point in time, everyone in the dealership world was chasing all of the aftermarket shops and trying to get aggressive about pricing and be cost competitive. That was all well and good. I almost feel like there is a reverse scenario coming on. We have gotten so aggressive at many of our locations about maintenance that I believe we're creating a hypercompetitive scenario that is counterproductive to anybody making a profit. I'm concerned about that at times. In order to build clientele, our owner is selling our 5,000-mile services — oil change, battery test, top off — for $29.95. And the next thing I know I've got competitors in the market area putting ads out for a $24.95 oil change plus free tire rotation. Now I'm stimulating a downward spiral myself. At some point as dealers we need to be cost comparable, but this rush to be cheaper could be counterproductive to us in future.
Bob Cawley has been fixed operations director with the Horne Automotive Group in Arizona for nearly two years, managing operations at six stores that cover 11 franchises, and employing approximately 150 parts and service employees.
Cawley earned his stripes at South Bay Ford in Hawthorne, Calif., where he was responsible for moving the fixed-ops department away from warranty work to a business model based on retail customer pay in the late 1990s. He's taken the lessons he learned there and applied them to Horne's operations.
What are some of the parts and service strategies you've employed at Horne that you utilized while you were in California?
I family price all parts going into any operation we're doing for the maintenance menus:
filters, all the oil, the fluids, brake pads, that type of stuff. We establish a family price cost for our parts, and we build all service codes up from those costs. By family pricing, I can come up with a pretty stable gross for the parts department. The parts department grosses 30 percent on all maintenance, and all of that is through smart parts acquisition. Its what you pay for it, not what you sell it for. We're very aggressive about doing creative things and purchasing things in bulk and in value packs.
The other thing in parts that has been a big part of what we've done is that in order for us to be competitively priced with the aftermarket shops, we have had to introduce to some dealerships an aftermarket or generic parts line, and that hasn't always met with a lot of happiness and joy by the manufacturers. But, it has allowed us to give customers a dual-priced system.
Generally speaking, that just leads to conversation about why there is a difference in the price between the generic and the OE brake pads, for instance. More often than not, they actually buy the more expensive part. But it ensures that I don't have anybody leaving me to go to Brake Masters to get their $96 pads.
{C}Has that been a difficult transition for the staff at these dealerships?
It's a huge, huge culture change. Stores that have understood it and embraced it are making money, selling to customers and keeping customers in our dealerships. It has a lot to do with overcoming concerns about quality. I just train and train guys and go over and over it. I make sure that they understand if they offer a customer brakes, and they are in need of doing them, if they don't buy from you, where are they going to go? They are going to drive down the street and put those generic pads on that you won't put on.
My theory behind all of this is to not have the customer answer a yes or no question when I'm selling to them. I'm presenting a service to a customer. I want to offer them generic and OE. Which one would you like to service your car with today? The customer gets to make that choice.
What other service strategies have you employed?
We simplified pricing menus at the stores, across all stores. We have gone to a standardized 5,000 service schedule for all makes and models, and we have a consistent and stable marketing strategy behind it. Five thousand miles is a proper interval. We educate our customers to the fact that there are components on vehicles that should not go up to 7,500 miles without inspection. We need to look at brake pads and check for tire wear, especially in the Phoenix area because we have so many conditions that can impact the vehicle.
What would you say is your biggest challenge?
I believe that at one point in time, everyone in the dealership world was chasing all of the aftermarket shops and trying to get aggressive about pricing and be cost competitive. That was all well and good. I almost feel like there is a reverse scenario coming on. We have gotten so aggressive at many of our locations about maintenance that I believe we're creating a hypercompetitive scenario that is counterproductive to anybody making a profit. I'm concerned about that at times. In order to build clientele, our owner is selling our 5,000-mile services — oil change, battery test, top off — for $29.95. And the next thing I know I've got competitors in the market area putting ads out for a $24.95 oil change plus free tire rotation. Now I'm stimulating a downward spiral myself. At some point as dealers we need to be cost comparable, but this rush to be cheaper could be counterproductive to us in future.
