Jim Phillips, dealership management consultant for the National Automobile Dealers Association (NADA), previously served as general manager of his family's Lincoln-Mercury dealership in Tidewater, Va., as a parts and service consultant with Automotive Dealership Management, and as a 20 Group Moderator for NADA.
What are the top challenges facing fixed operations departments now?The Wal-Mart down the street from me has 28 services lanes. On a Tuesday at 11:30, they are only about six or seven people there. But on Saturday, at high noon, every one of those lights is lit. We're not very good at that in our service operations. If we have four advisors, we have them in at 7:30 in the morning, at 11:30 and at 5 o'clock. We don't staff really well.
Dealers need to concentrate on having an environment in which they can perform, and the key is in spacing appointments. You have to get control over that. Make sure everybody isn't coming in all at one time. I was at a dealership last week, and they had 40 appointments for the following day. Thirty of them were from 7:30 to 8:45! I don't care how many advisors you have, that's a recipe for disaster, and that recipe is cooked up at dealerships all across the country.
We also don't do anything to prepare for the customer's arrival. If you made an appointment to come visit the sales showroom, and you had leased a vehicle and were turning it in, what would they do? They would have pulled your history. They would have another vehicle ready to show you, and it would probably be clean and have gas in it and have a license plate on it. They wouldn’t show you a brown car if you were driving a red car. They prepare.
If you went there and they had done nothing, you'd be irritated. But that's what we do in service. Somebody calls and makes an appointment, but the only thing that happens is we know the volume coming in, but we don't know a lot about what's happening. That's what causes such great disorganization in our service departments.
We need to pull histories and write work orders, check if there are any recalls before they ever arrive. The dealers doing that and controlling appointments then have time to present customers services that are due at the interval where they are.
The OEs are taking more control of parts inventories. How has that affected dealer operations?
The world of parts is changing a lot because manufacturers are heavily involved in the ordering process. If you are a GM dealer or a Chrysler dealer, the manufacturers are telling you what to buy. It's difficult for a dealer to control their destiny in parts if they want to play by the manufacturer programs.
However, there are other folks out there like Toyota or Ford that still have dealer control. The set up in parts should be such that we get maintenance parts quickly and we stock them earlier. It may take us three sales to begin to stock a water pump, but for wiper blades do we have to wait that long? That's the intent of what the manufacturers are trying to do. It's no longer a good scenario to have all parts coming in to inventory the same way.
Some dealers are keeping some maintenance parts out in shop. They keep filters and things like that out there. I see parts counter folks that are now paid differently, paid by shop production. Instead of playing defense, parts gets to play offense. They are trying to increase the productivity of the shop overall.
How has dealership consolidation affected fixed operations?
Only in that when you see consolidation, the big get bigger, and the big guys have decent processes. Those processes then go to all of the brands. When there is consolidation, the first thing that's happening is we're going out and marketing to those customers and trying to bring them in for a new service experience so we can create loyalty. What helps or hurts is what kind of environment you are being consolidated into.