BACK TO THE BASICS: GO ALL IN
A Service Department Can Be a Big Edge for Dealers Willing to Make the Commitment For independent dealers, having a service department isn’t something that should be taken lightly. Not all dealerships offer service – it isn’t for everybody – but for those that do it should be an integral part of the business, used to give the dealer an opportunity to attract, retain and better understand customers. Joe Lescota, the NIADA’s new director of dealer development, said he knows many dealers who lose money in the service department because the money that comes in through service goes into one big pot. “There’s a whole process in operating a service department,” said Lescota, the longtime instructor for NIADA’s Certified Master Dealer program. “Dealers think they are selling service when what they’re really doing is selling time. “A dealership only has so many hours in the day to operate. So a dealer should take the number of techs he has and multiply that number by the number of hours in operation. So a dealer might have 80 hours a day of time to sell. From a profit standpoint, it doesn’t matter if the dealer is changing oil or dropping an engine.” Doug and Nyla Borgmann, owners of Creighton Auto, Inc., in Creighton, Neb., manage to keep their mechanic and their body man pretty busy, which is good for their business. That means doing repairs for everyone, not just customers. “Offering service works for us,”
Doug Borgmann said. “We advertise on our store sign. Service accounts for between 25 and 30 percent of business. Our mechanic has been with us since the early 1980s. He’ll retire in four or five years and that has me worried. Replacing him will be hard. Our body man has been with us for about three years. Before getting him, we had a hard time getting someone full time to do our body work.” J.R. Westbrook, owner of Tyro Auto Sales in Bay City, Texas, has been offering service at his store since 1971. He does outside work in addition to working on the cars of customers, but he doesn’t advertise. He depends on word of mouth. Westbrook has kept his technician for years, operating on the theory that it’s easier to keep the person you have happy than go out and find new people. Staff is a key component to offering a good service department. Getting good help was one of the reasons Randy Yates, owner of Yates Motors in Gering, Neb., closed his service center. Yates is a third-generation dealer. His lot has been around for 66 years, and for much of that time, it offered service. Eventually, though, it wasn’t worth the trouble. “We got rid of our old service center, must be around nine years ago,” Yates said. “It was hard getting and keeping good people. I’d train people and they would get the skills they needed to do the job. But then they’d go to
dealerships, often franchise operations, that would pay better wages and I’d have to start the process all over again.” Yates said he realized he was better off if he stuck to what he did best – sell cars. Now he sends his cars to be fixed by people who do what they do best – repair and recondition cars. By letting the work get done by specialists, he doesn’t have to bother with the hassle of hiring and training technicians, then replacing them as they leave his business. Yates said he ended up spending a lot of time trying to drum up business for his mechanics instead of selling cars. “If the mechanics aren’t busy all the time, then they aren’t making as much money as they could be,” Yates said. “It finally came to the point where it became too much work for me to find work for them and for myself. Now I have less headaches just selling the cars and farming any mechanical work out.” He also didn’t have to keep up with the expense of getting new equipment all the time. For one thing, the types of tools a service provider must own has changed dramatically. Gone are the days when a mechanic could do all his work with a lift and some wrenches. Cars now are computerized, and dealers and shop owners have to invest their own money in the purchase of scanners and other electronic devices used to communicate with a vehicle’s electronics. Lescota said Yates’ situation reflects a reality of operating a service department – it’s not easy. But, he C O N T I N U E D O N PA G E 1 0
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