Adherence to flat rate guides

[Doug]

Let me run something past you guys and hear what you have to say.

How many of you encourage strict adherence to labor time guides.....Chilton, AllData, whatever you use? No, I'm not talking about those odd-ball difficult jobs and driveabilty issues, squeeks and rattles, etc. I'm talking about routine jobs---fuel pumps, water pumps, intake gaskets, etc.

Here's why I ask....

Over the years I have seen a good many repair order from other dealerships and am amazed, sometimes, at what I see. One recent example, and I've seen many like this, is a fuel pump replacement which, using Chilton, pays 2.5 hours. The repair order from "dealer-x" showed 5.5 billed hours. As the car was towed in as a "no start", I am hard pressed to imagine any peculiar problems with diagnosis.

Now, I am not trying to make a consumer affairs morality judgement here so don't get defensive

However, I have often wondered just how many service managers are proudly slapping themselves on the back about their "outstanding tech efficiency" when, in fact, they simply have advisors and technicians waaaay over-flagging the repair orders.

Meanwhile, and this will sound like "sour grapes", we try very hard to stick to the guides... with our dealer asking why our techs are not flagging 18 hours a day like "the other guys".

Don't get me wrong, I certainly have no objection to making money but sometimes you just gotta wonder.......

Any comments welcome......

Doug

[robc]

I've seen many stores quote what they want for a certain job based on the customer's willingness to pay. There could be intangibles here we don't know of that would have made 5.5 hours fair to everyone (i.e, it was an emergency rush job that they had to fit into their packed schedule). Ok, I am reaching and it was probably the case of a traveling owner that got nicked. I am not sure it is ever a shop policy as much as it is an advisor/tech one.

Back in the day, when customers would ask what guide I used I would jokingly mutter something called the Roger-Rob guide (for me and my Service Director). People swore that the way we determined time for a job was based on what needed to be flagged that day to move us to our monthly bonus. God forbid you came on a slow day. Of course, if something bad happened that day - like breaking a boat prop, kids needed braces, etc. then the times went up.

That may seem unreasonable, but I remember telling a dentist once what his estimate was, he took out his schedule to see who was coming in that day and I could literally see him try to calculate how he was going to raise the money for the repair bill. (In my book dentist are the closest thing to a service shop - or body shop)

The other side of the coin might be the dealership's labor rate ... was it fairly low. Too many stores, driven by some wacky Hours Per RO desire, just lower their rate and kick-up the hours.

In all honesty to address your dealers concerns - I answer such questions with, "there is no way to build long term profitibility and satisifaction flagging 18 hours a day unless we are working 12+" You can gouge customers for a while but they soon move on (it usually takes 12-18 months to occur), or you are selling your labor cheap and the store's gross is terrible. To believe a store is 200% efficient I'd want to see their gross, and what they were flagging a year ago.



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** Rob, Editor WD&S **
Help is only a message post away!
robc@dealersedge.com

[scotstrong]

As RobC alluded to, i have to wonder who is running the shop in a store where the 5.5 hours are charged: is it the techs or is it management? The nature of the flat rate system contributes to techs wanting to charge "whatever the market will bear." It is up to management to make sure that their customers are not being gouged. Techs and advisors will only get away with this if we as management allow them to.

[mjb]

I've worked in both sales and mostly in the service of a large dealership and every time someone brings this up I can't help but remember how it is on the varible side where you get rewarded for high gross and no different in F&I. Should it be the same on both sides of the dealership or should we only put up with gouging the customer on one side of the business?

[Bert]

No question...in many shops the
"inmates run the assylum." Hopefully, you
have a good system like Service Price Guides
so you can be fair, consistent, predictable,
and create trusting relationship with the
customer. Also, allowing techs to use a good system in the shop that allows them to view the parts inventory will increase their productivity. In an even better system the parts counterman productivity can be enhanced
as well by populating the order screen.
Good luck and YES a good pricing guide is imperative to good relationships.

[fburrows]

I have always been a big believer in delegating responsibility but one of the things no one was allow to do was bump labor hours. I made the tech or writer who was requesting the price change document the request with price comparisons of competition (dealer and non dealer) as well as why it was needed. This really cuts down on the requests. If allowed this can quickly get out of hand and it causes a lot of agony when you have to roll them back.

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Frank Burrows
Automotive Business Solutions LLC
frank@autobusiness.org

[Doug]

Thanks for all the good input.

Now, relative to mjb's comparison to sales department....

In my opinion there is a difference: a customer buying a car *expects* a negotiated price where, even if he ultimately takes it in the shorts, he went into the deal knowing that it was negotiable. This is not the typical situation in a service department (although, personally, I never hesitate to negotiate on a big repair job).

But, in truth, my intention here was not to discuss price gouging, specifically (althought that's what's happening). Instead, I wanted to discuss and/or point out the never-ending battle of dealer-to-dealer comparisons which use a handful of antiquated statistics to determine the sucess of the department. The old dinosaur of "hours per RO" is one of them (we've abandoned the concept) and so is, in my opinion, hours-flagged-per-day measurement.

Yes, yes.....of course we all want out techs to be efficient, and we do our best to keep them productive, but all too often apples are compared to oranges----bad enough on the face of it but even worse if the "oranges" skew the numbers with, well, questionable practices.

Anyhow, I am happy to say that our Serv Dept produces some very nice gross and net profit numbers without gouging.....even though we don't look quite so stellar if measured by some of the too-long-revered statistical standards.

Thanks for the good discussion

Doug

[eric the red]

One other factor to consider is that times in the labor guides are dropping as the factory times drop. Most, if not all guides, will take the factory rate and apply a multiplier. As the factory times drop, rightly or wrongly, so do Chilton's, All Data, Motor's, etc. The real guide is probably a combination of the tech's story, how reasonable your efficiency is, and a constant vigilance on management's part.

[usnavy]

mjb gets my vote,, it's all about absorbtion boys,, get rid of that and you can start running a real :for profit business:,

[Service 1]

I thinks that many repair facilities make up their own LTG's. We have had good success with using the factory labor time guide and a multiplier for each op-code ex. D4440 replace a/c compressor factory guide is 1.9 X 1.5 (our multiplier)= 2.85 or rounded 2.9 FRHs.
There are several diffent software companies that provide estimating software that are easily customized to your prefences. Automotive Systems Inc. out of Alabama is exceptionally good and very reasonably priced.By using this system and enforcing it's routine use by the service advisors we are always providing consistent estimates and repair invoices to all of our customers.