DealersEdge Professional Forums

I was reading a message the other day from Dealersedge that stated:
Dealers, technicians scrambling to replace lost warranty work(due to better quality vehicles).
YOU HAVE GOT TO BE FRIGGING KIDDING ME ! WHERE IS THE PROBLEM HERE? A dealer(G.M.) I once worked at started working an excellent out-of-warranty scheduled service plan and within a month or so mechanics were smiling and taking home more money (not to mention the dealer) because the warranty work was having to be scheduled farther out -because of the success of the new service plan. It not only benefited the dealer/tech but also the customer who generally got a good discount for following the new scheduled service plan.

Am I the only one who could not believe what he was reading???

Is it really a problem to be putting out higher quality vehicles?

Would you like to share your plan with us?

paul

It was stated "he once worked at", the dealer is now closed and is a bowling alley.

Anything that takes money out of my pocket is a problem. So, yes, declining warranty work is a problem.

Given the choice between a shop full of warranty work and a shop full of CP work - everyone would take CP work. That isn't the choice anymore and hasn't been for a while.

The choice now is a shop full of warranty work or an empty shop. The decline in warranty work is a combination of quality and lower sales. If quality is super high they don't break under warranty and they don't break after warranty. That is the issue. Shops were running at 90-95% capacity last year - if warranty drops 10% there isn't a line of customers to replace them.

For better or worse, like coffee is to 7-11 and lotto tickets are to the liquor store, warranty was the consistent lower gross work that allowed us to have the capabilities and capacity to get the high grossing stuff. Both of those have been reduced - and the maintenance stuff now for GM is just an LOF somewhere between 6-12,000 miles.


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** Rob Campbell, Contributing Editor for DealersEdge **

Like it or not warranty was a source of revenue. Since our shop was allready using maintenance menues, selling tires, doing inspections, etc. we have not had anything to make up the lost revenue with.

I am afraid GM's new maintence schedules along with the better quality cars are going to drive a lot of marginal dealers out of business.

I am not saying what worked at the dealer where I worked will work anywhere, but what has to be understood is that if what you are all responding with here was true Honda and Toyota dealers would not be where they are today. My experience at a foreign (Honda) dealer was 80% maintenance maybe 20% warranty not the reverse as it was at domestic dealerships. The opportunity is there to be successful without gorging the service department on the manufacturer's meal.

We are a GM store with Buick, Pontaic, GMC, Cadillac, Hummer. We have a great CP business with 79.3% CP to 20.7% warranty. We have had some great months this year. I do not see the maintenance being a problem. Customers do not adjust to the factory schedules that easy. New younger customers may, but our core, the older customers that still believe that they want to change their oil and filter every 3k miles will still come in to get that done. I have been at this store almost 2 years now and have seen the % stay close to this. Another store I was at before this was running 75 - 25. My menus are set up to GM's MI & MII and we still have to schedule work. This schedule has been in effect since the 04 model vehicles. DealersEdge did an article on this last summer. Guess we are lucky to have good business in a town of 250k + outling area. Can't complain.

Yes, there has been a definate drop but IME it has leveled off in the last few years.

I can't say that we are seeing fewer warranty customers but we are certainly seeing fewer high dollar warranty repairs: engine replacments, trans overhaul/replacements, etc.

Heh heh heh. I'll take you on a stroll down memory lane.....

Back in the late 70s-early 80s we were buying Olds diesel engines by the truck load and replacing them under warranty, sometimes 15-20 a month. It didn't seem like much fun at the time but when the gravy train ended we sure did see the difference in our commission checks !

Those were the days! Now we're expected to go out and earn business rather than having it handed to us. Geeeez. Where in the world did *that* come from ?

Actually its not very funny, at least not for some of us. Speaking for myself, and others too, maybe, in the "old days" a service manager was the guy who had a decent manner with people and strong enough organizational skills to develop a structure allowing all the work to get done. There never seemed to be a lack of work, of any kind. We felt pretty good just getting all the work *done* for god sakes !

Nowadays we scramble at times to keep the shop full. I've never had one iota of marketing or advertising training (although I've learned a bit over the years) and am hardly a great business visionary by any means. Any success I/we've had has been based on simple principles of good service, fair pricing, and good reputation. Those are nothing to be ashamed of, of course, but those attributes alone won't fill the shop.

Oh well, I'm just rambling......

Cheers
DD

Less we forget what our first priority is: Build the business! Old Irish is correct, few of us have had any formal training in marketing. Those that have recognized this change have adapted and grown, others remain firmly stuck in the mud and are struggling today. But, don't forget the lessons from the past which allowed the aftermarket shops to grow and flourish in the first place. Try this remedy:
1. Remove head from sand.
2. Make effort to open eyes.
3. Be honest about what you see.
4. Make appropriate changes.
5. Repeat.