A Question to Service Managers

[Ironchild]

Our service manager has a friend who owns a vehicle of our product line. Our service manager always goes to pick up and drop off the vehicle for service (15 minute drive) which I have no issue with. Since I am a parts manager and don't fully understand the ins and outs of service I'd like to hear some opinions on what I'm seeing. Just recently we replaced the rear muffler on this customers vehicle. The customer was charged normal retail for parts and was billed $49.95 for the labor. The techs time ticket on the back shows he was paid 6 tenths (labor rate $95/hr). Also on the repair order was a discount of $54 which equated to about 10% off the entire bill of parts and labor. Taking the discount into consideration, that pretty much wiped out the labor charge and a tiny portion of parts given the total bill. Is this something that should stand out as a problem? Not trying to get anyone in trouble here or cause friction. More or less trying to find the areas where we could be making more per repair order and gain a better understanding of the service side. This 10% off is usually given to this customer each time he comes in no matter what the service. Oil changes he has been getting $10 off which takes the labor down to $3.95. No coupons required. From the parts end of things it just seems backwards. The vehicle was not purchased from us if that makes a difference. Any input would be appreciated. Thanks!!

[Richard]

GM store? GM vehicle?

Service would also get the 1st 50% of your parts profit (before any other discounts are applied!!!) So keep that in mind too.

[Ironchild]

Sorry forgot to put franchises.....Nissan and VW. Small dealership....4 techs, 1 service writer, 1 service writer/parts consultant, 1 SM, and 1 PM total between both franchises. All in 1 building/shop.

[JustBob]

From your description it appears that Service can offer significant discounts. When posted in accounting do these discounts reduce both Labor and Parts? They should not have the ability to discount parts. Over the years I have observed Service Managers/Writers that were paid on Gross frequently using discounts to sell the job (or help a friend). In nearly every case the discount was taken to expense reducing the Net but not the Gross. Reality is the are being paid on Gross that was not received by the store but since it did not effect their pay they were very loose with discounts. In a recent consulting situation I found one of four Service Writers accounted for 90% of the total discounts in the store. He was discounting the labor on any significant customer pay repair by 10%. Of course his customers loved it and he utilized it as a selling tool telling the customer he was giving them a "special" deal. When they started reducing his Gross by the discounts his usage went down significantly. So did his sales since he has lost his special edge. He eventually sought alternative employment.

Do not know your situation but:
1. Service should not be able to discount parts. Your DMS should have the ability to restrict this.
2. Someone in management needs to review discounts given, looking for trends or repeated discounts to certain persons (or relatives). This might be outside your area of influence.
3. Hopefully the Service Manager is not the owners son and the "special" customer is not his girl friend!

[Ironchild]

Our service personnel (and parts also) are not paid any sort of commission at all-just a straight salary. I'm guessing this may sound weird but our dealership is a small family run setup that's been around since the 1950's. A lot of old practices are still in place. This particular customer is just a buddy of the SM. Not related to him or dealer owners. The discount is applied as a coupon on the repair order. I'm not sure how it affects each department or if it only applies to the service side. That I will need to inquire with our office manager on. Our DMS system is Websuite 2007.

[FixedManager]

Is there a systemic problem or do you have issue with the practice of discounting this customer? A Service Manager has the same ability to discount his customers as you, the Parts Manager does.

If you truly believe that the practice is a problem talk to him about it. Should there be no change then discuss it with your dealer principal and bring supporting documentation.