parts transfer

[partsguy]

So..... is there any truth to the rumor that GM is going to scrap the parts transfer for 2002? My CFO told me that they were... Has anyone else heard more? It's about time they get rid of this service dept. subsidy!

[Chuck Hartle]

I hope it is true. Do you want to put your wallet in the left pocket, or the right pocket, Mr. Dealer?

Way outdated process that did nothing but the above and create anamosity between the service and parts department......

It is about time!

Chuck Hartle'

[rcooper]

If gross transfer is a simple subsidy, then if the service operation could purchase parts where ever the wished would have no effect on the parts operation. Heck since a subsidy is an economic drain on the "producer" parts would be even more profitable without the service sales?

Having managed both parts and service operations (30 techs 1.5 mil inventory) I have sat on both sides of the fence. As a service manager I argued against gross transfer because I didn't want the parts manager to have an excuse if I beat him in net profit. However when I became parts manager I noticed the difference in lack of effort on my part to bring shop parts business in the door. I had 0$ expenditure on retail advertising, no time spent at all in customer development and relatively little direct customer contact.

I opened the doors and the service business came in. Of course at 1.5 mil in inventory I had a large wholesale business that was beyond that of the shop BUT when business got slow the parts personnel always complained that the shop wasn't doing enough business.

If in fact as a parts department you subsidize the service operations then by all means, take your statement and remove the sales, gross and profit from it as well as the expense and tell what kind of business do you have now? At least the parts department can decide what source they will use for non warranty parts but I would wager the service department has only one source of parts to choose from.

[partsguy]

I agree that service "is my best customer", but what I have a problem with is the fact that parts pays a portion of the service advisors commission, service cashier and warranty clerk salary, AND then is expected to give over 1/2 of the gross! I have 2 counterpeople who are dedicated to the techs, yet parts pays all their salary when 1/2 of the gross they generate goes to service. This is not equity...

[Doug]

I think paying advisors and the warranty clerk out of the parts dept budget is a bit odd.....at least I've never heard of it before. In your case you probably have a bit more reason than others to gripe about the transfer.

In most dealerships the Service Department bears the brunt of the expense in advertsing and merchandising to get the customers into the door....efforts and expense that parts department clearly benefits from. Don't forget, too, that you keep 100% of the lucrative warranty parts profit !

And who keeps the advertsing reserves in your dealership ? Do you share that with the Service Department ?

Not being argumentative.....just thinking out loud. I don't care one way or the other on this issue. If the change is made I'm sure that pay-plans will be adjusted at all dealerships to keep things balanced.

By the way, my understanding is that the transfer is really only a recommendation from GM. Has anyone out there already eliminated it or altered it from the "norm"?


Cheers to all,
Doug

[Hawk]

As a dealer, I cannot figure out why there has to be any complaining at all. If the dealer would just pay the parts and service managers on the total gross/net of both departments, they could start working together instead of wasting energy worrying about who pays or gets what! We all know each department couldn't do without the other, so acknowledge that, change to a combined pay plan and move onward and upward!!

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Tom Hawkins

[gman]

Guys, this one will never go away.
As with rcooper I have managed both departments and alot of what he states is true. I will put forth before I continue, that if you have not worked and earned your paycheck in each of these departments (separately) there is no way you can be objective.

Chuck, I am really interested in your viewpoint on this issue. I try to keep an open mind and realize that despite the fact I live in both departments my thinking may be skewed. All that you have to do is scan through alot of these posts to see that most dealers operate fixed operations as two completely separate businesses, that lives (and paychecks) are greatly impacted by dept profitability, and that there is a great deal of animosity between most parts and service departments. Do you really think that doing away with the transfer will improve this relationship?

As I think a bit further I look at the direct competition for our service department. Major repair/service franchises, Quick lubes, Local repair shops, etc. In our case, all of these people buy GM parts from us.(usually at a lower cost) The markup between aquisition and retail is extremely important to the profitability of these merchants. This money is used, for many things, advertising, customer development/satisfaction, spiff/bonus programs, etc. etc. Our service department must go head to head with these shops every day. How are they to sucessfully compete and remain profitable with the current level of non-participation from us in parts?
Couple that with the fact that GMSPO continues to roll out "programs" that put in place operational and administrative expenses on the service side while all the discounts and allowances flow in through the 687 account. Believe me, when I put on the parts hat, I'm loving it! When working on the service side and looking at the roi for programs like GSP, I get highly suspicious of anything GMSPO claims to be a "great" idea for your service business.

My underlying belief in this is that there should only be one department! Managers, counterpeople, advisors, etc. should be paid from the same line. Unfortunately, I don't think this will happen anytime soon. So in the meantime, give me some ideas on how to make this team (read parts and service depts) pull on the same end of the rope?

Thanks,

gman

[Richard]

I have an idea. Not sure what all you could do to implement it, but how would we go about 'tearing down the walls' and Making a Service & Parts Department, one department where you can get one-stop shopping, so to speak? Train every Advisor, both jobs, parts & Service, and pay them on doing both jobs. If a customer needs a part, let the 'now' Service Advisor sell it, and at least suggest selling the installation! You would still have to have dedicated W/sale, and shop counter persons, or at least someone to pull orders for the shops counter, after the Parts/Service Advisor looks them up, bills them and gives the job to the tech.

[Doug]

Like some of you, I, too, have worn both Parts Manager and Service Manager hats. Until you've done both it is more difficult to see both sides of the story.

I really like the idea of combining the departments into one "Service and Parts" department. Is it really that far-fetched ?

A journey of a thousand miles.....begins with the first step.

I'm gonna give this some thought !

Cheers to all,
Doug