Welcome to another episode of Service Drive with Don Reed, CEO of DealerPRO Training. One of Reed’s Fixed Operations Specialists from DealerPRO Training recently spent two days conducting a performance review of a dealership’s service and parts operations. Once the assessment was completed, the specialist reviewed the findings with the dealers and his management team. He outlined strategies to improve processes, management practices, employee productivity and profitability. The specialist’s recommendations also included a training program; however, the dealership responded by saying their service department was not down and declined further assistance.
Let’s take a closer look at the numbers. The dealership has a service uptake average of 65%, well below the industry guide of 100%. The dealership’s auto technicians are producing at a rate of 75% versus 120%, as the industry guide indicates. The number of hours per repair order averages 1.2, but should be closer to the 2.5 hour range. Single item repair orders are at a staggering 52%, and CSI scores were below the zone average. In fact, its net profit on services was -6% and its net profit on parts was 21%.
“If this operation ain’t broken, then break it,” Reed exclaims.
Now the obvious question is, if car dealerships know how to make the changes needed to improve performance and profitability, why are they waiting? If you find yourself in a similar situation, Reed advises asking yourself the following questions:
- Do my fixed operations employees have a performance-based compensation plan that motivates them to perform at higher levels?
- Do my service advisors present maintenance menus that educate and train customers on how to properly service and maintain their vehicles?
- Do my advisors advise customers on necessary and recommended repairs that ensure customers drive safe and reliable vehicles?
- Do my hourly technicians produce 20 hours or less per week?
If you don’t see the point of investing in fixed ops team training, consider this. Lack of training costs dealers $57,000 a month in customer payment parts and gross profit, Reed says. Additionally, if after-sales service staff members were properly trained in effective communication with customers, they could have a positive impact on CSI scores, which have a lasting impression on owner retention.
Record gross profits won’t last forever. Fixed operations account for about half of a dealership’s gross profit, so dealerships and general managers should spend half their time and effort supporting their service team. Don’t let good news for your sales department turn into bad news for your fixed operations.
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