Ward's Dealer Business lists the 150 top-performing franchised dealer service departments in America, including their income vs. total dealer revenue. The report also offers a fascinating behind-the-scenes look at the biz of selling repairs. According to the article, franchised dealers' service department revenues tumbled by nearly $5b last year; improving vehicle quality is leading to less warranty work. With razor-thin new car margins, that's gotta hurt. To staunch the wound, dealers are getting more aggressive about selling repair work. "Part of the problem is that service advisors are too busy answering the phone setting up appointments rather than walking the customer around the vehicle in the service lane upselling necessary repairs." Remember that the next time you get shunted onto the service department's voice mail.
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If what is happening down at a local Ford dealer is any indication, they found a more profitable method instead of walking the customer around the car. They perform a “free” mutli-point service inspection of your car before they get to work on the issue you dropped it off for in the first place. After the tech has done his fishing they call the customer back to upsell him on whatever they found.
“necessary repairs” riight… Like when my girfriend took her car to the stealer for a small evaporitive emissions leak cel and they tried to get her to change all her plugs (I had just done a couple of months ago), plug wires, fuel relay, change the oil, coolant, etc. They rang up about $600 in parts and labor for an issue fixed by tightening the gas cap.
..oh and they charged $100 for the privelege of getting their service sales pitch.
Acura permanently lost my business when a dealer unsuccessfully billed me $90 for unsought chemical services, assorted gasoline, engine and transmission additives.
As you languidly stroll into your friendly neighborhood dealer for your tune-up and check up, keep in mind the odds are that the service writer is PAID ON COMMISSION! Any service writer who doesn’t try hard to upsell every customer won’t have a job for long.
This must explain why the Lexus service dept. I used to go to NEVER answers the phone. It is always “leave a message and we’ll return your call”. I now go to a different dealership that answers the effing phones.
Something is happening out there for sure. Maybe it has to do with the fact that dealership labour costs are reaching $100 per hour.
I see (new!) clients with sticker shock holding estimates for $3-5000 worth of work that is said to be necessary.
When I analyse the estimate, much of it is so vague that I have to get the vehicle into my shop to verify what REALLY needs doing.
In many cases the real work comes in at less than half the dealer estimate.
One of the reasons dealers are attempting to up sell is the low gross profit on new vehicles, and manufacturers are “tightening” down on warranty work / claims.
When it comes to service work, the majority of customers don’t want to be sold, they just want the vehicle serviced or repaired.
I don’t trust any dealer with my vehicle. They always want 50% more for parts and labor than any of the private shops in town.
Right now they want to charge me $120 and 1hr labor for a part I can buy on my own(Autozone, Nappa, ect..) for $78 and replace in 30 minutes.
The whole scheme is going into a corkscrew spin.
There is no way in the world that even the best qualified tech can make a living working for warranty flat rate. The domestics are much worse then some imports and this is why there is such a difference in the quality of the techs.
As the % of warranty work increases anyone good enough goes independent and eventually only the ones that couldn’t possibly hack it in the open market stay at dealers.
Over more then 30 years I always had instances where dealers, both car long ago and motorcycle more recently, paid me as independent to repair warranty vehicles.
My absolute favorite dealer service experience was several years ago in Longwood, Florida. I stopped in to pick up a part for my Dakota. When I walked out I strolled by a ‘tech’ explaining to a lady that they would charge her $70 to change a tail light. He explained that the entire assembly had to be removed, etc., etc… I walked up and asked her to raise her tail gate, opened the provided access panel, removed the light, replaced it with one from my glove box (they were parked next to me), and turned with a grin and informed her she owed me 67 cents. Her words to the shop guy were priceless and unprintable. I was told by the service department that I was no longer welcome there…as if I’d go back after seeing that.
From Wards Dealer Business and article on dealers selling replacement tires.
http://wardsdealer.com/latest/customers_sell_tires/
My last trip to the Toyota dealer was when I was billed for a $30 Air conditioning air filter and my model does not have one. The Service adviser tried to tell me that he thought all models were so equipped, when it was just the high line Avalon that had them. Crooks, robbers and thieves all of them.
I,m anal about maintenance every spring and fall I buy a new air filter for my car/s.So I,m shocked to see on my,”[on “special] 29.95 oil change bill a charge of 18$ for air cleaner service.
I’m thinking no way did this baby need an air filter so they changed it unnessarily”.No way” says dude in white shop coat.We only serviced your air cleaner. So mikey, who actually sub assembled air cleaners in an earlier time says”what t f did you service.
After some more pleasant exchanges we [as in me] decided 18 bucks was a bit exsesive to take out the filter an give it a whack on the fan shroud.
And we wonder why doesn’t anybody go back to the dealer after waranty?
Recent trip to Toyota to get the alarm sensitivity adjusted resulted in a 15 minute wait (I was the only customer there) to be told it would cost $80 to have it looked at. Repairs would likely cost more.
The lousy strip center alarm shop told me in less than 5 minutes (I was third in line) that it would cost $35 assuming they could fix it, nothing if they could not.
Hmm, tough choice on that one, eh?
I HAVE had good experiences with BMW dealers while my car was under warranty. But also bad ones (when they to say something wasn’t warranty), and as soon as you are out of warranty – out come the long knives. A BMW without a warranty is worthless as soon as it breaks in my experience.
This is priceless
http://www.liveleak.com/view?i=25d_1181292344
From the art:
“It’s not just the service department that benefits from increased selling and customer retention. Most dealers understand that car sales drive service sales. If you’re not selling cars, over time, your service revenue will begin to dry up.
But there is a flip side to that statement. Service sales can impact vehicle sales. The problem is, very few people in the industry consider the service department as a tool for creating vehicle sales.”
AGR
That Mercedes piece is funny, but if one were to take it apart piece by piece it would show exactly what is wrong with the dealer system and flat rate pay.
It is extremely unlikely to be a intent to deceive.
What got me was calling both of the Toyota dealers in Tucson to get an estimate for AC repairs. Dealership 1 told me $1100. Dealership 2 said they’d get back to me with the estimate. So, an hour later as I was driving by Dealership 2, I stopped in to ask the rep I usually dealt with. She told me the same $1100 price. As I was leaving the dealership, the rep I had spoken to earlier at Dealership 2 called to give me an estimate of $1300. When they can’t get the estimates to agree at the same dealership, there’s definitely a problem.
HIPPO
The tech didn’t want to take the time to figure the problem out.I kinda feel for the service adviser who had to deal with this.
But your right the flat rate system doesn’t encourage good diagnostic skills.
I’d like to have seen what would have happened had the customer ok’d the work.Do you think they would have found the rock?
Would they have said”hey buddy its your lucky day?
Maybe buddy would had to pay 6500$ to remove the rock.
Who knows?
confused1096: great story; I’ll have to tell the guys at work this one!
I only darken the dealer’s door for warranty and recall work, plus I get free state inspections for my 2 of my 3 vehicles. Believe it or not, I haven’t been “upsold” yet when the inspections are done. Since all 3 vehicles are Toyota or Nissan products and I do my own maintenance, this means they hardly NEED to go to the shop.
I had one of those bad experiences not with a dealer, but Merchant’s, an auto repair chain in the DC area. I brought my old Volvo 240 in for an $18.88 front wheel alignment “special,” because one of the front tires was showing excessive outer edge tread wear. They must have been salivating as they saw me drive in with “old faithful.”
Besides the alignment, they said the car “needed” something like $700 worth of repairs. One item was replacing the radiator hoses, which I had just done very recently. I told them to do ONLY the alignment. They did, and I never went back there.
Oh BTW, I see the infamous Bill Heard has 2 dealerships in the top 150 for service income. Why am I not surprised?
Mikey,
I would wager that if the work had been authorized and the rock had been found without major disassembly they would have told the guy and charged a couple of hours, but the bottom line is that the wrench didn’t want to mess with it.
Actually, you can make money on warranty work, or at least you could when I wrote warranties on CAT diesel engine repair, circa 1979-’80. It required that the technicians just cranked on and generally fell into the “R&R” mode: remove and replace. My hunch is the same thing goes on with cars.
My experience writing for an auto service trade publication for the past 9 years has led me to believe that the key to success is seen as upselling as much as possible. And there’s a couple of ways of looking at this.
First, they’re trying to help you prevent a breakdown. Second, they’re trying to line their pockets. Both are true, to a degree.
It’s akin to how my dentist approaches my dental work, telling me “Well, you can put that off for a bit” or “I’d start saving and plan on doing this as soon as possible.”
It was different when more people worked on their own cars, or at least had a passing knowledge of what went on underneath the hood and underneath the wheel wells and the rest of the undercar. A service technician I know told me how “no one works on their car anymore” talking in large part about his clientele, college professors and other professionals with late model Volvos.
“And, the people who ask us about what went wrong or needs to be done are the women,” he added, “since they feel they’re going to get ripped off. The guys just ask how much, mull it over and whip out their credit card.”
So when you go into the service departments of new car dealerships, try to do a bit of homework before you get that phone call, the one where they’re trying to sell you on something you have a nagging feeling could be put off. Don’t be afraid to ask, “Does this need to be done right away?” or “how soon do I ‘need’ to do this?”
Also, learn the names and whatever you can about the people working on your car. If they like you, they are much less likely to jack you around. My experience when I wrote warranties, and from what I have seen at the shop where I take my Swedish hooptie, is that if you are not liked you are much more likely to loose the service wars.
Funny, but many people liken going in for car repairs to going to the dentists.
You don’t want to be there, you don’t want to spend the money and you have better uses for the cash.
Almost any other purchase you make has positive connotations, you WANT to buy.
Car repairs and dentistry are negative sells at best.
Even dentists upsell. How many times do you need a teeth cleaning in one year?
I’m wondering how Dave Smith Motors in Kellogg, ID (#68) got on the list. The others on the list are all in densely populated metro areas.