Automotive & HD Business Management Articles.
Bob Greenwood. August 27, 2014. ( over 4 years ago ) 861 views
Shop owners from coast to coast are realizing the competitive world of the Aftermarket Industry is heating up like never before. The New Car Dealerships are becoming increasingly focussed on taking the Independent sector’s business away from them, and doing their very best to keep it.
Based on what I see out there, however, I don‘t think the new car dealership strategy will ultimately work in the long run because of the following factors:
- New car dealers run their business focussed on “cost” which means they view, for example, all technicians as a “cost” to their business. Consider that competent employees make a business money; they create a great return “on investment” for the business. Dealerships, however, control costs by paying flat rate to technicians without regard to building long-term “career orientated” business/personal relationships with their technical team. History has proven the lack of respect for technicians is strong at the Dealership Management level.
Many Independent shop owners have confirmed this as many have come from working in a dealership environment. Due to the shortage of competent technicians, dealerships are now starting to guarantee a set amount of hours per week to their licensed technicians, however to control costs, they have less of them in the bays. We know of many examples where a dealership with 10 – 15 bays will only have 2 or 3 licensed technicians and the balance of staff are apprentices or helpers. This lack of “knowledge base” will backfire over time as quality control of the services being performed for the consumer becomes an issue. Lack of quality work and service works against the consumer. It’s an “attitude” in running the dealership type business.
- New car dealerships do not have enough bays to service the current fleet on the road which means a definite further inconvenience to the consumer in the future as scheduling service appointments increase in the waiting time. They also don’t have as many dealerships locations therefore the consumer is going to have to drive much further for vehicle servicing.
- New car dealerships are trying their utmost to keep vehicle technology information away from the Independent sector. The next battleground will be telematics information and ownership of that information. As the public becomes more informed about this issue, the backlash against dealerships could be very strong. The consumer owns their vehicle information, not the manufacturer. The consumer has a “right” to choose where their information goes. Monopoly style concepts within the capitalist system do not work in favour of the consumer.
- New car dealerships go out of their way to imply innuendoes to the consumer that their warranty will be void if services are not performed at the dealership and with OE parts. Innuendoes are implied to the consumer, but they will not put those statements in writing to the consumer.
Now I will be the first one to say that not ALL new car dealerships conduct their affairs this way. I know of some excellent new car dealerships across the country, that do work well with certain Independent shops, however, they are definitely in a small minority. Too many dealerships will just sell parts to the Independents creating additional dealership profits for themselves, but they do not respect the Independent as can be confirmed by the above mentioned issues. The best dealerships desire a full professional relationship with the select Independents because they do recognize and respect the Independent business in understanding the best Independent works on all makes and models, requires more training which produces a more in-depth of quality staff, and more equipment is required in their location to meet and service the consumer’s needs.
These issues create opportunity for the entire automotive industry if only everyone could step back and think things through.
Consider the objective is to have a bottom-line profitable business with a satisfied consumer enjoying, as much as possible, their experience with the servicing of their vehicle.
Consider that there are many excellent Independent shops across Canada, and yes there are many “lousy ones” too, but let’s focus on the best. These shops are focussed on service and quality to their client base. These shop owners understand professional business relationships and the importance of a win/win business relationship to the success of each party’s business.
Consider these above-average Independent shops, now judge the type of relationship they have with local new car dealerships in terms of help and support on technical issues when it comes to serving their client base. They are now actually advising their clientele on which type of new vehicle to purchase based on the quality of the vehicle and whether the dealership will work with the Independent to serve that particular client’s needs.
Consider the power of this business relationship when fully executed in a professional manner.
Consider the best Independents are as good as anybody else, but to have an equal chance of working with a new car dealership, they have to do much better than the average dealership. The saddest thing I have seen over my career within this industry with competitive businesses, is to see a business competing because he or she is “required” to compete, not because they have a “desire” to compete. When someone is “required” to compete, their main focus is only on price. When someone has a “desire” to compete, they focus on a “standard” of how to do something with value-added. This elevated standard enhances bottom-line profitability. This would be great for our entire industry to embrace.
History, world-wide, has always proven that protectionism attitudes have only served the “master” who started the idea in the immediate short-run, but never served the “master” in the long-run. Protectionism certainly won’t serve the end consumer. So answer this question honestly, “Who are we in business to serve… the “master” or the “consumer?”