case studies: service departments winning back 2 & 3 owner

Case Studies: Service Departments Winning Back 2 nd & 3rd Owner Vehicles

How Service Managers are revamping their business plans to open up a market segment previously dominated by the corner garage and chain retailers

WithEd Kovalchik - Net Profit, Inc

Moderated byMike Bowers - DealersEdge

Ed Kovalchick - CEO and Founder of Net Profit Inc

Ed Kovalchick is the CEO and founder of Net Profit Inc., (www.npinc.com) an international fixed operation consulting and training firm located in Alabaster, AL. Mr. Kovalchick and his firm have assisted thousands of dealers here and abroad, as well as every major automotive manufacturer. Mr. Kovalchick's career includes work with Toyota and Honda in Japan, GM in the Middle East, Peugeot in Europe, speeches and workshops for the Australian, Mexican, Canadian, Brazilian, and nineteen U.S. Auto Dealer Associations. He has spoken at NADA and served as a guest instructor for the NADA Dealer Academy for seven years, as well as conducted hundreds of dealer meetings and workshops on all areas of Service, Parts, and Bodyshop operations and customer retention.

Mr Kovalchick has authored hundreds of columns and articles for Dealer magazine, Wards, and others over the years. Included on his resume is ownership of Nissan and Chrysler dealerships, as well as an independent service center.

[email protected]

Phone 1.205.663.1962

www.NetProfitTraining.com

(c)1979-2010 Net Profit Inc., www.NetProfitTraining.com, Ph 1.205.663.1962

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Marketing The Garage®

By Ed Kovalchick

& Net Profit

Lucrative Second & Third Owner Vehicles Are Available For Your

Service & Parts Operation!


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The Garage®

� Ed Kovalchick

� Founder & Owner of Net Profit � Conducted Training Worldwide� Owner of Last Chance Garage - Restorations� Former New Car Dealer� Master Technician� Graduate - University of Louisiana� Columnist for Dealer & Fixed Ops Magazines

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Ed Kovalchick & Net Profit


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The Garage®

� Net Profit Inc.

� Began Business in 1979� Consulting – Training – Research - Development

for Automotive Dealers & Manufacturers� Conducted Business in North, Central & South

America – Japan – Europe – Middle East� Worked With Every Major Auto Manufacturer� Trained Thousands Of Dealer & Manufacturer

Professionals

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The Garage®Presented by


16.1m 2007

13.2m 2008

9.6m

10-12mCrashing Vehicle Deliveries Devastate Service & Parts

New Vehicle Deliveries

40.3% Drop from 07

2009

2010 - 2012


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The Garage®

� Trend 2008 to 2012 – fixed gross profit� Based on this dramatic drop in new units being sold into the

market, service and parts gross profit has been dropping and will continue to drop.

2008 – (5.4%)2009 – (16.6%)2010 – (24.9%)2011 – (31.1%)2012 – (31.4%)

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This drop will place the expense Burden Per Vehicleinto an unreachable number, well over $3,000 per retailed unit!

Created by the loss of first owner

vehicles.


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The Garage®

�What Is The Answer For Dealer Survival?� Sell More Units To Reduce Burden Per Unit� Increase Oil Change Business� Discover More Needs Per Customer� Create More Needs Per Customer� Sell Beer At The Parts Counter

OR� Tap Into The Massive Second & Third

Vehicle-Owner Market.

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The Garage®

�This Is Plus Business!� There is a massive group of vehicles, which

never visit dealerships – all plus business.

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The Garage®

�What’s In It For New Car Dealers?� The “Second & Third Owner” vehicle

market is made up of Six Year & Oldervehicles with over 75,000 miles. �Some Three-Fourths of all vehicles fall into

this category, with the average age of registered vehicles over Ten Years Old !� These owners do not use dealer service.

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The Garage®

�How Different Is This Market?� Average RO – about 3 hours� Average Service Visits Per Year – 4� Parts Sales To Labor Sales – Over 120%� Revenue Per Job – $300 and up� Loyalty Factor – 70%++�Waiters – None� Attitude – Help Me Please

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The Garage®

�Where Do These Customers Go?

� 81,000 Registered Independent ShopsApproximately 35,000 Unregistered Independent Shops� (Note: Dealer Locations 18,000??)

SEMA - NACE - NADA

Three-fourths of all technicians work in the Aftermarket – most in Independent Shops!

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The Garage®

�What Does One Garage Tech Generate In Monthly Sales?

Monthly Attendance Clock Hours 160

Production Output % (minimum) 120%Monthly Flat Rate Hours 192Garage Labor Rate $80

Labor Sales $15,360Parts Sales @120% $18,432

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The Garage®

�What Does One Garage Tech Generate In Monthly Gross Profit (bill-paying $)?

Labor Sales $15,360

Gross Profit Retention 70%

Labor Gross Profit $10,752Parts Sales $18,432

Gross Profit Retention 45%+

Parts Gross Profit $8,294

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The Garage®

�How Many Customers Does One Garage Tech Need Per Day?

Monthly Flat Rate Hours 192

Flat Rate Hours Per Customer 3.0Customers Needed Per Month 64Customers Needed Per Day 3.2

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The Garage®

�Where To Start:

Other Makes & ModelsFor every vehicle entering the service department, there are at least three others in the immediate family – most are second and third owner vehicles .

30 ROs Per Day x 3 = 90 Available Vehiclesx 21 Working Days1890 Vehicles in One Mo

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The Garage®

Sandwich Board

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Hometown Motors


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The Garage®

Simple Sign

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Hometown Motors


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The Garage®

Ed, Good morning.

Just a quick note to give you a little more feedbac k on my garage sign success. We have a customer who owns an 05 Odyssey and a 00 Nissan Quest. The last time she was in, she read t he sign and asked if she could start bringing the Nissan here as well.

Well, she brought it in Monday and picked it up yes terday. Her bill was $1754.93. If anyone is worried about justifying th e cost of the class you might want to pass this along. It doesn't take but a few tickets like this to pay for TWO people to attend. Thanks a gain.

Sincerely,Daniel SamfordBrew Honda

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Overhead Sign


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The Garage®

Billboard

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Took half of overbuilt Quick Service Center and converted to The Garage high profit

stalls.


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Handout


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Promotion


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Mailer


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Mailer


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Packaging


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E-mail notes from successful Garage managers:

� As far as the garage concept goes, my sign has still proven to be very effective. I still haven't spent a dime advertising for other vehicles to work on. Most of our business from the sign has come from people that already do business here.

� We are now though starting to get some "word-of-mouth" marketing from those people that I guess have been telling friends that we work on everything. Just last week we serviced a Mini, Land Rover, Chevy Aveo and Uplander, Dodge, Chrysler, and at least one more make. We average about $4000 a month gross and that number has been climbing steadily since we started.

� Bottom line is, we've picked up $48,000+ dollars a year of bill paying money. Once we really got rolling I was upset with myself for not implementing something like it sooner, but really wouldn't have known how to without the garage class.

� An easy $8,000 a month additional net profit.


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The Garage®

�What You Can Do - Specifics:1. Contact Local Parts Suppliers – Primary & Seconda ry

� Utilize Manufacturer Parts Second Line Programs� Contact Local Parts Suppliers For Secondary Source� Reset Inventory & DMS Source Controls� Consider A Non-Competitive Parts Supplier (www.MightyAutoParts.com)

2. Locate A Mail List Of Second & Third Owner Vehic les� Utilize Manufacturer Mailers / Great Source: Nick Pizza 800-982-8629 � Use “The Garage” Marketing Plan� Tap The Current Customer Base – DMS Mining� Fleet Owners – Yellow Pages, Chamber, Internet

3. Interview Current Staff Vs Outside Candidates� Garage Service Manager – Technical / Parts Knowledge� Repair Technicians – Component Repairs vs Replace

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The Garage®

�What You Can Do - Specifics:4. Review Facility Utilization

� Separate Garage Staff� Prepare Stalls – Shelving For Parts

5. Establish Forecasts & Budgets� Marketing Budget (Up to 6% of the Sales / 12% of the GP)� Garage Manager Pay (Up to 12% of labor and parts GP)� Additional Computer – Cell Phone� Tech Cost – (up to 30% of Labor Rate) – Fixed Labor Rate

6. Line Up Available Tech Information� Identifix.com - JustAnswer.com – IATN.com

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The Garage®

� What’s Next?The Net Profit “Garage®” in-dealer visit includes:

1. An Individual Garage Market Study – Size, Opportunity, Target

2. Individual Facility Utilization & Staffing Study & Determination

3. Skill Set Descriptions (Service & Parts) – Written Job Functions –Hiring & Selection Options – Garage Pay Plans & Applied Budgets

4. Aftermarket Parts Options – DMS Sourcing & Setups –

Presentations From Other Makes Aftermarket Parts Suppliers

5. A Complete Garage Marketing Plan Including Budgeting & Planning

6. Garage Financial Forecast: Sales – Gross – Expenses – Net Profit

7. Written Business Plan Including Installation Cale ndar Dates

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What You Will Learn With The Garage®1. How Independent Shops earn over 50% Parts GP.

2. Techniques Independent Shops use to create Absolu te Loyalty .

3. Why Independent Shops enjoy 3 hours or more per Repair Order.

4. How Independent Shops compensate Technicians & Ma nagers .

5. How Independent Shops approach Reception & RO Write-up.

6. How Independent Shops approach the Fleet Business .

7. How Independent Shops utilize various Parts Suppliers.

8. The types of Marketing Independent Shops utilize .

9. The profile of a successful Independent Shop.

10. What it will take to achieve 100% Fixed Absorpti on & How to do it .

11. That Any Dealership Can Win Back And Maintain A Piece Of This Highly

Profitable & Readily Available Market.


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Questions: Ed Kovalchick [email protected]

Ph 1.205.663.1962

Garage® Workshops are available for Dealer Groups!

References Available

case studies: service departments winning back 2 & 3 owner

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