September 6, 2012
Making changes to your service processes can lead to increased post-warranty service work.
By Denise L. Rondini, Executive Editor
Fleets of all sizes are part of the customer base at most dealerships. Maintaining and growing business from these fleet customers is important for a dealerships continued success.
By selling vehicles to a fleet, dealers have an opportunity to begin to develop a relationship that can lead to business for many years. In addition, performing warranty work allows dealers to demonstrate their service department prowess.
Interestingly, in a recent study of fleets conducted by Commercial Carrier Journal, sister publication to Successful Dealer, while dealers get a great deal of warranty work from fleets, they are not getting all of it.
In areas like engine, electrical, steering/suspension and paint and body, dealers are capturing a significant share of warranty dollars, getting 63.7 percent of the engine work, 50.5 percent of electrical repairs, 49.1 percent of steering and suspension work and 42.9 percent of paint and body work.
In some instances, fleets themselves have become authorized to perform warranty work and are doing some of the work in-house. Most significantly, 48.1percent are doing their own warranty work on brakes as well as 52.8 percent of the preventive maintenance work.
Unfortunately for dealers the service situation changes dramatically when the vehicle is no longer under warranty. The percentage of maintenance and repair work taken to dealers after the warranty period has expired drops precipitously: engine 26.4 percent, electrical 10.4 percent, steering and suspension 7.1 percent, paint and body 14.6 percent.
And while fleets increase the amount of in-sourcing post warranty, they do not do all of the maintenance and repair themselves. Independent service providers step in to take over some portion of the maintenance and repair work that was handled by dealers. While a vehicle is still under warranty, CCJ’s survey discovered that independents were only getting 9.4 percent of engine maintenance and repair. Post warranty that number climbs to 24.5 percent. The same is true for steering and suspension repair. The percentage of electrical and engine repairs also increase at independent repair shops once the vehicle is no longer under warranty.
One of the reasons fleets cite for either doing maintenance and repair in-house or taking it to an independent service provider is the inability to get the vehicle in for service in a timely manner at truck dealerships.
Yet, according to Mark Martincic, professional advisor, KEA Advisors, the internal processes at dealerships are not particularly efficient. “Typically dealers are billing on average only 65 percent of [available service] hours because they are not keeping their techs in the bay with the right kind of work [for their skill set].”
Dick Hyatt, CEO of Decisiv, says if dealers want to garner more work from fleets they need to change the way they operate. “They have to operate as if they are part of the fleet. Basically they have to become an adjunct to the fleet.”
In order to do that, dealers need to go to their fleet customers and build a profile of all their assets, processes and maintenance requirements of that fleet, Hyatt says. “Then they have to commit to the fleet that they will perform those services within a certain standard relative to time and will do it for a certain agreed upon price, and they must build those profiles into their systems so the information is available at all the dealership’s locations.”
Trucks today are running with longer warranties. According to Brian Mulshine, director of field service and marketing for Navistar, most truck have 5 year/500,000 mile warranties. This is both good and bad news for dealers. The good news is it increases the amount of warranty-related work that flows through their bays. The bad news is that it ties up bays and prevents dealers from performing the more lucrative customer pay repairs.
This, along with the fact that the average age of fleet vehicles is higher than it has been for quiet some time, is putting even more pressure on dealers to improve their service processes so they can have bay availability when their fleet customers come in to their shops with vehicles that need service.
Hyatt is optimistic and says that fleets are seeing some progress in this area and “are increasingly open to reconsidering the use of outside service providers for additional work other than breakdowns and warranty.”
Dealers who position themselves to take advantage of this change in attitude by making room in their shops for non-warranty repairs and who can perform those repairs in a timely and cost-efficient manner will be the big winners in the future.