The aftermarket is killing you. What can you do to fight back?
“Nobody Knows Your Toyota like we do.” Such slogans can prove invaluable for dealers, to promote the advantages of specializing in servicing a particular brand of vehicles as well as the need for highly trained technicians to perform the work.
Educating customers about the need for good quality service and using quality parts on their vehicle is crucial. As Mohammad Shahzad says, “we know the difference between eating healthy food versus junk food and having good shoes with support instead of flip flops for running. Shouldn’t your car deserve the same when it comes to oil, brakes and tires?”
The aftermarket industry is big business. In Canada, during 2009, the average spent on vehicle repairs was $862. Given that motorists are expected to keep vehicles longer in the coming years, this number is expected to increase, providing a tremendous opportunity for savvy dealers to grow their service business.
It’s a hot topic of contention, dealers versus aftermarket vendors and independent repair shops. The general perception among the public is that taking your car to an independent shop will cost significantly less than taking it to a dealer, both in the price of labour charged for diagnosis and repairs as well as parts installed on the vehicle.
It’s a battleground many dealers are familiar with. One service manager we interviewed, who declined to be named, said it’s been an ongoing issue for years. “Much like the sales side, there’s a stigma attached to our end of the business, namely inflated prices when it comes to parts and labour. And although in reality, the situation is often quite different, this stigma is still there, which means that often, we have to work especially hard to retain customers, which is our lifeblood, since buying a car is often just the honeymoon period, while servicing is the significant part of the actual marriage.”
All service managers encounter customers who say they only visit their dealer for warranty work, but if it’s basic maintenance, such as an oil change, tire rotation, even a radiator or transmission flush, they’ll say they get a better deal at the local lube or independent repair shop, so there’s no point coming to the dealer.
Another concern involves major servicing once the vehicle warranty expires. “If the customer keeps the vehicle beyond the warranty, sometimes even the extended warranty if it has one, it’s quite common for them to stop visiting the dealer service department entirely.
Time makes things worse
The older the vehicle is, the less likely it is that consumers will service it at a dealership. According to a J.D. Power and Associates Report released in Canada last year, the service and repair market in Canada contracted from $9 billion to some $8.4 billion between 2010 and 2011, with the average number of customer visits to auto service and repair facilities dropping by nine per cent.
And of those visits, the survey noted that the older the vehicle, the less likely the owner was to visit a dealership for servicing as opposed to an aftermarket facility, with the highest group being those that drove cars 8-12 years in age. Interestingly enough, the biggest reason wasn’t cheaper labour rates or parts prices, but perceived better customer service.
Among owners that participated in the survey, 58 per cent said they received immediate attention at an aftermarket facility, versus 39 per cent at a dealership. In addition, 85 per cent said a service advisor at an aftermarket facility made them feel at ease, versus 80 per cent at a dealer. Approximately 73 per cent also said the aftermarket facility offered them useful advice on automotive repairs, versus 66 per cent when it came to dealers.
Clearly, with findings like this, many dealers have cause to be concerned, though surveys don’t always paint an accurate picture when it comes to the reality of automotive service.
From issues to opportunities
While the current economic climate and stricter rules on lending are pushing more consumers toward purchasing used vehicles, as well as looking at ways they can save money on overall motoring costs, including parts and service, some dealers have been able to turn a perceived sow’s ear into a silk purse.
At Brimell Toyota in Scarborough, Ont., dealer principal Mark Bozian and Customer Management Operations Manager Mohammad “Shah” Shahzad, have developed an interesting approach when it comes to servicing to combat aftermarket competitors.
“Too often, there’s a lack of communication, not only between the customer and the dealership service department, but also between the service advisor and the technician,” says Shahzad. “Often the original customer complaint is misinterpreted, so by the time it reaches the technician, they end up troubleshooting for a different problem and the vehicle isn’t fixed properly the first time. It’s because of situations like these, that the customer is more inclined to then take the vehicle to an aftermarket vendor.”
Shahzad says dealers need to listen more carefully to their customers. “They need to stress the importance of car maintenance and why you need somebody who is fully trained when it comes to servicing and repairing the customer’s vehicle to be working on it. Dealers are giving away business to the aftermarket because they aren’t recognizing this aspect.”
Shahazad likens vehicle service at a dealer to hospital procedures. “When the car goes on the hoist, think of it as a new patient taking their place on the bed. When the apprentice comes to remove the wheels, it’s like the nurse coming to check the patient in preparation for the doctor’s visit. When the technician arrives to diagnose the problem, he’s the doctor with the stethoscope. And from there, much like in the hospital, diagnosis will lead to the required procedure. It’s all about how you relate to the customer,” he says.
“Often, many customers aren’t aware of how important vehicle maintenance is for their safety. For example, would you avoid or skimp on brake system repairs, cutting corners and using inferior parts? When you’re able to put it into perspective and from a dealer standpoint and mention to the customer if they would they rather have surgery in a hospital by a certified doctor, or visit some back alley clinic; explaining that it’s exactly the same when it comes to their vehicle, it can prove a real eye opener.”
Go the extra mile
Other dealers stress the importance of listening better. “Part of the reason why service departments, don’t often fare well on quality satisfaction lists, is that many customers either feel intimidated, or that the service advisor or manager just isn’t listening to them,” says Jeff Glennie, Service Manager at Mercedes-Benz Burlington.
“It’s so important to establish that level of communication and trust. Assurance that you’ll take care of the problem and have the car repaired as good as new is crucial. Often, there’s too much emphasis on simply selling the vehicle and not enough on service. You want customers to keep coming back, so go the extra mile by providing additional services that most aftermarket vendors simply aren’t able to offer, such as a free car wash and detailing, a courtesy shuttle or even front door vehicle drop off and pick up. You’ll be amazed at the difference the little things can make.”
OEM vs aftermarket parts
Another common perception as it relates to vehicle servicing between dealers and the aftermarket concerns not only cheaper labour but also parts as well. In fact, parts has become such an issue for many dealers that some have decided to conduct their own investigations, finding out whether advertised deals such as $19.99 oil changes are really all they’re cracked up to be. And the results in many cases; are actually quite revealing.
While conducting research for this story, Canadian auto dealer reviewed a study, produced from observations by a dealer’s own employees working undercover at aftermarket facilities, that showed in many cases, the parts used were not only inferior to original equipment items, but that when all was said and done, the aftermarket shops actually charged more for them as well as the procedure!
In one instance, an oil lube and filter service performed at a main dealer, in which genuine, manufacturer recommended oil was used, plus a drain plug gasket and oil filter installed; fluid levels inspected and topped up, the air filter replaced, tire pressures inspected and adjusted, all locks, latches and hinges lubed and the lights and wipers checked, cost $59.44. In addition, all service details were duly noted on the customer’s invoice.
The same procedure, witnessed at an aftermarket facility, saw the use of generic oil, non OE filter, no drain plug gasket and save for checking tire pressures, no fluid top ups nor lubing of latches or locks, nor inspection of lights. Yet, the cost came to $158.08 and no details of the service procedure were listed on the invoice.
In another case, a brake inspection and service came to $137.80 at a dealer, which included installing genuine OE brake pads, inspection of brake lines and hoses and the inspection and lubrication of the calipers and a road test.
At an aftermarket repair shop, while the same procedures were indeed observed, including the road test, non-OE graded pads were used, yet the procedure came to $224.90. Furthermore, at the aftermarket facility, the warranty only covered the pads, whereas at the dealer, the brake service was backed by a 20,000 km/1-year guarantee on both parts and labour.
Nobody knows it better
In addition there have been instances of customers taking vehicles to aftermarket facilities, only to have those vendors send the car to a dealership, often for warranty work because the aftermarket vendor doesn’t have the expertise and resources to fix the problem.
“It’s something most people simply aren’t aware of,” says Shahzad. “While, as a customer, you might be drawn in by the $20 oil change by an aftermarket vendor, it’s often a case of penny wise, pound foolish. That advertised oil change often proves irrelevant because modern engines are designed to much higher tolerances, requiring different (usually more expensive) oils to provide adequate lubrication of the moving parts, so the 10W30 that’s part of the advertised package isn’t applicable,” he says.
“Also, because many aftermarket facilities promote they can service all makes and models, there’s a much greater chance of the service procedure not being performed correctly, simply because there isn’t a technician who’s intimately familiar with that particular vehicle. So not only is the customer often surprised at the final bill, there’s a potential risk of greater problems down the road, because the car wasn’t serviced properly.”
Jeff Glennie agrees. “From our perspective, when it comes to servicing vehicles like late-model Mercedes-Benzes, you really need to have specialized training to work on them. Long gone are the days when technicians could service a variety of makes and models, even European ones; advancements in technology and the plethora of onboard computers have essentially made that a thing of the past,” says Glennie.
