Smythe European - No. 1 Service Department, Again

Smythe European (ranked 5th on this year’s Ward’s Dealer 500) is the leader in service department revenue for the third consecutive year. The San Jose, CA import dealership generated $23.3 million in service revenue in 2000. That’s an increase of $4.6 million from 1999.

What is even more astounding is in 1997, just before AutoNation purchased the dealership, total service department revenue was approximately $ 8 million. So in a four year span, the dealership tripled its service revenue.

The dealership had to expand the service department facilities into three satellite locations, because, as John Seadler, director of fixed operations, explains it, “We basically just ran out of room.”

Last year, the 200 service department employees serviced an average of 200 vehicles a day. This despite severe restrictions in space – including limited parking. “Our employees consistently defy the odds,” says David Spezak, AutoNation’s western district manager. (He is a former general manager of Smythe European.) Despite the limitations in space and heavy workload, Smythe’s CSI hovers 3-5% above the national average.

“The success goes to our people,” Mr. Seadler notes. “We’ve learned that the biggest return of investment is on our human capital.” Several years ago, the dealership developed the Pacific Institute, a five-day training seminar for its employees. New employees, once they are at the dealership for six months attend the five-day seminar.

The Pacific Institute focuses on people skills and life skills. Technicians are trained to interact with the customer. The seminar is also used as a time of “vision building.” Says Mr. Seadler, “We set our goals and then figure out how we’re going to get there.”

Not only are the employees trained in the “Smythe culture”, the employees understand that the dealership is investing in them as people – not just workers, and that builds loyalty. Although not everyone was happy, notes General Manager Frank Sheets. “In the first six months after establishing the program, 99% of the employees we knew to be pessimistic left the store.” Adds Mr. Spezak, “Politcs, manipulation and arrogance are not tolerated here. The employees have to answer to each other.”

“One of the reasons the CSI score are so high is because we don’t say no to the customer,” says Mr. Spezak. “Our employees who deal with the customer have the ability to do almost anything. In most stores, the technician has get permission to tell a customer ‘yes’. Here, they have to get permission to tell a customer ‘no’.” In fact, each associate has business cards they can give to customers.

Smythe European seems to have handle on the technician shortage that is plaguing the industry. Five years ago, the store had 45 technicans. Now the dealership has over 100.

Mr. Seadler thinks it is because of Smythe’s great reputation and culture. “Many of our technicians come from other stores. They want to work for us. We look for quality journeymen and train them on product.” The store also takes part in several job fairs and has an ongoing relationship with local junior colleges.

Mr. Seadler emphasizes, “The shortage is all the more reason to invest in your people.” Only five technicians have left the store in the last five years. “Our turnover rate is less than 3%,” says Mr. Seadler.

Part of the Smythe philosophy includes having the employees be involved in the management process. According to Mr. Spezak, most of the ideas originate with the employees. “And before any idea is implemented, associates have to bless the idea. It’s what we call ‘Smythizing’ the idea – making sure the idea fits within our beliefs and our culture.”

Although the import dealership has been owned by AutoNation for several years now, the community still believes that Smythe is family-owned. “That’s because our employees act as if they own the store,” explains Mr. Spezak.

According to Mr. Gordon, the parts department manager,when AutoNation came in, “They showed a willingness to understand the importance of maintaining the store’s individuality. Mike Maroone visited the store and told us ‘We’re here to learn, not to change things’.”

Smythe European also has an impressive parts and accessories department – in the top 15 on Ward’s list. Says Mr. Gordon, the store sold more Mercedes retail accessories than any other store in the country. “Our employees did this without the snazzy boutique areas that other dealerships set up,” he adds.

The store is successful because it committed to a course of action and stayed with it. Mr. Gordon stresses, “These programs have to a long-term process. You have to be committed to the philosophy.” Even when times are hard, adds, Mr. Seadler. “If it’s right now, it’s right then.”