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Service Dept. More Important
Conventional wisdom is that when vehicle sales decline, dealers turn to other areas business to keep that revenue coming in. That's why the service department has become more important for dealers, as they look for ways to drive revenue. The average dealership gets 30%-40% of its profit from its service department revenue. That department is becoming more important to customers, too. Google says that,
Cliff Banks
August 1, 2008
7 Min Read
Conventional wisdom is that when vehicle sales decline, dealers turn to other areas business to keep that revenue coming in. That's why the service department has become more important for dealers, as they look for ways to drive revenue.
The average dealership gets 30%-40% of its profit from its service department revenue.
That department is becoming more important to customers, too. Google says that, while the total number of searches for new vehicles in the U.S. has declined by 16 % between March 2007 and March 2008, there has been a 35% growth in people visiting parts and service sites in the same period.
High-volume stores appear to be capturing some of those customers, according to this year's Ward's Service 150, a ranking based on data from this year's Ward's Dealer 500.
Dealerships on the Ward's Service 150 generated 5.8% of their revenue from service departments in 2007, up from 5.3% in 2006. Those dealerships averaged $159 million in total revenue with $9.2 million from the service department. They also sold an average of 2,961 new vehicles in 2007.
Meanwhile, the percentage of revenue created by the service department declined from 4.6% to 4.3% for the rest of the Ward's Dealer 500 (350 stores) over the same period.
On the marketing side, dealerships are becoming more sophisticated in their use of e-mail advertising, says Chuck Tildon, product-marketing manager for the Cobalt Group's Onstation.
“We're seeing dealers target more to specific niches of customers,” he says. “They're limiting the number of attempts to each customer, but are running as many as six or seven campaigns to smaller niches.”
The quality of the creative content is improving, Tildon says. Dealers are learning they can tie all of their marketing programs together and see what their customers did and what transactions they made.
Another trend is automated phone calls to customers alerting them to service specials.
While most dealerships market only to customers who have purchased new vehicles, some dealers are seeing success by marketing their service departments to people who have bought used cars.
It's a way to increase customer pay business to offset declining warranty work most brands are seeing today because of improved vehicle quality.
Several experts advise dealers to advertise oil-change services using prices that compete with independent and chain shops. That also presents upsell opportunities if a vehicle is found to need additional work or maintenance.
But dealers have learned that driving too much quick oil-change business can backfire. One problem is that those customers rarely will spend more on additional services.
And many dealerships aren't equipped to be as fast as 15-minute shops. As a result, customer satisfaction scores drop.
Dealers also need to be careful of marketing free inspections in an effort to generate warranty work. If the affected auto maker finds out, it could lead to a factory audit of warranty work.
Dealers wanting to drive more business to the service department need to make sure they have the proper staffing levels. And having enough competent service technicians continues to be a problem that plagues a lot of stores.
Think creatively. Most dealers use community colleges as a pipeline for talent, but you're competing with other dealerships in that channel.
Many dealers avoid traditional help-wanted ads, saying the return on investment is not there. If you must advertise for help, creative spots on the radio might be a better idea. The trick is using methods your competition hasn't thought of yet.
Some dealers are using the Web site CraigsList.com to find technicians. Posting jobs is free, although, it can be time consuming, though.
The people on Craigslist generally are younger and are more trainable and willing to learn, according to dealers using it. Be prepared to conduct a lot of interviews.
Another trick for dealers is to take your vehicle to get work done at the local tire shops and quick oil-change shops. Give your business card to the employees that are working hard and conscientiously.
Other dealers pay their staff a “bird-dog” fee for referring potential employees to the dealership. Pay a bonus once the person is hired and a second bonus if the person lasts a year.
Also, have your service manager talk with representatives visiting the store to sell tools for technicians. You might want to pay them a bird-dog fee if they recommend employees working elsewhere who ultimately come to work for you.
Cobalt
As a leading provider of Owner Marketing services, Cobalt is proud to sponsor the Ward's Service 150.
Rank | Dealership | Owner/Principals | City | ST | Service Revenue | Total Revenue |
|---|---|---|---|---|---|---|
1 | Fletcher Jones Motorcars | Fletcher Jones Jr. | Newport Beach | CA | $35,146,410 | $571,082,030 |
2 | Braman Motorcars | Norman Braman | West Palm Beach | FL | $22,537,825 | $430,388,387 |
3 | Galpin Ford | Herbert F. Boeckmann II | North Hills | CA | $18,625,838 | $331,329,932 |
4 | Lexus of Tampa Bay | AutoNation Inc. | Tampa | FL | $17,388,968 | $159,443,351 |
5 | Crevier BMW | Donald Crevier | Santa Ana | CA | $16,535,371 | $287,227,084 |
6 | J M Lexus | JM Family Enterprises Inc. | Margate | FL | $16,496,853 | $422,227,848 |
7 | Fletcher Jones Imports | Fletcher Jones Jr. | Las Vegas | NV | $16,097,049 | $201,455,476 |
8 | Dobbs Honda on Covington Pike | AutoNation Inc. | Memphis | TN | $14,876,452 | $94,058,966 |
9 | Braman Motors | Norman Braman | Miami | FL | $14,189,210 | $336,315,879 |
10 | Desert Volkswagen | AutoNation Inc. | Las Vegas | NV | $13,601,218 | $110,498,692 |
11 | Mercedes Benz of San Diego | Penske Automotive Group (Formerly United Auto Group) | San Diego | CA | $13,598,239 | $175,572,464 |
12 | Bankston Ford of Frisco | AutoNation Inc. | Frisco | TX | $13,589,877 | $124,032,958 |
13 | Stevens Creek BMW | Sonic Automotive | Santa Clara | CA | $13,523,110 | $202,768,124 |
14 | WI Simonson Mercedes | Sonic Automotive | Santa Monica | CA | $13,128,337 | $218,129,772 |
15 | Global Imports | Sonic Automotive | Atlanta | GA | $13,126,572 | $221,273,172 |
16 | Autobahn Motors | Sonic Automotive | Belmont | CA | $12,950,652 | $185,106,004 |
17 | South Bay BMW/Mini | Frederick E. Hitchcock | Torrance | CA | $12,662,046 | $240,915,461 |
18 | BMW of San Diego | Penske Automotive Group (Formerly United Auto Group) | San Diego | CA | $12,569,191 | $175,114,441 |
19 | Mercedes-Benz of Walnut Creek | Sonic Automotive | Walnut Creek | CA | $12,434,901 | $130,340,551 |
20 | Chapman Scottsdale Autoplex, LLC | J. Baxter Chapman | Scottsdale | AZ | $12,417,475 | $205,016,536 |
21 | Ray Catena Mercedes Benz | Raymond Catena | Edison | NJ | $11,597,360 | $285,750,160 |
22 | Momentum BMW/Mini | Sonic Automotive | Houston | TX | $11,233,112 | $207,390,741 |
23 | Hendrick Lexus | Hendrick Automotive Group | Charlotte | NC | $11,192,105 | $183,355,615 |
24 | Roseville Toyota | John L. Sullivan | Roseville | CA | $11,179,987 | $204,021,108 |
25 | Dobbs Nissan | AutoNation Inc. | Memphis | TN | $11,160,565 | $87,160,621 |
26 | Midway Chevrolet | John Cleaves | Phoenix | AZ | $11,024,225 | $221,407,047 |
27 | AutoWest Chrysler Jeep Dodge Roseville | AutoNation Inc. | Roseville | CA | $10,986,258 | $121,923,808 |
28 | Desert Honda | AutoNation Inc. | Las Vegas | NV | $10,878,366 | $100,274,824 |
29 | Don Sanderson Ford Inc. | David Kimmerle | Glendale | AZ | $10,734,709 | $271,971,733 |
30 | Desert BMW of Las Vegas | AutoNation Inc. | Las Vegas | NV | $10,689,700 | $97,132,675 |
31 | Downtown LA Motors Mercedes-Benz | Jeanette Shammas | Los Angeles | CA | $10,669,157 | $207,049,094 |
32 | Mercedes-Benz of Tyson's Corner | Penske Automotive Group (Formerly United Auto Group) | Vienna | VA | $10,647,793 | $122,167,420 |
33 | Gaudin Motor Co | Gary/Dan Ackerman | Las Vegas | NV | $10,593,834 | $207,571,279 |
34 | Beverly Hills BMW | Sonic Automotive | Beverly Hills | CA | $10,466,669 | $170,222,732 |
35 | Earnhardt Ford Sales Company | Hal J. Earnhardt III | Tempe | AZ | $10,342,591 | $170,072,631 |
36 | BMW of Fairfax | Sonic Automotive | Fairfax | VA | $10,268,472 | $159,833,761 |
37 | Fred Haas Toyota World | Fred Haas | Spring | TX | $10,248,595 | $286,789,507 |
38 | Hendrick BMW MINI | Hendrick Automotive Group | Charlotte | NC | $9,959,201 | $166,141,367 |
39 | Dave Smith Motors | Ken Smith | Kellogg | ID | $9,912,569 | $486,359,607 |
40 | Capitol Toyota | AutoFocus, Inc. | San Jose | CA | $9,828,562 | $169,295,163 |
41 | Crest Auto Group | Van Tuyl Group | Plano | TX | $9,791,855 | $164,565,871 |
42 | Galpin Jaguar Lincoln Mercury, Inc. | Herbert F. Boeckmann II | Van Nuys | CA | $9,755,564 | $193,994,376 |
43 | Lexus Kearny Mesa | Penske Automotive Group (Formerly United Auto Group) | San Diego | CA | $9,733,752 | $131,053,256 |
44 | BMW North Scottsdale | Penske Automotive Group (Formerly United Auto Group) | Phoenix | AZ | $9,726,870 | $162,612,386 |
45 | Bill Heard Chevrolet, LTD | William T. Heard | Sugarland | TX | $9,698,000 | $219,131,000 |
46 | Carr Chevrolet, Inc. | Wallace Preble/Gene Bradshaw | Beaverton | OR | $9,644,072 | $181,277,032 |
47 | East Bay BMW MINI | Hendrick Automotive Group | Pleasanton | CA | $9,597,238 | $115,242,012 |
48 | Mark Christopher Auto Center | Mark/Christopher Leggio | Ontario | CA | $9,548,569 | $205,906,077 |
49 | AutoWay Honda | AutoNation Inc. | Clearwater | FL | $9,470,967 | $85,717,152 |
50 | Lute Riley Honda | Sonic Automotive | Richardson | TX | $9,435,859 | $173,228,826 |
51 | AutoWest Mazda Subaru Roseville | AutoNation Inc. | Roseville | CA | $9,361,149 | $75,535,723 |
52 | Gwinnett Place Honda | Hendrick Automotive Group | Duluth | GA | $9,276,208 | $183,257,527 |
53 | Camelback Toyota | John O'Malley | Phoenix | AZ | $9,255,379 | $195,188,754 |
54 | AutoWay Chevrolet - Tampa | AutoNation Inc. | Tampa | FL | $9,153,812 | $73,312,229 |
55 | Autowest Honda Fremont | AutoNation Inc. | Fremont | CA | $9,148,573 | $113,212,090 |
56 | Pinnacle Nissan/Infiniti | John Cleaves | Scottsdale | AZ | $9,119,737 | $152,101,456 |
57 | Tustin Lexus | David Wilson | Tustin | CA | $9,112,113 | $173,042,919 |
58 | Mike Shad Nissan of Orange Park | AutoNation Inc. | Orange Park | FL | $9,010,584 | $84,351,161 |
59 | Ed Mullinax Ford | AutoNation Inc. | Amherst | OH | $8,975,509 | $100,302,550 |
60 | Mercedes-Benz of Chicago | Fletcher Jones Jr. | Chicago | IL | $8,971,900 | $102,491,672 |
61 | Prestige Automotive Group | Gregory Jackson | St Clair Shores | MI | $8,925,778 | $186,953,353 |
62 | Drew Ford | William Drew | La Mesa | CA | $8,810,106 | $120,941,176 |
63 | Lexus of Rockville | Sonic Automotive | Rockville | MD | $8,668,171 | $122,850,182 |
64 | BMW of Austin | Penske Automotive Group (Formerly United Auto Group) | Austin | TX | $8,634,602 | $129,143,650 |
65 | Braman Honda | Norman Braman | Miami | FL | $8,620,812 | $206,772,487 |
66 | Power Nissan Torrance | AutoNation Inc. | Torrance | CA | $8,602,382 | $73,700,050 |
67 | Appleway Chevrolet | AutoNation Inc. | Spokane | WA | $8,571,917 | $142,392,247 |
68 | Herb Chambers Honda Saab Infiniti | Herbert G. Chambers | Boston | MA | $8,535,167 | $141,081,616 |
69 | Showcase Honda | Tom Buis | Phoenix | AZ | $8,477,400 | $147,643,269 |
70 | AutoWay Chevrolet - Clearwater | AutoNation Inc. | Clearwater | FL | $8,441,997 | $97,534,962 |
71 | Rick Case Honda | Rick Case | Davie | FL | $8,388,355 | $206,573,027 |
72 | Kearny Mesa Toyota Scion | Penske Automotive Group (Formerly United Auto Group) | San Diego | CA | $8,348,954 | $98,759,118 |
73 | Power Honda Costa Mesa | AutoNation Inc. | Costa Mesa | CA | $8,341,467 | $66,331,564 |
74 | Maroone Ford of Ft. Lauderdale | AutoNation Inc. | Fort Lauderdale | FL | $8,334,434 | $80,710,267 |
75 | Magnussen's Lexus of Freemont | Bernard L. Magnussen | Fremont | CA | $8,326,478 | $138,105,581 |
76 | AutoWay Nissan Brandon | AutoNation Inc. | Tampa | FL | $8,326,312 | $123,128,968 |
77 | Stevens Creek Honda | Sonic Automotive | San Jose | CA | $8,321,678 | $151,620,122 |
78 | Sam Galloway Ford Lincoln Mercury | Sam M. Galloway | Fort Myers | FL | $8,258,998 | $165,059,380 |
79 | Herb Chambers BMW Mini | Herbert G. Chambers | Boston | MA | $8,247,163 | $161,799,106 |
80 | Courtesy Honda | AutoNation Inc. | Sanford | FL | $8,246,582 | $109,397,545 |
81 | Bankston Honda | AutoNation Inc. | Lewisville | TX | $8,084,810 | $181,003,228 |
82 | Chambers Motorcars of Boston | Herbert G. Chambers | Somerville | MA | $8,036,047 | $101,296,019 |
83 | Courtesy Chevrolet Phoenix | William Gruwell | Phoenix | AZ | $8,014,291 | $180,325,029 |
84 | Michael Cadillac, Inc. | Michael L. Rosvold | Fresno | CA | $7,992,134 | $202,055,918 |
85 | Al Serra Auto Plaza | Joseph O. Serra | Grand Blanc | MI | $7,965,085 | $221,353,722 |
86 | Lauderdale Imports Ltd./BMW | Joseph S. Holman | Ft. Lauderdale | FL | $7,897,227 | $140,436,042 |
87 | AutoWest Acura of Stevens Creek | AutoNation Inc. | Santa Clara | FL | $7,891,136 | $83,005,975 |
88 | Big Two Toyota Scion of Chandler | Chris Hoeye | Chandler | AZ | $7,803,289 | $153,279,684 |
89 | Right Toyota | David Wilson | Scottsdale | AZ | $7,797,937 | $203,853,652 |
90 | Mercedes-Benz of Pompano | AutoNation Inc. | Pompano Beach | FL | $7,766,080 | $147,425,484 |
91 | David Maus Toyota | David Maus | Longwood | FL | $7,763,452 | $190,101,934 |
92 | Hudson Toyota Scion | Penske Automotive Group (Formerly United Auto Group) | Jersey City | NJ | $7,758,067 | $195,763,748 |
93 | AutoWay Ford - St. Petersburg | AutoNation Inc. | St. Petersburg | FL | $7,747,214 | $78,541,798 |
94 | Performance Automall | Hendrick Automotive Group | Chapel Hill | NC | $7,674,381 | $108,187,881 |
95 | Greenway Ford | Carl Atkinson/Frank Rodriguez | Orlando | FL | $7,649,908 | $128,103,525 |
96 | Herb Chambers Lexus | Herbert G. Chambers | Sharon | MA | $7,626,621 | $185,928,147 |
97 | Toyota of Orange | David Wilson | Orange | CA | $7,601,709 | $207,152,636 |
98 | Bill Heard Chevrolet Corp.-Las Vegas | William T. Heard | Las Vegas | NV | $7,576,000 | $123,554,000 |
99 | South Bay Toyota | David Wilson | Gardena | CA | $7,524,055 | $153,900,129 |
100 | Wilde Lexus of Sarasota | Mark Wilde | Sarasota | FL | $7,459,308 | $145,981,183 |
101 | AutoWay Nissan | AutoNation Inc. | Clearwater | FL | $7,454,044 | $66,003,598 |
102 | BMW of Pembroke Pines | Joseph S. Holman | Pembroke Pines | FL | $7,417,295 | $159,557,258 |
103 | North Hollywood Toyota | Don Hankey/Chris Ashworth | North Hollywood | CA | $7,349,756 | $184,329,954 |
104 | Hendrick Honda NC | Hendrick Automotive Group | Charlotte | NC | $7,243,776 | $157,177,311 |
105 | Rosenthal Fairfax Honda | Robert Rosenthal | Fairfax | VA | $7,220,615 | $125,637,925 |
106 | Lexus of Pleasanton | Hendrick Automotive Group | Pleasanton | CA | $7,183,775 | $94,554,504 |
107 | Capitol Honda | Penske Automotive Group (Formerly United Auto Group) | San Jose | CA | $7,176,855 | $121,908,271 |
108 | Folsom Lake Ford | Chuck Peterson | Folsom | CA | $7,137,973 | $71,368,825 |
109 | Fletcher Jones Motorcars of Fremont | Fletcher Jones Jr. | Fremont | CA | $7,120,466 | $89,233,740 |
110 | Ancira Winton Chevrolet Inc. | Ernesto Ancira, Jr. | San Antonio | TX | $7,064,612 | $123,038,311 |
111 | Lexus of Serramonte | Sonic Automotive | Colma | CA | $7,023,181 | $128,268,597 |
112 | Right Honda | David Wilson | Scottsdale | AZ | $7,002,262 | $119,791,115 |
113 | Rosenthal Fairfax Honda | Robert Rosenthal | Alexandria | VA | $7,001,431 | $116,543,605 |
114 | Classic Chevrolet, Ltd | Tom Durant | Grapevine | TX | $6,907,811 | $281,404,736 |
115 | Momentum Jag/Volvo | Sonic Automotive | Houston | TX | $6,906,283 | $90,644,086 |
116 | Autowest Honda Roseville | AutoNation Inc. | Roseville | CA | $6,905,932 | $143,246,369 |
117 | John L. Sullivan Chevrolet | John L. Sullivan | Roseville | CA | $6,890,435 | $131,120,367 |
118 | Atlantic Toyota | John Staluppi Sr. | Amityville | NY | $6,889,489 | $148,105,211 |
119 | Motorwerks BMW Mini | Penske Automotive Group (Formerly United Auto Group) | Bloomington | MN | $6,887,211 | $126,123,265 |
120 | Westbury Toyota Scion | Penske Automotive Group (Formerly United Auto Group) | Westbury | NJ | $6,849,299 | $136,186,439 |
121 | Wilde Toyota Scion | Mark Wilde | West Allis | WI | $6,808,017 | $157,133,247 |
122 | Champion Chevrolet Gulf Freeway | AutoNation Inc. | Houston | TX | $6,790,947 | $105,675,055 |
123 | Champion Ford Gulf Freeway | AutoNation Inc. | Houston | TX | $6,756,703 | $94,833,784 |
124 | Burt Toyota | Lloyd G. Chavez | Englewood | CO | $6,712,318 | $139,669,036 |
125 | Warnock Dodge, Chrysler, Jeep | Robert Warnock | East Hanover | NJ | $6,699,954 | $115,340,756 |
126 | Bell Honda | John Cleaves | Phoenix | AZ | $6,685,227 | $114,898,722 |
127 | Schaumburg Honda Automobiles | Robert V. Rohrman | Schaumburg | IL | $6,664,801 | $141,312,554 |
128 | Flagship Motorcars | Herbert G. Chambers | Lynnfield | MA | $6,649,340 | $86,084,491 |
129 | Warnock Lexus | Bethanie Warnock | Livingston | NJ | $6,614,762 | $108,324,617 |
130 | Jim Click Ford/Lincoln/Mercury | James H. Click | Tucson | AZ | $6,570,560 | $105,228,011 |
131 | Toyota of Richardson | Steve Grogean | Richardson | TX | $6,563,557 | $136,783,109 |
132 | Lexus Bridgewater | Penske Automotive Group (Formerly United Auto Group) | Bound Brook | NJ | $6,542,197 | $115,396,863 |
133 | Van Chevrolet | Chuck Mullins | Scottsdale | AZ | $6,539,578 | $163,001,901 |
134 | Mile High Honda Acura Mitsubishi | Norman Braman | Denver | CO | $6,539,180 | $99,006,858 |
135 | Vandergriff Honda | Charlie Evans | Arlington | TX | $6,524,610 | $128,253,797 |
136 | Lexus of Cerritos | AutoNation Inc. | Cerritos | CA | $6,521,416 | $162,784,055 |
137 | AutoWay Lincoln-Mercury | AutoNation Inc. | Clearwater | FL | $6,519,090 | $90,892,647 |
138 | Tempe Honda | Penske Automotive Group (Formerly United Auto Group) | Tempe | AZ | $6,501,898 | $123,031,221 |
139 | Atlanta Toyota/Scion | Penske Automotive Group (Formerly United Auto Group) | Duluth | GA | $6,497,593 | $152,777,658 |
140 | Honda of Tyson's Corner | Sonic Automotive | Vienna | VA | $6,488,578 | $98,103,996 |
141 | Lone Star Chevrolet | Sonic Automotive | Houston | TX | $6,479,037 | $178,598,044 |
142 | Ray Catena Lexus of Monmouth | Raymond Catena | Oakhurst | NJ | $6,471,786 | $193,475,746 |
143 | Gillman Honda (South) | Ramsay Gillman | Houston | TX | $6,469,932 | $137,113,408 |
144 | Champion Chrysler Jeep Isuzu Hyundai Gulf Freeway | AutoNation Inc. | Houston | TX | $6,462,808 | $85,108,690 |
145 | Landmark Chevrolet, Ltd | William T. Heard | Houston | TX | $6,462,000 | $224,877,000 |
146 | Maroone Chevrolet of Greenacres | AutoNation Inc. | Greenacres | FL | $6,456,285 | $111,961,825 |
147 | Bill Heard Chevrolet at Town Center, LLC | William T. Heard | Kennesaw | GA | $6,433,000 | $131,886,000 |
148 | Lustine Toyota Scion Dodge Jeep | Burton Lustine | Woodbridge | VA | $6,426,000 | $157,835,000 |
149 | Hendrick Honda of Woodbridge | Hendrick Automotive Group | Woodbridge | VA | $6,419,754 | $95,868,735 |
150 | Stadium Toyota | Jack W. Parks | Tampa | FL | $6,408,063 | $86,238,720 |
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