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Competing with Longer warranties & Free Maintenance


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  • 1 year later...

One of the issues I have ran into is the cheap maintenance packages offered by some of the highlife dealerships.

 

their once comprehensive service packages used to be very expensive but now they have dropped their price substantially and only do a bare minimum service for the low advertised price and all other items that used to be standard are additional cost.

 

This is a ploy to get the customer in the shop then hit them with all the additional items.

 

I am having a hard time with this because my customers still expect the full package yet complain that the dealer wants so much less for this service.

 

I then have to explain the whole racket to them and tell the that I am still $100 less than the dealer if they were to replace all the items I still replace standard.

 

For some reason it is working for them better than it is for me so I guess I will have to offer the same thing and just up sell, up sell, up sell, but one big problem will come from this I know and that is the fact that most customers will opt for the basic cheap package because of price and their engine performance will suffer.

 

It is really getting harder to compete with "cheap" now days and I am getting so sick of customers skipping their major services and calling me to ask " How much for an oil change?".

Edited by Biff Tannon
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  • 5 months later...

I was talking to a previous tech I had. He started out as an apprentice in highschool working at my shop, then moved onto Carmax to make more money when he wanted ot jump into flat rate labor with little experiance. He has been working for carmax and got his Toyota master tech status. Great kid, wish he would have stayed at my shop but I know he was better off getting into a major car brand and leaving an independant service shop for european vehicles. Anyway, I stay intouch with him and we were talking about service and I asked him about the free maintenance plans... You will all love what he told me.....

 

The techs are paid close to half of what the service should pay the tech, so the dealers are screwing the techs, thus it's going to the c and d techs.

The techs doing the maintenance are basically just changing the oil and filter, sometimes not even the filter and throwing any other parts away or hiding them.

 

What he described to me is that the cars are better off going to a quick lube cause they get more attention there. Its sad but the way it works is they make it as cheap as possible and the customer is getting what the dealership is willing to pay for. This si fine if you have someone that trades the vehicle in every couple of years, but any long term ownership will suffer from poor maintenance.

 

I have started to look at how I can compete pricing wise where I am more than the dealerships oil change but just sell the fact that we actually inspect the vehicle and I have the same tech that would replace a major component doing the service because they knwo the early warning signs. My customer base is of the mind set that they get what they pay for so most don't hesitate.

 

 

Bottom line is we need to take the time to educate the customer of what they are getting with these free programs, cause it will cost them dearly later on. Sadly we have to work twice as hard to get the same business because of short sighted sales tactics from the dealership.

 

Horray my first post, hopefully I have contributed!

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Free Maintenance is actually built into the price of car, plus the dealer and the car makers know that if you bring in more customers you accomplish a number of things: the chance to up sell, the chance to create a long time customer, the increased channce to sell another car in the future.

 

The marketing works and I don't like it. Xrax is right, how do you compete with free????

 

Free draws the people to contact dealer (along with ONstar, iphone apps). The dealers get paid by the customer and by the factory to do recalls and campaigns. When the warranty is over they can up sell to a new car and the process starts all over. B)

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  • 4 months later...

More and more new car dealers are jumping on the band wagon and offering free maintenance or a low cost maintenance plan with new car sales and used car sales. When you factor in the longer warranties, an added maintenance plan may keep your customers going back to the dealer for a longer period of time.

 

I do not like leaving things to chance. The new breed of dealers left behind after the economic dust settles will be an aggressive bunch, having the support of the car maker behind them.

 

Should we worry? Should we find a way to compete? Should we wait and see what happens? Like to hear from you…

 

A couple things to say about it. If you think about it, Toyota care is free maintenance for 2 years or 24,000 miles. Whooped de do! Think about that, it might cost them 100.00 in parts over that time for oil changes, rotations and cabin filters. And you know "there are certain things that will need to be done" that are not in the owners manual. I have a few customers whom would rather pay me than to got back to the dealer for anything. I have some tell me to fix something even though they know it's under warranty because they don't want to deal with them. For Toyota, I think it's a way to earn back loyalty for the whole Camry recall issue. More power to them then.

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  • Have you checked out Joe's Latest Blog?

         3 comments
      Got your attention? Good. The truth is, there is no such thing as the perfect technician pay plan. There are countless ways to create any pay plan. I’ve heard all the claims and opinions, and to be honest, it’s getting a little frustrating. Claims that an hourly paid pay plan cannot motivate. That flat rate is the only way to truly get the most production from your technicians. And then there’s the hybrid performance-based pay plan that many claim is the best.
      At a recent industry event, a shop owner from the Midwest boasted about his flat-rate techs and insisted that this pay plan should be adopted by all shops across the country. When I informed him that in states like New York, you cannot pay flat-rate, he was shocked. “Then how do you motivate your techs” he asked me.
      I remember the day in 1986 when I hired the best technician who ever worked for me in my 41 years as an automotive shop owner. We’ll call him Hal. When Hal reviewed my pay plan for him, and the incentive bonus document, he stared at it for a minute, looked up, and said, “Joe, this looks good, but here’s what I want.” He then wrote on top of the document the weekly salary he wanted. It was a BIG number. He went on to say, “Joe, I need to take home a certain amount of money. I have a home, a wife, two kids, and my Harly Davidson. I will work hard and produce for you. I don’t need an incentive bonus to do my work.” And he did, for the next 30 years, until the day he retired.
      Everyone is entitled to their opinion. So, here’s mine. Money is a motivator, but not the only motivator, and not the best motivator either. We have all heard this scenario, “She quit ABC Auto Center, to get a job at XYZ Auto Repair, and she’s making less money now at XYZ!” We all know that people don’t leave companies, they leave the people they work for or work with.
      With all this said, I do believe that an incentive-based pay plan can work. However, I also believe that a technician must be paid a very good base wage that is commensurate with their ability, experience, and certifications. I also believe that in addition to money, there needs to be a great benefits package. But the icing on the cake in any pay plan is the culture, mission, and vision of the company, which takes strong leadership. And let’s not forget that motivation also comes from praise, recognition, respect, and when technicians know that their work matters.
      Rather than looking for that elusive perfect pay plan, sit down with your technician. Find out what motivates them. What their goals are. Why do they get out of bed in the morning? When you tie their goals with your goals, you will have one powerful pay plan.
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