Competing with Longer warranties & Free Maintenance

[Joe Marconi]

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…

[xrac]

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…

 

These warranties and free maintenance are a problem. Recently I had a loyal customer tell me I hadn't seen them in a long while because of the freebie deals they had got with their new car. I think in the long run this will not be profitable for the dealers and that eventually the consumers will find these are not good deals for them as well but it will cost a lot of business is the short run. How does a guy compete with free????????

[CARMandP]

My question is how do they make any money with free? What is the catch to get the "free" service. Nothing is free....

[Joe Marconi]

My question is how do they make any money with free? What is the catch to get the "free" service. Nothing is free....

 

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????

[Biff Tannon]

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 December 6, 2011 by Biff Tannon

[FROGFINDER]

At some point Homeland Security will demand that all vehicles get serviced in a controlled environment (like dealerships) that can control the fleet.

[Joe Marconi]

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?".

 

I understand your frustration fully; we go thru the same thing each day. We need to know what the dealers are doing; this is the only way to compete. I have built service packages for my customer that are of real value. These packages are seasonal (4 times a year) and include an oil change. We sell a ton of these packages.

 

I guess when you call it an oil change, you reduce the service to a commodity and that's when people begin to compare; like comparing gas prices or a gallon of milk or a loaf of bread. When you create a value package that is different and throw in an oil change, people realize that it has more value. The seasonal package sells for $69.95 and includes a multipoint inspection, BG oil and fuel additive, a tire rotation, battery test and an oil change.

[Silver Star]

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!

[xrac]

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!

 

Good post! Glad to have you on board! Welcome!

[FROGFINDER]

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.

[Bossman]

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.