As the DEALER advocate magazine, DEALER
welcomes your letters, and after verification will run them signed or
unsigned. Letters may be edited for space and clarity.
Send To:
DEALER magazine
1116 W. 7th Street
PMB 239 Columbia, TN 38401 (931) 388-1800 ext. 203
Fax (931) 388-4881 e-mail: mroscoe@dealeronline.com
Don't assume that you must post a labor rate if you job price your work. Isn't flat rate really job pricing anyway? The key is that if you were to do the division you would find numerous labor rates. You must have a separation between dollars charged to customers and hours paid to techs. If a customer were to ask you what your hourly labor rate is you could honestly say, "We don't have one. What would you like to have done? I'll be glad to quote you a price for that job." If you approach it from this mindset and examine your state laws carefully you may find that you don't have to post your labor rate.
What you have now accomplished is no more complaining from the techs that warranty work doesn't pay as well as customer work since you use the same time standard for both. However, the techs must understand that they are receiving a much higher hourly rate by virtue of you charging more dollars and fewer hours. The end result is the customer pays the same the tech makes the same but now you can justify getting $90.00 per hour vs. $60.00 per hour from the factory. All it takes is a paradigm shift and for everyone to change. The dealer quoted in the article wanted the factory to make changes. Is he willing to use the above example and change his own environment?
Bob Mellinger
Service Director
Lancaster Toyota-Mazda
East Petersburg, PA
Dear Dave Anderson,
Let me introduce myself. My name is Rebecca Eckstrom. I am a service manager
for a dealership in Barrington, IL. I read your article, "Old World Management:
A Death Sentence in this Millennium," and would like to commend you on
this piece. Your words are so true in regards to the needed change from great
service managers to great leaders.
In our industry, in order to stay on top, we must be risk-takers or face the possibility of being run over by the ever-growing consolidators. Yet we need not only be aware of these businesses but also, as you said, the Bill Gates and that young Stanford student with the bright idea and a plan to make it happen. To better ourselves is to better our businesses. This may mean stepping out of the comfort zone and making changes to our employment roster.
Who knows what will change or not change as we step into the new millennium, but I agree with you 100% that if you or your team are not willing to take risks, be on the edge and adapt to change for the future, you can almost guarantee that your business will decline and eventually be bought out or go belly up.
I would encourage every dealer and manager to read this article and if it makes them feel uneasy they should read it twice and think about the future and the direction they want to take.
Sincerely,
Rebecca Eckstrom
Service Manager
Wickstrom Ford
Barrington, IL
Jim Ziegler,
I enjoy reading your articles in Dealer Magazine. Did you see the full page
ads Auto Nation ran announcing the closing of their used Super Stores? I quote,
"In 1996, we built used vehicle Megastores to bring you lower prices".
Does anyone in their right mind believe Huizenga and Co. built these stores
to lower prices to the consumer? Of course not! They spent billions to make
more money and it did not work. And their final comment, "If it benefits
you, it is worth changing", referring to the customer, of course. They
are closing the stores because they are losing their butt-not because it benefits
the customer. Keep up the good work.
Wyndall Walters
Fitzgerald Ford L/M
Fitzgerald, GA
Dear Mr. Roscoe:
I read your "Dealer Undercover" article on factory warranty payment
policies in your February 2000 issue. I have had battles against GM on this
matter and have solved this problem. I would be happy to share my "solution"
with any interested dealers.
Malcolm Duncan
Duncan Buick Company
Waco, TX
Fax 254-752-6038
I just watched a telecast from Chevrolet with our "favorites" telling us how great things were (they even had two dealers from their selected board-who elects these guys?) I refused to listen to the propaganda, but when they asked us to fax questions I sent them a zinger. It read (I tossed the original) something like: "How does Chevrolet allocate Suburbans and Tahoes? This model year I will receive two Suburbans and only one Tahoe. How do you justify that type of allocation? In 1997, we sold 350 units, in 1998 we sold 298 and last year 212. Has Chevrolet marked certain dealers for extinction? By the way, we sold three Suburbans in both November and December 1999 and, as of this date, still have only seen one, with the promise of one more. FYI, we had to push the Suburban off the transport, the tranny was defective."
They, of course, danced around the question just like when I asked last year where my allocation of extended cab pickups was. When I purchased this franchise, I thought I was buying a future for myself and my son, but Chevrolet has decided, I guess, that the million I invested, which I am losing at an alarming rate, is of no importance to them. So here I am, hanging in there, trying to figure out how to make a dollar on 15 new units per month.
Name withheld upon request.
Jim,
Another great column as a follow-up on December. I am the CFO of a $350 million
group in Chicago. Since my background is from a "Big 8" CPA firm,
I have a different viewpoint than most automobile dealers. I see the manufacturers
"meddling" in our business daily, from inventory supply to mandatory
purchasing of overpriced brochures and computer equipment, to taking over
our local ad agencies (and lowering our market share in conjunction with)
to the "biggest lie" of all, selling their overpriced service contracts!
Here is a thought. What if the manufacturers spent the same amount of energy and money on returning to a legitimate "Dealer Development" program based solely on one's ability and skills rather than sex or color?
Most of the best dealers in our market were "DD" back in the 1960's and were "asked" by the manufacturers to represent them. They learned how to be auto dealers and businessmen. You became a dealer because of skill and desire, not because of affirmative action or father's big bank account! There are a lot of highly-talented non-owner progressive automotive executives (like myself) who make our dealers millions of dollars every year but do not have a "snowball's chance in hell" of ever owning an agency because of the amount of capital required. Can you imagine the quality of a dealer base that is very young, talented and owes their fortunes to the manufacturer for financing their agencies? Maybe if GM spent time on earning the respect of their dealer base via programs such as above they would achieve a 35% market share without really trying!
I truly hope the Ford family takes control of their company. Only then do any of us have a hope of staying in a business we love. I do not want to work for a "dot-com" company, but then again, I am not getting any younger!
Keep up the fight!
Bruce G. Povalish
Chief Financial Officer
Bill Kay Auto Group
Downers Grove, IL
Jim Ziegler:
Your articles are great. The factories (domestic) want the dealer out. What
they don't understand is that what stands between them and oblivion is the
dealer body. The imports will own the U.S. when this drama is fully played
out. Chrysler is just as stupid as GM and Ford they will follow the same path.
Keep punching - your aim is very good.
Mike Branker
Branker Buick Nissan Hyundai
Lincoln, NE
Jim Ziegler,
I enjoy reading your articles in DEALER magazine. Did you see the full-page
ads AutoNation ran announcing the closing of their used car Super Stores?
I quote, "In 1996, we built used vehicle Megastores to bring you lower
prices."
Does anyone in their right mind believe Huizenga and Co. built these stores to lower prices to the consumer?? Of course not!! They spent billions to make more money and it did not work. And their final comment, "If it benefits you, it is worth changing," referring to the customer, of course. They are closing the stores because they are losing their butt - not because it benefits the customer. Keep up the good work.
Georgia Ford dealer
Name withheld upon request
Dear Mr. Ziegler,
I read your February column with my usual anticipation and delight. You stated
in your column that, "Toyota and Daimler-Chrysler will continue to gain
market share and Ford, General Motors and Honda to continue to decline over
the next few years." The article then went on to explain misguided approaches
to the Internet, failed Auto Collections, corporate direction battles at Ford
and possible leadership changes at General Motors.
But not another word about Honda.
As a Honda and Acura dealer who greatly values your thoughts, could you please expand your thoughts to me via e-mail? I will be attending the Acura new model show in San Diego next week and would like to use the opportunity to discuss these issues with Acura.
By the way, as of yesterday (February 7th), AutoNation is down to 6 5/8 from 8 on January 8, 2000. Wait till we have a few slow months. I seem to remember a physics equation about measuring the acceleration of a falling body.
Name Withheld Upon Request
Dear Mr. Roscoe,
Your Undercover Dealer interview in the February issue shows how dealers continue
to hurt themselves by getting caught up in the flat rate time standards issue.
The time standard by itself is irrelevant since it's only half of the equation.
The problem dealers have is that most service managers have a technical background
and come from a flat rate environment. Their mentality is to abandon the factory
flat rate manual for customer pay work and use a book such as Chilton or Mitchell
to get more hours for their techs. All this does is drive down their hourly
labor rate. They feel that if they are in a $60.00 per hour market that they
can only increase their hours billed by using an independent time manual to
make a profit.
Some dealers may be afraid that posting such a high labor rate may scare customers even though the customer is not actually paying any more for the completed job. This brings up the issue of the laws in your particular state. Try to go to job pricing and have set dollar amounts for the work you do.
These job prices should be competitively priced in the areas where you need to compete in and reflect higher prices charged in non-competitive areas. Check your state laws carefully. If the majority of your work is job priced do you need to post your labor rate or even show flat rate hours on the repair order? Can you separate the dollars charged from the flat rate hours paid to the techs in such a way that if anyone were to divide the dollars charged by the flat rate hours paid they would come up with 30 or 40 different labor rates? Check your laws carefully.
