Five ways technology can help your dealership service department maintain margins
Written by Ian Johan-Gomez
At the NIADA Convention and Expo, George Verkamp (shown above), Vice President of Sales & Business Development at ALLDATA, and Doug Turner, Director of Service Operations at Byrider, revealed a statistic: the #1 reported problem facing independent dealers today is the increased cost of doing business. Why? Running a service department is increasingly complex and it’s more and more difficult to maintain margins.
Yet, hope is not lost. According to Verkamp and Turner, technology can offset five key factors that threaten your profits.
1. Technician skill level
According to the Auto Care Association’s Auto Care Factbook 2019, there is currently a shortage of 50,000 automotive technicians in the industry. This makes it difficult to find and keep good technicians. Technology can help with this in a few ways. One way is to increase your technicians’ skill levels through online training. Instead of struggling to hire someone new with the skill level you desire, you can invest that time, money, and energy into someone you already have.
If improving workflow efficiency is your goal, technology can also help by providing tools that streamline your techs’ work. This can come in the form of a tablet supplied with OEM data, or user-friendly software with all the information they need right at their fingertips.
A third way technology can help is when you consult with hotlines like ALLDATA Tech-Assist®. It’s staffed by ASE-Certified Master Techs who are on-call to help with expert diagnosis or step-by-step repair. ALLDATA Tech-Assist even incorporates technology in a different way, through livestream video to the technician on the hotline.
2. Service comebacks/sublets
It’s never a good thing for a vehicle to come back to the service department. But by accessing OEM accurate specifications and procedures and following through the entire process, you can nail the diagnosis and fix it right the first time – reducing these service department comebacks.
Time-consuming sublets are another profit killer, but technology can assist with these as well, as shown in this recent case study:
Case Study: 2012 Acura TSX, Inoperative Window
A tech was working on a 2012 Acura TSX with an inoperative power window. The tech followed the OEM testing procedure to properly test the window motor circuit and found that the window motor needs to be replaced to fix the problem. He installed the new motor – but it still didn’t work! This is where a dealer sublet would have occurred. Instead, he found that the vehicle needed a reset procedure for the window module to recognize the new motor. So, he looked up the OEM reset information and successfully performed the reset procedure without having to sublet the vehicle.
3. Vehicle evaluation at the time of acquisition
Whether you have a new vehicle at your service department or you’re buying one at an auction, diagnostic scan tools will help you evaluate the condition of the vehicle. Using scan tools, like ALLDATA Diagnostics, to help you pull codes and provide instant access to relevant OE data at the vehicle will help you increase the accuracy and speed of your diagnosis. Take this case study for example:
Case Study: Auction Evaluation, 2012 Toyota Camry Hybrid with MIL Light
A purchasing agent found a 2012 Toyota Camry Hybrid to buy at an auction. The purchasing agent had subscriptions to CARFAX, Black Book, and ALLDATA Mobile on his tablet. The Toyota Camry Hybrid had a MIL light on. When the purchasing agent connected his tablet to the car via a wireless Bluetooth device, he pulled up two diagnostic trouble codes related to the hybrid battery. He then proceeded to check the Technical Service Bulletins (TSBs) and found one that addressed those codes: the hybrid vehicle battery cooling fan was clogged with debris and needed to be cleaned, and the battery needed to be replaced. Using OEM data, he was able to quickly pull the OEM parts and labor cost – a new battery would be $3550 not including the 2.5 hours of labor needed. While this normally would be a deal breaker, the purchasing agent noticed that the TSB also mentioned that the Battery is under warranty for 96 months or 100,000 miles. The Camry was only 4 years old and had 63,000 miles on it, and therefore was covered under the warranty. He won the bid at a fraction of what the car would have sold for because the MIL scared off a significant portion of the other buyers.
4. Supplier relationships
Ordering and managing parts online can help you simplify your supplier relationships and increase responsiveness. You can conduct price and quality comparisons, as well as manage part warranties.
“ Technology’s role in these relationships is exemplified in AutoZone’s approach to warranty claims. If a service department experiences a comeback due to a part defect, they know that they can rely on AutoZone to reimburse up to 100% of the cost of labor.”
– George Verkamp, Vice President of Sales & Business Development , ALLDATA
Technology’s role in these relationships is exemplified in AutoZone’s approach to warranty claims. If a service department experiences a comeback due to a part defect, they know that they can rely on AutoZone to reimburse up to 100% of the cost of labor. AutoZone then uses ALLDATA’s labor times to calculate how much labor they should reimburse.
5. Advanced electronic systems
When it comes to advanced electronic systems, utilizing technology is not only a convenience, it’s a necessity. For example, ADAS (Advanced driver-assistance systems) are increasingly prevalent in newer models. These systems require rigorous diagnostics and potentially complex calibrations if their corresponding parts require repair.
You can also document and later explain to your customers how you repaired these complicated systems. Scan reports and printable PDFs provide the back-up you need to verify that the repairs were performed according to OEM specifications – information that’s crucial for satisfied customers and necessary for insurance providers.
Incorporating technology into your service department will give you an edge to fighting factors that affect your profit. It will provide resources and tools to not only supplement your knowledge, but to help you improve customer and supplier relationships as well.