As Chrysler moves ahead with its "consolidation strategy" (a.k.a. Project Genesis), it's apparently had enough foresight to realize that shutting down dealerships seriously handicaps your ability to service your customers. According to Steven Landry, Chrysler executive vice president of North American sales, the company's solution will be "stand-alone service stores" -- it is easiest to think of them as dealerships that have closed, but the service department still remains open.
While the first stand-alone service store is still about two years from opening its doors, Chrysler is in active talks with a handful of other retailers about the strategy with customer service as their goal. "If we all of a sudden go from 80 stalls to 40 stalls we don't want to do our customers a disservice," says Landry. "You need to have the right number of stalls." Funny, any woman at a professional sporting event could have told you that.
[Source: Automotive News, subs. req'd]
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Reader Comments (Page 1 of 1)
Will @ Apr 18th 2008 10:09AM
This is probably a great idea from a profitability standpoint as well. Many dealers actually lose money on new car sales and only turn a profit because of the revenues drawn in by the service and parts departments.
Consolidate the weaker profit generation function into the larger dealerships that can actually make money selling cars, and maintain a network of small, profitable service centers without the burden of new car franchises? Seems like a good idea for Chrysler.
MemphisNET @ Apr 18th 2008 10:20AM
Coming up with a good business plan (not ripping people off) will help - GM/Goodwrench (Ontario anyway) is making huge pushes in the media to show they are just as competitive as any shop. A similar strat. will do wonders.
I don't think most people mind paying for quality service - but it has to be just that. Quality, reliable and not being hosed.
sw @ Apr 18th 2008 10:21AM
Wooohooo, now make it that I can get a car delivered to my nearest service center so I don't have to pay the large markup by the dealership, only a small fee to keep the service center running.
S K @ Apr 18th 2008 10:49AM
Standalone service centers are quite common in some Asian countries, they are also known as "Authorized service centers" to differentiate them from some shade tree mechanics posing as service center for a particular automaker. Seems like a good idea to emulate in the US as they tend to be often cheaper than a dealership.
Alex @ Apr 18th 2008 10:52AM
I'm not claiming to be a marketing expert here but I wonder how many new or used cars are sold as a result of people seeing something they like while having their car serviced? Personally I know when I wait for my car I look at what's new and I actually know of several impulsive people who went in for something small and came out with something new. I'm not saying its a bad idea and that it won't be very helpful for a lot of current owners but ever since GM started throwing around their idea of "boutique" dealers I've wondered if its the best idea for selling more cars.
71cuda @ Apr 18th 2008 10:57AM
I think what you would see is service centers with used car lots operating out of the sales side. Since I'm guessing these would be owned by dealers with full service Chrysler dealerships close by, there would be a few new cars showcased on the showroom floor, with an invitation to visit the sales department off-site.
Judy Zik @ Apr 18th 2008 11:52AM
I totally agree with Alex. In my days selling vehicles I made a lot of sales off of people who were in for service who were browsing to kill time. I think this is a mistake and is not going to make the full service dealers happy. What happens when part of their territory is being chopped off because of a shop that just does the very profitable service part without the new sales overhead? These places will also probably have used car dealerships attached. So their service customers will get talked into a nearly new Cerbyler instead of a new one. Not something that is good for the bottom line or sales figures at Cerbyler.
AZMike @ Apr 18th 2008 11:54AM
Alex,
you hit the nail on the head; this is an asinine idea. I owned a Dodge dealership for ten years (a small one), and we could count on at least five sales per month from customers who bought a NEW (please note, 71cuda, not a USED) car while theirs was in for service.
so let's see...let's force profitable dealers (if they weren't profitable, they wouldn't be open, would they?) to close, so we can open 'service only' centers that don't sell any of the vehicles our customers are driving. let's not give them a reason to trade up today!!
for those who don't know, way over half of all vehicle purchases are very spontaneous things. so we'll put the new vehicles a few miles away somewhere else, and make sure all that spontaniety is totally gone.
I look forward to taking my vehicles in for an oil change, just so I can look at everything on the lot. just did this yesterday at a Buick/Pontiac/GMC dealer.
the lease is up on my Rendezvous in about six months, and I now know I definitely prefer the Enclave over the Acadia, and a choice between the Buick Super and Ponitac G8 (TONS of front legroom, beautiful "cut and sewn" interior; one interior color choice;black..ugh) would be a tough one. none of these deductions were made from a catalog, or sitting in front of a computer. they were made by sitting and touching the actual car.
of course, if this was a 'service only' center, I could either pass the time by watching Oprah, or reading a well used, dog-eared Reader's Digest.
AZMike
FThorn @ Apr 18th 2008 12:57PM
Kinda like the Commissaries/PX/BXs staying open on closed us military bases.
Keith @ Apr 18th 2008 2:42PM
Ford is doing this as well I think. We just got a mailer from our dealer about it, but I cannot remember the name.
Richard Warren @ Apr 18th 2008 3:00PM
This idea has rolled around the industry for years, it's one of those things that looks great on paper but has no basis in reality.
When I ran 9 stores for a dealership group fully 25% of sales were generated from the service department with customers waiting or a vehicle that need excessive repairs.
What makes anyone think that the repairs would be any different?
Those that think no money is made in the front end of a delership need to think again, it's how the expenses are allocated and absorbation.
Agree with Alex and AzMike.
Richard S. @ Apr 18th 2008 3:43PM
This could be a great idead if the service centers are also used to service any other brand. Perhaps Chrysler could by a national chain (such as NTB) and merge with the dealers that they have to buy out. Then follow Gillette's and HP's business: Make a kiling servicing the product (selling razors and toners). Boeing and GE makes a lot of money servicing their aircraft and engines respectively. Why shouldn't servicing be a source of income for automakers.
Martman @ Apr 18th 2008 4:57PM
Chrysler: Build better autos and you wont need as many serivce centers period. One local dearler here is now charging $120.00 per hour for shop labour. At those rates they will be doing only warranty work.
JN @ Apr 18th 2008 6:32PM
This isn't new, not even for Chrysler. The small town where I grew up had a Dodge authorized service garage for years. The gentleman who owned it used to be a Dodge dealer, but he retired from sales in 1967, and the service side stayed open through the early '90s.
And back when Studebaker was still selling new cars, they had a good many "service dealers." These were independent garages who participated in the company's training programs and purchased X amount of parts and accessories. Even though the last Studebaker car was built in 1966, and Studebaker "officially" terminated all of the dealership contracts on July 1, 1972, the last authorized Studebaker garage stayed open until early 1991.