Auto dealers think outside the box on service options

By Dee-Ann Durbin

THE ASSOCIATED PRESS

A box that sends puffs of new car-scented air into his Chevrolet dealership’s service lane is just one of the tricks Tim Colussy is using to entice buyers to his Pittsburgh-area dealership for servicing.

Colussy Chevrolet has repainted and sealed the floors, brightened the lights, and added new signs and displays in its service area. In the customer waiting area, there’s a new flat-screen TV, WiFi access and a coffee bar.

Colussy said the Bridgeville, Pa., dealership’s efforts have paid off: service business has increased 10 percent this year.

It’s hard to overestimate the importance of parts and service to dealers’ profits. Dealerships typically get half their profits from service, with the rest coming from new- and used-car sales, said Paul Taylor, chief economist with the National Automobile Dealers Association.

But with new-car sales plummeting — the average dealer lost money on new cars in 2006 and 2007, and sales this year could hit their lowest level in more than a decade — dealers are racing to renovate body shops, add dedicated lanes for quick oil changes, and compete more aggressively with independent repair shops and big chains.

Dealers have been doubly squeezed because improvements in quality have significantly cut down on the number of warranty repairs they perform and have lengthened the time between service appointments.

GM, for example, uses a sophisticated monitoring system to tell customers when they need to change their oil, so drivers no longer automatically come in for a change every 3,000 miles.

“We don’t have the warranty anymore as the trigger to bring someone in,” said Peter Lord, executive director of service operations at General Motors Corp. “Warranty repair is now the exception. It’s the routine maintenance we have to be prepared for.”

Five to 10 years ago, 80 percent of the service business at Wes Lutz’s Hyundai dealership was in warranty repairs and 20 percent was in customer-paid repair work. Now it has completely reversed.

“We really don’t have any warranty issues anymore,” he said. “We had to learn to adjust how we take care of customers.”