Once upon a time in the new car business, dealers used the “back end” or the service bays to cover the entire cost of running the operation. Good dealers could have a “service absorption rate” of 100% or more, which meant the overhead of the facility, including new vehicle sales, was covered by repair work.
Much of the repairs involved were actually warranty repairs, paid for by the factory at reduced labor rates. In order to compensate technicians for this factory dictated lower rate, dealers charged higher rates for non-warranty repairs.
This created a huge and still thriving independent aftermarket comprised of accessory, repair, collision, and oil change shops that charged lower rates, and often used independently produced parts.
As warranty worked diminished when the initial quality and durability of new vehicles rose over the past several decades, authorized dealers started to try and win back some of the by now long gone repair work.
The latest developments in this renewed push for repair dollars came today as both Ford Motor and General Motors started promoting dealership auto repair programs.
Ford is touting the fact that it now has 600 Quick Lane stores at its dealerships, which sell routine vehicle maintenance such as oil and filter changes, as well as light repair services including brake repairs and tire replacements on all vehicle makes and models.
Ford’s Quick Lane owners sold a record 1 million tires in 2010 and posted record sales of more than $570 million. Ford claims competitive pricing.
General Motors is changing its repair pricing in dealerships, adding new consumer web sites, and kicking off a new national advertising campaign for Certified Service at Chevrolet, Buick, GMC and Cadillac Dealerships.
Certified Service replaces the long standing Mr. Goodwrench brand at GM. A national advertising campaign, which replaces the Goodwrench ads that stopped last October, began running this week on network TV and cable stations. One 30-second spot promotes an oil change, four-tire rotation and a 27-point inspection; and another 30-second ad promotes an ACDelco ceramic brake pad rebate offer.
Certified Service is now available at the more than 4,400 Chevrolet, Buick, GMC and Cadillac dealerships across the United States. This dealer repair network can work on current and canceled GM brands. Certified Service experts use Genuine GM Parts and ACDelco parts that are manufactured to original equipment specifications. More information is at www.mycertifiedservice.com.