Did you know you can have maintenance done at your dealership as cheap as anywhere else?

The evolution of the new car dealership service departments is an interesting study in market shifts. Back in the 70’s, the typical car dealer relied on the factory payment of warranty claims to sustain the parts and service operations. The factory paid the dealer based on the rate they charged customers for maintenance and other customer pay functions. Since warranty work could represent well over 50% of the total service load to the shop, the dealership had to charge higher rates on customer pay to get the factory to pay more. Training and special tools were expensive, and these higher rates were necessary to support the expense.

This spawned a new industry in the United States. Independent shops and tire vendors began to pop up everywhere, offering lower prices on maintenance and non warranty repairs. The dealers didn’t mind because they were concentrating on completing warranty repairs.

Over time, dealership gross profits on new and used cars and trucks began to get squeezed due to competition, and quite frankly the customer’s ability to easily travel on more efficient roadways and shop. Dealers were faced with a dilemma. Dealers had to get profit from the parts and service departments to make up for lower profits on cars and trucks. They began to realize that they had chased the more profitable brake, tire, suspension, and exhaust work away to the independents. In fact, in many cases, technicians that had been trained by the dealerships were going to work for these independents or opening their own shops.

Along came a cottage industry of consultants that began teaching dealers how to get the profitable maintenance business back. Dealers had to re-price their labor and do things like variable labor pricing, and offering less expensive non original equipment manufacturer parts. But the factory came back with longer 3-4 and 5 year warranties. This had the effect of stalling the move to lower prices.

Today, even with longer warranties, the quality of the cars and trucks, at least for GM, is so good that warranty work now only represents 10 to 15 percent of total dealership service. We have to get the defectors; (those who only use the dealership for warranty and take the rest of the work elsewhere) back into dealership service departments.

The GM Giant is embarking on a new campaign to do just that. While we will make the case for Genuine GM Parts with lifetime parts and labor warranties, and work done by factory trained technicians, we will offer alternatives. The independents don’t use factory trained technicians and seldom if ever use factory parts. The reality is there is a place for both. Depending on your individual situation, we may recommend factory parts installed by our best technicians, or we may suggest less expensive parts installed by journeymen technicians, saving you money. One thing is for sure: We do not want you taking your car to anyone else but us for service, and we are willing to cut our prices to do it. You will see us advertising specials that will be as good as anything in the market. We will still offer Genuine GM Parts, and in some cases almost insist on them. But if price is the determining factor on whether you get the work done or not, we will commit to offer the same or better value than our competition. Even though we know our factory brakes will last longer and have a better warranty, we would rather see our customers buy aftermarket brakes from us than drive an unsafe vehicle. It is a new mindset, but we are determined to provide the best value for our customers.

For information on this or any GM Giant products, visit us online at www.gmgiant.com.