Dealers continue to lag independent service
When it comes to Canada’s $10-billion-a-year repair market, franchised dealers will continue to lose out to independent garages unless they boost customer service and their use of technology, industry experts say.
As their vehicles age out of warranty, owners turn more often to aftermarket repair shops, citing higher levels of customer satisfaction, according to J.D. Power Canada’s 2019 Customer Service Index Long-Term Study.
“It’s one of the biggest challenges we face,” Terry Johnson, general manager of Leavens Volkswagen Inc. in London, Ont., told Automotive News Canada. “We’re constantly strategizing on how to keep these customers, because the longer they’re in service with us, the better chance we have of selling them another vehicle.”
DEALERS LOSING SERVICE BIZ
Dealers still attract more of the service dollars, the J.D. Power study found. Customers spent an average of $323 per visit at their dealership in 2019 vs. $222 at an aftermarket shop, giving dealers a 54-per-cent market share, the study said.
But customers are making more trips to aftermarket shops, visiting them on average 1.6 times in 2019, compared with 1.5 times the previous year. Meanwhile, visits to dealerships remain flat at 1.3 times on average, the survey found.
“Considering the sheer size of the auto service market for maintenance and repair, any fraction gained in market share translates into millions in potential revenue that auto dealers are leaving on the table,” said Virginia Connell, automotive research and consulting manager at J.D. Power Canada.
For dealers, the main challenge is competing on price, said Johnson of Leavens VW, the flagship store in a seven-dealer chain representing multiple brands.
Aftermarket repair shops usually have a lower cost structure. Their employees are less likely to be unionized, their waiting rooms have fewer amenities, and they have access to lower-cost aftermarket parts.
In comparison, dealers use only top-tier parts that come with a manufacturer’s warranty, and they often have luxurious waiting areas with free coffee and other amenities.
“The independents know they have to be cheaper than the dealer,” Johnson said.
Where a dealership can compete is on “corporate culture,” he said.
AMENITIES VS. PRICE
Customers of Leavens Volkswagen usually know their mechanic by name and are welcome to visit the service bay to watch their car being worked on, Johnson said.
In addition, the dealership offers multiple amenities — including free Wi-Fi, a laptop work area, a popcorn machine, espresso and a free shuttle service, Johnson said.
It even provides golf clubs to customers who want to hit a few balls at the nearby golf course while their car is in for service, Johnson said.
NAPA AutoPro, the top scoring company in the J.D. Power study, said price is only part of the reason customers leave their dealerships.
“We’re a little cheaper,” John O’Dowd, NAPA Canada vice-president of marketing, said in an interview with Automotive News Canada. “When we do our surveys, we find out price is the initial reason. But it’s never No. 1.”
NAPA’S PERSONAL TOUCH
O’Dowd credits NAPA’s combination of national brand recognition with local independent ownership.
Customers appreciate talking directly with the service centre owner and the mechanic working on their car, he said.
The Montreal-based company represents 625 repair shops, most of them family-owned with six or seven employees, O’Dowd said. The head office provides technical training, parts warranties, marketing, uniforms and support. The local owners provide the personal touch.
“Everyone likes to be able to say ‘I know my mechanic’ at the aftermarket centre on the corner,” O’Dowd said.
CUSTOMERS ARE COMPLEX
In the digital era, customer service has become increasingly complex, said Jason Dale, executive director of the Automotive Business School of Canada at Georgian College in Barrie, Ont. Customers want to be able to choose whether to check in on a drivethrough kiosk, receive the mechanic’s diagnostics via text or talk with a customer service adviser in person, Dale said.
“Each individual consumer is asking for something different. It’s not generational. It depends on how much you utilize technology in your day-today life.”
NAPA AutoPro said 25 per cent of its service centres now use tablets to send photos and details of recommended work via email to customers for their approval.
Leavens Volkswagen recently installed drive-through kiosks, open 24 hours a day, where customers can drop off their vehicle and pick up a rental at their convenience.
“We know people value time these days, and it’s not always easy to get to a dealership,” Johnson said.
From a business perspective, Dale said, dealers could do a better job of converting parts sales into service work by suggesting the customer get a service estimate. Too often, the two departments operate independently, he said.
NAPA AutoPro has won the top spot in the J.D. Power survey in five of the previous 10 years.
Among dealers, VW scored the highest customer satisfaction rating in the 2019 survey, followed by Toyota. Toyota Canada declined to comment.
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