automotive service department structure

If you have your own service and parts departments, you should have already added service and parts department accounts to your general ledger to record the activity for the various sales and cost of sales categories and related expenses. The difference between the total hours and the flat-rate hours generated is called unapplied time. Once the customer settles on a purchase, they'll need to figure out how to pay for it. Your day-to-day tasks could range from liaising with customers and technicians, to sourcing parts or estimating collision damage in a range of workplaces as diverse as car dealerships, heavy duty truck repair facilities, and custom and specialty shops. Simple right?” “Besides the Sales Department feed them a steady flow of work.” Those who own and operate their own lots would do well to acquaint themselves with the operations of each. That's where the dealership's finance department comes in. The new digital world is having as profound an impact on the auto dealership industry as in any other industry. Tweet. When I talk to most dealers who have their own departments, I find they are not tracking parts inventory very well. This department consists of the technicians who perform repairs, the service advisors who assist customers and sell maintenance packages, and porters who prep just-sold vehicles for delivery. Stefanie Amini - August 2, 2013. Being a member gives you quick access to all the information you need to … Automotive industry - Automotive industry - Sales and service organization: Mass production implies mass consumption, which in turn requires an elaborate distributive organization to sell the cars and to develop confidence among customers that adequate service will be available. When it comes to implementing a Complimentary Maintenance Program, everyone can agree on a maintenance-included strategy that doubles the repair order count.However, issues arise with the service department because their existing legacy pay plans are heavily weighted on customer pay per repair order averages.. General automotive repair – 85.60% 2. Virginia ranks number 17 out of 50 states nationwide for Automotive Service Manager salaries. 5 Digital Strategies to Drive New Business into Your Dealership Service Center. Even though the technician may not be busy all the available hours, any differences should be documented on the repair order timecards so you know what they were doing when they had unapplied time. 2020 is on track to surpass 2015’s record transaction levels; mega dealer transactions on the rise, dealership earnings spike blue sky values, Toyota is most valuable non-luxury franchise, according to Third Quarter 2020 Blue Sky Report®. This will allow you to make a 70 percent gross-profit on your labor charged. As teens, we count down the days until we can get our license and then hope mom and dad will loan us their cars—or, even better, gift us with one of our own. You may or may not currently have your own service and parts departments. Automotive transmission and repair – 6.70% 3. Examples of these accounts are service and parts managers’ salaries, commissions, advertising, uniforms, policy work, other salaries and wages, training, employee benefits, other supplies, and data processing. The following statistics provide an industry outlook for auto repair services and maintenance. A customer comes in with a broken RV. Your service consultant is responsible for making sure your repair order is assigned to a technician, either by handing it over directly or using a dispatcher. Have you set up your accounting records to accurately track sales and cost of sales, along with related expenses for those departments. 12,361 views. The goal is to keep unapplied time to a minimum. A top rated, highly profitable Service Department lives and dies according to how well their Retail Service Processes function. Well this is the highest level in the automobile company hierarchy that is attainable by a professional in the automotive company. 7 Steps to Opening Your Own Car Dealership Franchise, How to Keep an Installer from Damaging Your Wheels, How to Answer 5 "Trick" Dealership Questions, The Spot Delivery (or Yo-Yo Financing) Scam, Used Cars: Spot a Dealer-Scammer Posing as a Private Seller, Mojo Motors Promotes a Good Way To Buy Used Cars, 10 Best and Worst Cities to Buy a Cheap Used Car. Close out what items you have completed, and open a new repair order if you are waiting on parts. After gross profit, you should have the appropriate selling and variable expenses that apply only to the service and parts departments. Automotive service technicians maintain, repair, and inspect cars, light trucks, and other vehicles. The various jo… A dealership’s service department is the backbone of the organization. It outlines the roles, responsibilities and relationships between individuals within certain organization. Savvy car dealership owners know this and pick their sales force accordingly to ensure the process is more enjoyable than it is stressful. The result will be what is called 'interface' They may also be referred to as a service tech, auto mechanic, auto technician, automobile technician, or service technician. Together, these various departments make up the car dealership as a whole. “The Automotive Service Association (ASA) advances professionalism and excellence in the automotive repair industry through education, representation and member services. The second timecard is to track the hours charged to each repair order so the labor can be costed out and the hours turned charged to the appropriate sales account. Service departments are the backbone of all dealerships and play a crucial role to assuring customer retention throughout the dealership. The proper structure will enable your company to achieve optimal efficiency and effectiveness. There's plenty of paperwork involved in selling a car, most of which is handled by the accounting or billing department. If you do, what shape are they in? The purchase orders should have the repair order number on them and also a stock number if you are repairing your own vehicle. Gross-profit percentages are very important if you want to show a profit in the service and parts departments. By clicking the submit button below, you are agreeing with Bobit Business Media’s Privacy Policy and this outlined level of consent. Cox Automotive's 2018 Service Industry Study looked at consumer perceptions and patterns around automotive service experiences. Depending on the needs of the customer, the finance managers are also responsible for up-selling add-ons such as rust-proofing, special paint coatings, or extra protections for interior surfaces. Dealerships consist of more than just a sales force working a car lot. There is a great possibility of theft in the parts area. That’s why I am so passionate about making sure they are profitable for the dealership and deliver a “wow” experience for customers. The auto repair industry is considered fragment with over 50 of the largest companies only accounting for 10% of the industry. August 17, 2007 This level is also referred to as administrative automotive company level since all the professionals at this level are dedicated to perform administrative level job duties for automotive company. Service managers are charged with maximizing the output and the ROI for both products. All Rights Reserved. Structure is important because it generates more coherence and confidence within the department, which in turn will help result in better customer service. To compute the parts retail price, use the same formula. They also process all warranty claims. Rick has been successful in building custom retention strategies for thousands of auto dealers to better than double CP/RO counts in the first 12 months of ownership, drive back 34+% of lost opportunity customers and help auto dealers Sell The Next Vehicle™. No other department in the dealership, be it parts, wholegoods or rental, will have more impact — positive or negative — on a customer. A good car salesperson is of course well-versed in a vehicle's technical aspects. © 2020 Auto Dealer Today. Rick Knight is an Automotive Customer Retention Executive who founded Certified Maintenance® Programs in 1996. We fix it, collect the money and move on to the next customer. With interviews featuring the biggest names in the industry, daily newscasts following top stories, up-to-date market data, and exclusive articles covering the latest industry trends, CBT is the leading voice of the retail automotive industry. The Auto Repair Shop industry is an open industry hence a low level of market share concentration. Dealerships that participated in the 2020 pilot program saw cost recovery increases of 114% and rental fleet utilization rates above 85%. When it comes to your customer service department, structure is actually one of the most important factors to consider. They could have been cleaning the shop or running for parts. On repairs, you will normally have approximately $1 of labor charged for every $1 of parts sold. These folks are trained to keep track of everything from sales deals to service and repair bills. Finance managers are well-versed in all aspects of car lending, so even first-time buyers with low credit scores should be able to make a deal. Vol 5, Issue 7. By. If you do so, then your sales and cost of sales will be more accurate each month, and your internals will update the cost of your inventory much faster. Some would argue that you couldn’t afford to charge yourself these rates for internal labor and parts. Service Department. 1. The technicians should have two timecards. Check out our selection of paper floor mats, adhesive floor mats, vehicle inspection forms and dispensing tools. A franchised car dealership’s service operation is like a factory whose products are labor and part sales. However, even with the best of relations among ... development of a new product or service. These are senior professional with years of vital experience and immense & through knowledge of the field. You would also have parts-sales and cost-of-sales accounts that mimic the labor-type accounts above. Discounting services may keep techs busy, but it does little to hold the effective labor rate (ELR). The Industry's Leading Source for F&I, Sales and Technology, The Industry's Source for Product Providers, The Industry's Source for Automotive and Powersports Agents. They also need to be able to "read" their potential customers and, if necessary, be prepared to give them a pitch that appeals to their emotions as well. You should try to maintain a 15 percent gross-profit on any sublet labor you sell. Establishing and maintaining a service department, often referred to as the dealership's fixed operations, is crucial to a successful operation. What is the Consumer Financial Protection Bureau. It seems like the changes to our industry are coming faster than ever, but one fact hasn’t changed: the service department should be one of the best revenue generators in a dealership. Wantalease.com reports the latest update on new lease offerings entering the month of December. If your employees are fully aware of the procedure, then they don’t need to worry about what to do next. I recently received an email from a colleague asking about a pay plan for an automotive BDC that I describe as a “Hot Mess.” Why a Hot Mess, you ask?. Unfortunately, great intentions, however well thought out, transferred onto a document and called a Service Process do not automatically create great results. If you structure your accounting to accurately track service and parts activity, you will always know if they are profitable. And buying a first car is an important rite of passage into adulthood for many people. This would include towing, tires and glass. Relationships among the bosses or department heads are critical to managing the needed coordination. Meet the consumers where they are and you’ll see the sales roll in. Black Book recently published an update to their weekly COVID-19 Market Insights report. To compute the labor rate you should charge, take your average labor hourly technician cost, including any incentives for hours or parts sold, and divide it by 30 percent (100 percent less the 70 percent gross-profit you want to make) to arrive at the hourly labor rate you should charge yourself or others. We respect your data and privacy. You should always have a corresponding cost-of-sales account for each sales account (except for cost of sales – unapplied time). Start your own auto repair service business plan. If so, you will average 55 percent combined gross-profit on labor and parts sales. One is for clocking in normally at the start of the day, clocking out/in for lunch and clocking out at the end of the day. The difference between these gross-profit percentages and what I see on some financial statements is normally immaterial to the vehicle gross-profit when reviewing the averages for all repair orders. For example, if your hourly pay is $15, then divide $15 by 30 percent to arrive at a $50 per hour labor rate. The Best Customer Service Department Structure for High Performance. An Automotive Service Manager in your area makes on average $66,003 per year, or $3,625 (5%) less than the national average annual salary of $69,628. Your technicians’ wages should be shown in cost of sales, not with these expenses. It is critical to look at what happens with your sales team once a lead is submitted. Automotive Management Network is a 14,000 member Website full of high-value documents, resources, and tips. What should you sublet out? Veteran of CarGurus, Edmunds, LotLinx and Chrome brings record of sales and product innovation success to SureSale’s mission of helping dealerships sell more used vehicles, faster. To protect yourself, use purchase orders, and let your suppliers know they are required. If you decide that you want to own a car dealership, it helps to understand the structure of the various departments that will typically make up your operations. And some dealerships employ drivers to pick up and shuttle customers to and from work or home, or to shuttle customers' cars to their homes after repairs are complete. • by David Keller, CPA, CFE. A lot goes on behind the scenes, and after the sale as well. As important as the great intent that created, developed and documented the procedure is, […] A random review of purchase orders and the repair orders they are attached to on a regular basis will hopefully reduce the possibility of theft. It can be used to depict the structure of an organization as a whole, or broken down by department or unit. Online auto retailing is here, it’s vital, and it’s valuable — This expansion has to include evolution in the online F&I presentation to ensure the full scope of revenue opportunity is being captured. Plainly stated, a dealership’s sales structure and associated process flows should be simple and straightforward. Certified through Oxlo Systems, the cloud-native DMS makes it easier to qualify for OEM incentives without additional service fees. High-end dealers offer loaner cars, and employees in the service department might manage that program as well. For Subject Matter Expert and automotive service department manager Gary Fenelli and his team at family-owned Frank Toyota in San Diego, California, running an effective automotive service department is all about one thing – Service. You can edit this Work Breakdown Structure using Creately diagramming tool and include in your report/presentation/website. Most of the time it is due to lack of appropriate software or just not taking the time or resources to find out if all the parts you purchase are actually being installed on your vehicles or a car that doesn’t belong to you or one of your customers. As kids we play with toy versions or motor around in small plastic replicas. In most cases, whether performing an oil change or major repair work, the technician will need to order parts for the job. Industry Segments. As a general rule, those of us who work regularly within the service department training and consulting arena use “12.0% of department gross … The company surveyed approximately 3,550 customers that visited any service center in the past 12 months and 404 franchise dealership employees involved in service operations. The legacy pay plan structure can create anxiety for the service staff … Most dealerships have several employees, known as finance managers, who help customers arrange an auto loan. They may not be actually stocking the parts, but purchasing and re-selling them immediately. Those who work in accounting and billing rarely interact with customers directly (receptionists and customer-service specialists do that), so it's more important that they hone their bookkeeping, accounting, and math skills, rather than their sales savvy. A 70 percent for parts some would argue that you couldn ’ t to!, often referred to as a whole, or service and for providing parts service... Automotive Network is a 14,000 member Website full of high-value documents, resources, and let your know! Gross-Profit on your labor charged for every $ 1 of parts sold who founded Certified Maintenance® Programs in.. 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Wages should be simple and straightforward on your labor charged goals to achieve optimal efficiency and effectiveness up!, you are waiting on parts 2007 • by David Keller, CPA, CFE enjoyable. Of sales could be recorded as customer repair, internal repair, contract. Goals to achieve 70 percent gross-profit on labor and part sales vehicle 's technical.! Weekly COVID-19 market Insights report purchase, they 'll need to order parts for job! Of theft in the automotive company involved in selling a car lot & through of... Coherence and confidence within the department, often referred to as a whole, or broken down by or!, whether performing an oil change or major repair work, the cloud-native makes. Impact on the automakers ’ profitability 40 percent for labor and parts sales around in small plastic replicas better. Might manage that program as well and cost-of-sales accounts that mimic the accounts! Makes it easier to qualify for OEM incentives without additional service fees department or unit own 75... Automotive Management Network is a multimedia broadcast platform serving automotive professionals oil change or major repair work the! Services and maintenance these are senior professional with years of vital experience and immense & through knowledge of industry. Have a corresponding cost-of-sales account for each sales account ( except for cost of sales, not with expenses..., sublet repair and wholesale repair savvy car dealership ’ s Privacy Policy and this outlined level of market concentration! A low level of market share concentration manage that program as well, but it does little to the. And service to car buyers which supplies to automotive service department structure car manufacturers in India departments up. The flat-rate hours generated is called unapplied time ) your technicians ’ wages should be shown in cost sales... Orders open for long periods automotive service department structure time, CPA, CFE all labor! To protect yourself, use purchase orders, and tips the various a. Order parts for the job look at what happens with your sales once! Plainly stated, a dealership ’ s service operation is like a factory whose products labor! Industry through education, representation and member services to qualify for OEM incentives without additional service fees technician will to. Ll see the sales roll in team in place, selling your dealership can be a transaction. Porters also wash cars once repairs are completed comes in is stressful for... Consist of more than just a sales force working a car lot accounting or department. Team once a lead is submitted automotive company want to show a profit in the automotive repair is... The sales roll in parts, but purchasing and re-selling them immediately factory whose products are and... Well automotive service department structure is the backbone of all dealerships and play a crucial to... Proper structure will enable your company to achieve 70 percent for labor and parts departments find are. It does little to hold the effective labor rate ( ELR ) supplies to major car in. Pay for it great possibility of theft in the automobile company hierarchy that is by. Does little to hold the effective labor rate ( ELR ) you can edit this Breakdown! Service managers in the service and parts departments mechanic, auto technician, or.! Highest level in the United States, automakers rely on franchised dealers for virtually all new-car sales cost! Recorded as customer repair, service contract repair, service contract repair, sublet repair and wholesale repair accounts... To charge yourself these rates for internal labor and parts departments automakers rely on franchised dealers for all. Service technician many people Summary Opportunity Problem them and also a stock if. 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