Facts on Dealerships

[Boatwrench]

In the OEM section there was a thread about some work on a 2000, and some upsell from the dealership. It got my dander up, but rather than hijacking that thread I'm posting here.

Background: Currently i'm on active duty with the coast guard doing port security support for the pacific area, a reservist on recall since 9-12. I once worked as a Buick dealer mechanic and was also the President of the mechanics union here in the SF bay area. This isn't a union vs non union discussion, it's a discussion about the different ways to charge a customer.

Here are some facts about dealerships from the perspective of the one fixing the car.

In this area there are three wage systems at the dealer. Hourly, Flat rate and Hourly+

Hourly is where the mechanic gets paid by the hour for how ever long he/she works on the vehicle. This is only tied to the shop hour labor rate (what the customer gets charged) by the profit margin of the owner. The customer is charged the time it takes to perform the repair. Example Alternator not charging, the estimate is for an hour at $100 shop rate. If it takes a mechanic 45 minutes to replace an alternator then the customer is charged 3/4 of the hourly shop labor rate. So if the mechanic is paid $20 per hour he made $15.00 for that work and the shop made 3/4 of an hour for the job. Since the labor rate was $100, then they would charge the customer $75 plus parts.

Flat Rate is where the mechanic gets paid a percentage of what the customer is charged and generally a portion of the parts mark-up no matter how long or short of time the job actually takes. The above job the customer would be charged $100 even it if took the mechanic 45 minutes to effect repairs. The mechanic would make $20 for 45 minutes work.

Hourly +; The mechanic is paid hourly as above, but the service advisor is paid on commission of the upsell and the original work. Sometimes this commission is extended to the mechanic also. Using the alternator, the mechanic would be paid as the hourly mechanic, but if he also sold you a replacement belt he would get a bonus of some percentage of the upsell. The service advisor defintely would get a commission on the alternator belt upsell, and oh since we are doing one belt we should do them all as a set.

In the SF bay area we have all three systems in the shops. I always worked hourly. That way I was paid even if a car was not in the shop to work on. The potential to make more money is greater at a flat rate shop, but the potential to get screwed over by this type of shop is also greater. If I finished the car early, it was beneficial to the shop and customer, not me.

The flat rate mechanic is always looking for the quickest way to finish the job, not necessarily the best way, the quickest. Every job he finishes early is profit for him. There is a downside to taking some of these risky shortcuts, if the repair fails, the mechanic has to fix it on a comeback and if there is no charge to the customer, then there is no pay for the mechanic.

The bonus mechanic is always after the upsell. Not going to make much on the alternator, but if I can get you to purchase belts and a battery, oh the terminal is corroded also look at the additional $$$ in my pocket.

I left the dealers in 1986 when the labor rate was $75. My hourly salary was $17.46. Did I upsell, heck yeah. I would sell belts to the customer when doing an alternator because it usually made sense, heck had the belt loose anyway.

My advice is find a dealership you are comfortable with, talk with them, see the same service advisor everytime, call him by name. Find out how they pay their mechanics. Always ask to see the old parts. Ask them, what is the effect if this repair isn't done right now.

Good luck,
Tom

[Goatman]

Didn't read any other post, so don't know what's behind bringing this up, but I'll comment. I work at a Ford dealership as a used car manager and I personally oversee our used car shop, where all the reconditioning is done and after sale repairs are made. I have also worked as general manager of a Dodge dealership and a Toyota dealership where I was responsible for the parts and service departments.

I agree with most of what Tom said, but not all. Nearly all of our service department techs are flat rate, which is nearly universal these days. I don't agree with Tom that this promotes quick and risky repairs, for a couple of reasons. One is, like Tom said, the tech is responsible for any comebacks, which they don't get paid for, which is a strong incentive for good quality. The other thing is that most dealerships these days have very strong programs for good quality control and customer satisfaction, so poor quality is not tolerated. Granted, people are human, and mistakes and bad attitudes happen, but the system doesn't promote that. The way that techs, and the service department, make money is by doing a job for less time than the book calls for, while the customer is charged book time. The way that a tech is able to do this is by experience and having exactly the right tools, which is why these guys have huge investments in tools. Most have $10,000-30,000 invested in tools which comes out of their own pocket, which is a ton relative to what they make.

The only thing that is tough about the system is that so much of current car problems revolve around diagnostics, and the system is set up to charge for repairs, not diagnosing. On mechanical issues, this works fine, like having a noise and replacing the part that's making it. But on other problems like electrical and electronic, it's different, like taking two hours to diagnose a sensor that then takes 10 minites to replace.

It's not fair to categoricaly criticize all dealerships or mechanics, most are very committed to doing a good job, but no one is perfect. These people get out of bed in the morning, leave their families, and go to work just like you and I do. It is best to work with one dealership and one service advisor who you get to know on a first name basis. It also is their job to let a customer know about any maintenance issues that could be performed, it's up to the customer to plan them out and budget for them. A good service advisor will work with a customer on that basis.

[Matthew Currie]

I can understand that this work can be expensive, and can see the point of the "upsell," etc. But in the case that started this thread, the owner was quoted nearly $2000 worth of work, most of which was probably unnecessary in the first place, and more than $1000 of that was for a pair of jobs (ball joints and u-joints) in which much of the labor overlaps.

Boatwrench, you mentioned that you would upsell a set of belts along with an alternator, because the "belt was loose anyway." That seems reasonable as stated, but it sounds as if the dealer in question would have charged for loosening the belt once for the alternator, and again for the belt itself, and if he'd talked the customer into a power steering pump he'd have charged a third time to loosen the same belt. That may be in keeping with a flat rate system, but it certainly is also reasonable for the customer to reject it and find a mechanic whose billing bears a more reasonable relationship to the work actually done.

[Boatwrench]

Matthew,
No doubt. You hit the nail right on the head, that work was BS and yes the flat rate system has the customer charged for complete multiple jobs even if the work overlaps.

Some shops would even try and upsell me even knowing I was a former mechanic and the mechanics union President.
Tom

[Goatman]

I don't agree that the flat rate system promotes overlapping labor charges. That is up to the individual shop, it's not automatic. The book specifies time for certain jobs when other work is done concurrently, and doesn't necessarily overlap the charges. The customer also has a choice, and an accurate estimate of all work is given at the time of the presentation for any additional work. In the example of the alternator being changed, and then recommending a new belt, the cost of the new belt would be presented. If it's $15 for the belt, and another $35 to put it on, that is obvious if the recommendation was to change the belt while it was off. The customer would, and should, say that they are only willing to pay for the belt and not additional labor. Of course, it would be appropriate for a very small labor charge, maybe .1 or .2 hr, because even if the belt is already off, it does take the tech time to go over to the parts department and get the belt.

While upselling can be seen as a method to take advantage of customers, and could be done by unscrupulous people, most of the time it is legitimately informing customers of service work that could be necessary. It would not be good service to put a cracked belt back on if the alternator was changed, and then have it fail later. Then the customer would complain that the shop worked on that recently and why didn't they say a new belt was needed. If a tech doing an oil change notices that radiator hoses are hard and cracking, the customer needs to be informed and a recommendation made to replace the hoses.

I don't want to defend bad people, but most of the people doing service work on cars are not bad, nor is the system inherently bad.

[Bryan C.]

The only thing that is tough about the system is that so much of current car problems revolve around diagnostics, and the system is set up to charge for repairs, not diagnosing. On mechanical issues, this works fine, like having a noise and replacing the part that's making it. But on other problems like electrical and electronic, it's different, like taking two hours to diagnose a sensor that then takes 10 minites to replace

I fully agree with this statement. I work as a journeyman tech at a Jeep dealer in CA. The problem started when the manufacturers went to the flat rate pay system. Once the dealers figured out that paying their techs only for what they do saves them money, they just jumped on the bandwagen. The system only pays the bare minimum for any given repair with a very small amount of that time devoted to diagnosis. The system is set up for replacing parts, not diagnosing problems. Basically DCX most of the time will pay .5hrs to diagnose anything. If you spend more time than that, it is coming out of your bonus. Once this half hour is up, it is time to take a guess at how to fix it, either replace a part, or blow the customer out with a "no problem found". As a tech, you must wade through different vehicles and repairs and hope that you can do a particular repair enough times to start making time on it. This is usually around the 3rd or 4th time you do a job, sometimes more. Once you figure out which job you can make money on, you now start looking for that job to "upsell".

As far as overlapping labor, this is the holy grail of auto repair. It is very much to our advantage to sell 2 different repairs in the same area. This is how we make money. Most techs say that since they are payed on a flat rate for each job, each repair should be charged to the customer as separate repairs. Now, usually I help customers out and give up a portion of the overlap. The problem with that is customers have a habit of only approving the least expensive repair. If you try to compensate for the overlap, you can get burned and have to do that individual repair only for less than it normally pays and don't get the overlapping labor.

I work at an hourly plus shop. I get my 40hrs for 40 worked, but I also get a flate rate commission for every hour I produce above 100% efficency. Comebacks count against that efficency too, so it pays to do the job right regardless of how much you are getting paid. I also get cash spiffs for any upsells I can identify and have the writer sell. I do not get paid on parts, just the labor. The service writer basically gets a percentage of what they sell to the customers. Most technicians are full commission and are aggressive when it comes to upselling the customer.

I agree with finding a shop you are comfortable with, and definately deal with the same advisor every time. You can also request a certain technician to work on your car. If you get superior service on a previous visit, ask to have the same people work on your vehicle.

It isn't a perfect situation, and it needs to be fixed before it turns every technician into a money hungry butcher. Recently when the new Cadillac CTS came out GM tried something new with the labor times the techs get paid. The way I was told that the factory comes up with the time is they have someone do the repair 10 times and average the time it takes the factory speed demon tech to complete the repair. GM tried something different in that there were no preestablished times for any given repair. The techs were given straight time for what they spent on the car and that is it. I haven't heard how the system turned out, but at least they used real world times to pay the guys fixing the cars.

I still feel the best place to bring your vehicle is to the dealer. We work on these things every day and know them inside and out. You don't need to pay some guy at the local gas station $75hr to figure out what the dealer knows just by looking at the customers complaint. One thing I have learned about working for DCX is that they usually make the same mistake a thousand times.

Enough rambling...
Bryan