Honda says its service needs repair, hopes to cut down on long customer waits
05-31-05, 11:12 AM
#1
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Honda says its service needs repair, hopes to cut down on long customer waits
LOS ANGELES -- Honda sales in recent years have outstripped dealers' ability to provide timely maintenance and repairs.
So Honda Division is campaigning for more service bays and satellite service centers.
The service headaches are part of a larger problem of slipping store profits and slipping sales of the Accord and Civic. The lack of service capacity also has hurt the brand's image in customer service studies, says J.D. Power and Associates of Westlake Village, Calif.
**** Colliver, executive vice president of sales at American Honda Motor Co. Inc., says dealers' new-vehicle gross profits slipped to an average $1,225 in 2004, from $1,503 in 2003.
Total store profits, on average, were down about 5 percent during the same period, he says.
Some dealers say profits are holding steady this year or are rising slightly from 2004 levels because of the new Ridgeline pickup and redesigned Odyssey minivan. But they say lagging car sales are a drag on earnings.
More profits
Some dealers are taking Colliver's advice and investing in service.
Art Wright, owner of Lehigh Valley Honda in Allentown, Pa., says he opened a 30,000-square-foot store in November, which includes a bigger service area than his old store.
Wright now has 15 technicians, compared with nine before. He also opened an express service center that has three dedicated technicians.
Now his service business has revenue of about $200,000 per month, compared with $100,000 per month before, Wright says.
"Customers have responded to it and love it," he says. "We had three- to four-week backups for appointments before. You can't give good service when you have to tell people that."
Wright says his new-vehicle grosses are pretty much the same as the fourth quarter of 2004.
"Trucks are helping grosses," he says. "We need to shore up the car side; that's what's hurting overall grosses. The new Civic in the fall will really help."
Honda Division's car sales were down 5.6 percent the first four months of the year. Thanks to a 16.2 percent increase in truck sales, total sales were up 3.2 percent. Wright says his sales goal this year is 2,000 units, compared with 1,600 last year.
Colliver says Honda dealerships operate about 20 satellite centers, mostly in large, urban areas. But many more are needed, he says.
Robb Brown, a dealer in Toledo, Ohio, says he may build a satellite service center.
"There is no question that many of our sales facilities are not large enough to handle the volume," says Brown, a member of the Honda National Dealer Council and owner of Brown Honda.
Brown says he plans to visit satellite centers that are in operation. He says some dealers have built them near their stores. Other dealers, he said, have put them in areas, such as downtowns, which lack dealerships to serve their customers.
Brown says he has had to rent adjacent lots to park service cars, and some in-house mechanical work has to be done at other dealerships that he owns.
He says so far this year his gross vehicle profits are up about $100 per unit over last year.
Longer waits
Despite Honda's service headaches, in the J.D. Power 2004 Customer Service Index study, Honda Division moved up to No. 14 on the list, compared to No. 19 in 2003.
Marianna Singontiko, manager of research projects for J.D. Power, says a big problem with Honda customer satisfaction is that its customers have longer service waits than the brand's competitors.
Honda customers wait an average three days for regular maintenance, compared with an average 2.5-day wait for customers of other nonluxury brands, Singontiko says.
"That's one of the difficult areas for Honda," she says, "They've improved everywhere else, but service is an area where they are not making a difference."
So Honda Division is campaigning for more service bays and satellite service centers.
The service headaches are part of a larger problem of slipping store profits and slipping sales of the Accord and Civic. The lack of service capacity also has hurt the brand's image in customer service studies, says J.D. Power and Associates of Westlake Village, Calif.
**** Colliver, executive vice president of sales at American Honda Motor Co. Inc., says dealers' new-vehicle gross profits slipped to an average $1,225 in 2004, from $1,503 in 2003.
Total store profits, on average, were down about 5 percent during the same period, he says.
Some dealers say profits are holding steady this year or are rising slightly from 2004 levels because of the new Ridgeline pickup and redesigned Odyssey minivan. But they say lagging car sales are a drag on earnings.
More profits
Some dealers are taking Colliver's advice and investing in service.
Art Wright, owner of Lehigh Valley Honda in Allentown, Pa., says he opened a 30,000-square-foot store in November, which includes a bigger service area than his old store.
Wright now has 15 technicians, compared with nine before. He also opened an express service center that has three dedicated technicians.
Now his service business has revenue of about $200,000 per month, compared with $100,000 per month before, Wright says.
"Customers have responded to it and love it," he says. "We had three- to four-week backups for appointments before. You can't give good service when you have to tell people that."
Wright says his new-vehicle grosses are pretty much the same as the fourth quarter of 2004.
"Trucks are helping grosses," he says. "We need to shore up the car side; that's what's hurting overall grosses. The new Civic in the fall will really help."
Honda Division's car sales were down 5.6 percent the first four months of the year. Thanks to a 16.2 percent increase in truck sales, total sales were up 3.2 percent. Wright says his sales goal this year is 2,000 units, compared with 1,600 last year.
Colliver says Honda dealerships operate about 20 satellite centers, mostly in large, urban areas. But many more are needed, he says.
Robb Brown, a dealer in Toledo, Ohio, says he may build a satellite service center.
"There is no question that many of our sales facilities are not large enough to handle the volume," says Brown, a member of the Honda National Dealer Council and owner of Brown Honda.
Brown says he plans to visit satellite centers that are in operation. He says some dealers have built them near their stores. Other dealers, he said, have put them in areas, such as downtowns, which lack dealerships to serve their customers.
Brown says he has had to rent adjacent lots to park service cars, and some in-house mechanical work has to be done at other dealerships that he owns.
He says so far this year his gross vehicle profits are up about $100 per unit over last year.
Longer waits
Despite Honda's service headaches, in the J.D. Power 2004 Customer Service Index study, Honda Division moved up to No. 14 on the list, compared to No. 19 in 2003.
Marianna Singontiko, manager of research projects for J.D. Power, says a big problem with Honda customer satisfaction is that its customers have longer service waits than the brand's competitors.
Honda customers wait an average three days for regular maintenance, compared with an average 2.5-day wait for customers of other nonluxury brands, Singontiko says.
"That's one of the difficult areas for Honda," she says, "They've improved everywhere else, but service is an area where they are not making a difference."
05-31-05, 12:57 PM
#2
i think it's a good thing that they realize the problem and trying to work on it. toyota/lexus is doing the same thing too, except that they are couple yrs faster. if you notice, at least here in cali, a lot of lexus dealerships are spending crap load of money to improve and expand their service areas. customer relationships don't stop after the sales is completed.
05-31-05, 02:44 PM
#3
Lexus Connoisseur
Hmmm first Nissan now Honda. Toyota/Lexus has stepped up and expanded their existing service facilities. A good example is the expansion at Stevens Creek Lexus & Longo Lexus. And just recently the expansion of Lexus of Westminster's service facilities just to name a few.
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