AUTO MARKETING: FOR MANY USED-CAR SELLERS, IT'S SERVICE WITH A SMILE: POST-SALES ACTIVITIES SEEN AS KEY TO BOOSTING CUSTOMER SATISFACTION

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Used cars, once sold "as is," have become catalysts for huge, after-sale service operations.

The new breed of used-car superstores, including AutoNation USA, Driver's Mart Worldwide and HPR Automotive Superstores, say how their customers are treated in the service department after the sale is as important as how they are treated in the showroom before the sale.

REAP THE SAME BENEFITS

Used-car chains hope to reap the same benefits from providing good after-sale service that new-car dealers covet: greater profitability, increased customer loyalty and more new customers.

"After the sale, service is a critical element of customer satisfaction," says Thomas Eggleston, president of Driver's Mart. "By including an extensive warranty, it is obvious that we view service as a critical element."

So does AutoNation, says Gerald Weber, the company's senior VP-retail operations. AutoNation's entire work force, including its service technicians, undergoes training that focuses on customer handling procedures and the company's "customer for life" philosophy.

"It's part of the whole strategy," Mr. Weber says. "It's a confidence builder and a tremendous customer relations tool."

NEARBY SERVICE

Like new car buyers, used-car buyers will drive 40 or 50 miles to buy a vehicle but will not drive that far for service.

That's why Driver's Mart is working on an assortment of authorized service centers, Mr. Eggleston says. The network will include the 300 new-car dealerships owned by the retailers in the group. In those markets where Driver's Mart does not have a dealership of a particular brand, it's establishing service agreements with area dealers.

Also, Driver's Mart is forging relationships with national service chains to provide after-sale service for customers. Mr. Eggleston declined to name the service chains.

CUSTOMER SATISFACTION

William Hamlin, CEO of Hamlin, Power & Reaves Ltd., and owner of HPR Automotive Superstores, says he is focusing as much on service as on sales because the service department experience significantly affects customer satisfaction.

HPR is building a 40,000 square-foot service center across the street from its new superstore, which opened in August 1996.

The new service center, scheduled to open June 1, will have 40 service bays and room inside for another 15 vehicles. The center will perform full service from simple jobs such as alignments and brakes to heavier work such as transmissions and engines, Mr. Hamlin says. It will sell tires and have two pits for quick lube service, he adds.

Each of AutoNation's seven used car stores includes an Automotive Service Center. Each service center is 26,000 square feet, features 24 service bays and is staffed with technicians who have earned National Institute for Automotive Service Excellence certification.

WHO HANDLES WORK

But when it comes to warranty work, whether the consumer or the superstore takes the vehicle to the dealership for service "depends," Mr. Hamlin says.

After 2 1/2 years in business, his superstores now outsell the local Ford and Chevy store in terms of late model used cars, he says-a point that doesn't sit well with some dealers, he adds.

"In some cases we take it back and in other cases the customer takes it back," Mr. Hamlin says. "We stole 25% of their market. We know who'll give us a hard time. Some give the customer a hard time. It does them more harm than good."

Still, he says he hasn't had a big problem getting dealers to perform factory warranty work.

Neither has AutoNation. Its parent company, Republic Industries, owns over 40 new car dealerships, which means that at least some after-sale warranty work must be done by non-Republic dealerships.

WARRANTY HANDLER

In fact, AutoNation tells its customers whose vehicles need factory warranty work to bring them back to the AutoNation store, which will take the car to the dealer.

Mr. Weber says new-car dealers have been receptive to performing warranty work on AutoNation vehicles.

"They view it as incremental revenue," Mr. Weber says. "We're finding that a lot of dealers see the benefits of working together."

After-sale service is not a core business for CarMax, but that is probably going to change. CarMax said in its proxy statement last fall that it plans to expand its retail operation starting in the 1998 fiscal year.

Currently, the superstore chains uses its service facilities to inspect and recondition the vehicles its acquires for resale. As the company adds additional stores, CarMax plans to open additional inspection and reconditioning centers.

The centers will perform inspection and reconditioning, freeing up the service facilities at the stores for retail repairs. CarMax expects its total in-store service bays will increase from 194 at the end of fiscal 1997 to 2,580 at the end of 2002, the proxy states.

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