Chapter 1:

The Automotive Service Industry

Service Operations

FVB 20103/21004 (2011/2012)

Manager; 2%

Support; 46% Technician; 52%

State of Industry

More than two

vehicles per
household and
continues to grow

AUTOMOTIVE

Over 200 million

cars registered in
US & 25 million in
Canada
Over 600 million
vehicles running on
roads worldwide

Demand for vehicle

service continues to
grow faster than
supply (e.g. :
PROTON, PERODUA)
By 2012, annual
demand for
technicians will
grow by 12.4%

HOW TO MAINTAIN ???

ROBUST
ROBUST
automoti
automoti
ve
ve
service
service
industry
industry

FVB 20103/21004 (2011/2012)

Automotive
repair and
maintenan
ce shops

New car
and truck
dealerships

Automotive
parts,
accessories
and tire
stores

Service
Market
Segme
nts

Gas
stations

Fleets

FVB 20103/21004 (2011/2012)

Service Market Segments

1. New Car and Truck Dealerships
. The only factory-approved sites of warranty repairs

Sole responsibility - Make all of the warranty repairs to vehicles

Because of this mandatory specialty, service work in new car and truck
dealership service departments has historically been dominated by warranty
repairs
Thus, historically, even when maintenance and customer-paid work is involved,
they tend to limit their work only to their manufacturers products

. Close

ties with a specific manufacturer and so being awarded an

exclusive franchise to sell and service the warranty repairs of a certain
brand of vehicles in their area

Have access to the latest technical support data on those models

. In

recent years, because of the dramatic improvements in product

quality, dealership service departments which were originally built to
support huge volumes of warranty work, have begun to look for other
sources of work to sustain their large operations

Engaged in retail sales and repairs and preventive maintenance

Focus on the highly competitive retail service business

FVB 20103/21004 (2011/2012)

Service Market Segments

1. New Car and Truck Dealerships
.

Unique trait of dealership service departments - a part of

organization

Six major departments (new vehicle sales, used vehicle sales,

service, parts, body shop, and car leasing) working under one
roof
Manage and operate as unique and separate subcompanies
within the organization

Although the service department is only one of six profit

centers of the overall dealerships operation, it is essential to
dealership stability and profitability

Depends on service as an essential profit centre that produce a

Service Departments
steady
source of income for each month
Dedicated service facilities that are a part of all new car and truck
dealerships; the sole warranty repair stations that perform general
maintenance and repairs as well

FVB 20103/21004 (2011/2012)

Service Market Segments

2. Automotive Repair and Maintenance Shops
. Independent repair shops that operate as single-purpose
organizations

Range in size from locally owned one-bay proprietorships to

large multibay shops that are comparable in size to some of
the local new car dealerships
Do not have a built-in business as do new vehicle
dealerships

Sole purpose - Repair and service vehicles

Single focus - Customer-paid work

Cannot depend upon the consistent flow of manufacturer-paid

warranty repairs

Do not carry the liability and burden of being the sole source
for resolving some of the difficult new vehicle problems
Work on all makes, models, and years

Some shops chose to specialize in a specific segment of the

market (such as domestic, European, or Japanese vehicles)

FVB 20103/21004 (2011/2012)

Service Market Segments

2. Automotive Repair and Maintenance Shops
.

One of the greatest challenges - Access to technical

information and training

Must actively seek out information on a broad array of vehicles

and vehicle systems, yet their access to manufacturer technical
data and specifications is limited
Rapid expansion in access to technical information, primarily
through the Web, has been of great help to improve the situation

Independent Repair Shops

Single-purpose service shops that are not affiliated with a specific
manufacturer or product; perform service and repairs on a wide
range of vehicles
7

FVB 20103/21004 (2011/2012)

Service Market Segments

3. Automotive Parts, Accessories, and Tire Stores
. House several unique departments - much like car
dealerships
. Work on all makes and models of vehicles
. Limited access to manufacturers technical information

However, they are a part of a large group of identical shops in

varying locations, and hence they share information, training
opportunities, and even equipment and tools

Large chain operations tend to be semi-specialists

Intentionally limit their range of work (e.g.: If they are part of a

major tire store chain, they may choose to focus primarily on
tires,Service
suspensions
and brake repairs)
Chain Stores
Service Chain Stores
Stand-alone service centers that are part of a group of independent
repair shops, owned and operated in conjunction with a major
provider of parts or accessories

FVB 20103/21004 (2011/2012)

Service Market Segments

4. Gas Stations
.

Although gas station repair shops have been an institution

in automotive repair since the automobiles introduction
over a hundred years ago, their numbers have declined
significantly over the past decade

Because of these trends, many existing service stations

converted their service bays into convenience store

Difficulties in keeping up with the technology and the high cost

of specialized equipment, tools, and training
Limited space (typically one to three service bays), the cost to
equip the shop is prohibitive

As new gas stations are built, they are rarely designed as service
Service Stations
stations,
but are most likely selling gasoline, soft drinks, chips,
Gas stations that also provides automotive service repairs and
and
other convenience items
maintenance

FVB 20103/21004 (2011/2012)

Service Market Segments

5. Fleets
.

Department within companies/governmental agencies that

maintain and repair only those vehicles that are
owned/leased by that particular company or agency

E.g.:
A fleet service working with the state police will
specialize in preparation, maintenance, and repair of police
cruisers

Do not accept business from general population

Sole responsibility - Keep their fleet up and properly running at all

times

Range widely in size and variety of vehicles serviced

Limit the number of makes and models of vehicles that they

service at any one time

10

To simplify their needs for technical information and allows them

to become specialists

FVB 20103/21004 (2011/2012)

Service Market Segments

5. Fleets
.

Struggle to obtain technical information

However, larger fleets purchase large numbers of cars and

trucks, and hence be granted special privileges (access to
manufacturers latest technical bulletins, service manuals, and
training)
Some are even granted the status of local warranty service
centers, which allows them to perform their own warrantyreimbursement repairs in-house

Fleet
A group of vehicles that are owned and operated by a company to
support its business operations

11