I smell fear

On October 4th, Bob Attrell, president of the Toronto Automobile Dealers Association, wrote in the Toronto Star an opinion piece arguing for the superiority of dealership repair shops to their independent counterparts. The piece created a not unexpected stir amongst independents, as Attrell’s article peddled in the tired myths brought against the independent sector: independents don’t have the sophistication or specialized training needed to repair new cars; that independents are not allowed to do warranty-service work on vehicles; and only dealerships have access to the latest diagnostic software and engineering expertise.

I won’t bother showing how false those statements are; I’m more interested in why Attrell would make them. Reading his piece over, what struck me is the underlying sense of fear it conveys.

If one reads the news, it is not hard to find where that fear comes from. Right now, the traditional Big Three automakers are in trouble. J. P Morgan reports the troubled credit markets will have Ford and General Motors seeing sinking vehicle sales and increasing losses, and General Motors is looking ever keener on acquiring Chrysler in order to boost its cash position; added to that, General Motors announced it had retained Merrill Lynch to explore selling certain assets. What this may portend is the possible disappearance of one of the major North American car makers sometime soon. If this happens, there will be, to use the parlance of the business press, a rationalization of resources, meaning product lines will be cut and overlapping dealership operations will be shut down, along with their service operations.

For dealerships, this means they will face a tougher market as they will have to compete even more aggressively for those service dollars and do so in a market where they have fewer bays, technicians and tools to work with. This is why, I believe, Attrell is taking the position he as staked out in the Toronto Star article. He knows independents continue to make inroads against the dealership operations. The most recent J. D. Power and Associates report on customer satisfaction (see October 2008 SSGM) finds independents come out ahead, for customer satisfaction in customer service, quality of work and the technical skills of the technicians. As well, more owners of newer vehicles are taking them to independents for warranty service work.

For dealership operations, the gnawing fear is if one of the Big Three automakers mergers with a rival, or worse declares bankruptcy, those service operations are going to be struggling to get people to come to them. One way of doing that, it would seem, is promoting outright myths about the skills and quality of independents.

However, independents should not rest on their laurels right now. The industry must still need to do a better job promoting themselves to customers, move away from competing on price such as the $19.95 oil change, or undercharging for such things as diagnostics in order to get someone into the bay. Instead, the industry must fight by further improving customer satisfaction, quality of work and continued investments in training and modern equipment.

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Attrell’s article peddled in the tired myths brought against the independent sector: independents don’t have the sophistication or specialized training needed to repair new cars; that independent are not allowed to do warranty-based work on vehicles.

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Do you agree? Disagree? Let us know! letterstotheeditor@ssgm.com