In the second of a series of articles sponsored by Chevron, reporter Jacob Stoller looks at how the growth of corporate fleets will impact the business strategies of successful auto repair shops.
By Jacob Stoller
Whether or not one believes some of the bolder headline-making predictions, alternatives to travel in private vehicles are a growing reality.
Ride sharing services such as Uber and Lyft are projected to grow, according to an Orbis Research study, at 20% per year until 2025.
And according to a Market Watch study, car-sharing services which offer rentals on an hourly basis will see similar growth.
Many individuals are also traveling less, thanks to the wide proliferation of rapid delivery services – a trend that is expected to explode as autonomous vehicles remove the driver, and associated costs, from the equation.
All this is expected to have a disruptive effect on the aftermarket. A McKinsey report titled “Ready for Inspection: The Automotive Aftermarket in 2030” paints a picture of a changing industry where the average customer is, increasingly, not an individual consumer, but a fleet owner or manager.
There’s a growing professionalism
in fleet management, creating
an awareness that cutting corners
on repairs and maintenance
and engaging in adversarial
relationships with service
providers are not
good business practices.
The study recommends repair shops launch new strategies to cope with the trend, including offering more differentiated services, shifting from meeting B2C needs to solving B2B needs, and creating a range of fleet service packages.
Many shop owners will not welcome this advice. Some fleet owners have a reputation for skimping on maintenance, squeezing shops on parts and labour, or overwhelming shops with paperwork and approvals procedures.
The outlook, however, is not all bad.
According to Ray Brisby, fleet manager for the Calgary Fire Department and senior vice president at National Fleet Management Association (NAFA), there is a growing professionalism in fleet management, creating an awareness that cutting corners on repairs and maintenance and engaging in adversarial relationships with service providers are not good business practices.
“Professional fleet managers absolutely see the big picture when it comes to the value of fleet maintenance,” says Brisby. “In fact, as part of the material we at NAFA teach in the CAFM (Certified Automotive Fleet Manager) program, we encourage the best practice of Predictive Maintenance, whereby a fleet manager would analyze failure trends and replace parts or components proactively prior to failure, the idea being that although there will be slightly higher overall maintenance costs, the increase in vehicle reliability and uptime more than offsets the added expense.”
Todd Sarson, owner of Stop N Go Automotive in Burlington, Ont., had a customer who learned this the hard way. Sarson had maintained his client’s 40-vehicle fleet for years when management implemented a policy of requiring three estimates for every repair. “They were just going for the cheapest estimate,” he says, “and not comparing apples to apples. So I was extremely pleased to hear that after two years with this struggle, they finally turned things over to a fleet management company. Now it has made it so much easier for us to be speaking for somebody that speaks your language for the most part, and you get approval right away.”
“My tolerance for breakdowns
or rework is pretty low.
When trucks come out of
a shop, whether it’s
my shop or a vendor shop,
they have to be fixed to the
highest standard possible.”
Unlike the consumers that many shops are used to, fleet managers are held accountable by their employers for aggregate numbers such as long-term costs, service levels, and the productivity of the employees using the vehicles.
With that in mind, here are five ways in which auto shops can help them succeed:
1) Show them that you understand their business needs.
Every company is different, and buyers give preference to providers who recognize their unique requirements.
“We need to have that comfort level that they’re going to understand our business needs,” says Brisby. “We’re in emergency service, so my tolerance for breakdowns or rework is pretty low. When trucks come out of a shop, whether it’s my shop or a vendor shop, they have to be fixed to the highest standard possible.”
Sean Payne, owner of C. Martin’s Bus Service in Napanee, Ont., operates a fleet of school buses. “We’ve had some facilities where my work gets pushed to the side for off the street stuff that comes in,” he says. “And that just doesn’t work for me. I don’t carry a lot of spare vehicles, so we can’t afford to have vehicles down for two or three weeks at a time.”
2) Make their job easier.
Fleet managers, particularly when they wear other hats, are busy people. Shops can help them cope.
“With fleets, you’re taking on the role of managing the vehicles’ maintenance plan and scheduling, and scheduling their annual safeties,” says Mark Bergasse, founder of Marks Auto Service in Oakville, Ont. Bergasse’s shop often provides advance notifications to help the customer to schedule the necessary downtime for an inspection, or budget for an upcoming expense such as tires.
Shops can also assume an advisor role.
“We can’t just throw every possible part at a problem,” says Brisby, “so you need good judgment. We rely on the vendors we do use to understand this, and make recommendations that will allow us to get the best possible service life out of the unit once it comes back.”
3) Provide documentation.
Governments and many corporate fleet owners demand proof of compliance with WCB, health and safety regulations, and other statutory requirements.
“You really have to have everything documented,” says Brisby. “A shop might have a good safe work practice, but if they don’t have it documented in a health and safety manual, then they can’t share that with us.”
While the task is a daunting one, it is for the most part a one-time investment that could pay off, and an exercise that often helps companies get a better understanding of their own processes.
4) Consider alternative business models.
Many fleets have their own maintenance and repair facilities, and look to the outside to complement their own capabilities.
“We have one shop, for example, where we provide them the parts,” says Payne. “So we get our discounted rate on the cost of the parts, but we pay their door rate. So some different strategies like that sometimes work.”
5) Get started on the right foot.
Upfront communication is key in B2B relationships, and can prevent a lot of headaches later on. “A lot of time we need to interview them at that point when they come in and ask how they want their fleet maintained,” says Sarson, “because the last thing we want to do is make recommendations on services that they are just not willing to do.”
It’s also important to ensure that the fit is right.
“I’ve got fleets that deal with me, but they’ve got to pay my prices,” says Rob Scott, owner of Glenwood Automotive Services in Saskatoon. Sask. “They appreciate what we do, our competence levels, our level of service, and they’re willing to pay for it.”
As service delivery models continue to evolve, tomorrow’s fleet owners may choose to outsource not only their maintenance and repair, but their mobility requirements.
“We’re seeing a shift in the industry where a lot of fleets are trying alternative methods of mobility, like moving away from an asset ownership model,” says Brisby. “If they can somehow get their people or their goods moved without having to own rolling stock assets, that’s kind of a preference.”
Where will this leave auto shops?
“There’s always going to be a need for vehicle maintenance services,” says Brisby. “It might be less of a one-on-one interaction – it might be more through a third-party service provider, whether its contract administration or a full-service leasing package. Those types of options.”
Jacob Stoller is a freelance writer living in Toronto. He specializes in lean management.