2 May 2008

Service profits for the world’s largest manufacturers of automotive and commercial vehicles contribute more than 46 percent of total profits according to a Deloitte Global Service and Parts Management Benchmarking study.

The Study, Ladies and Gentlemen, Start Your Service Engines: Competing on Service Excellence in the Automotive Industry stresses the huge potential of service and parts operations in boosting profitability in the automotive industry. Deloitte Risk Services Partner Damon Cantwell said, “The findings from this study show that automotive companies that capture and maintain the service business gain, not only in sales and profit, but also in reduced costs and greater customer satisfaction and loyalty.”

It appears that most companies have a long way to go in this area and face obstacles such as a lack of service strategy and business design, and substandard operational planning and management.

The research suggests the following key success factors for getting the service engines started and maximising the value from service business within the automotive sector:

• Push harder to integrate service and parts into the corporate strategy, not as a cost center or even a “cash cow,” but as a profitable growth leader

• Be more aggressive in planning, managing, and monitoring the service business

• Deliver as promised, one customer at a time as this can be a major differentiator for improving customer satisfaction, loyalty, sales, and profits

• Reduce structural costs by implementing the concepts of lean distribution. Our data shows that the best companies spend 10 percent or less of net sales on logistics, and

• Finally, make it easier for dealers and customers to do business with you; through better service and parts and management focus which leads to higher sales as well as long-term customer loyalty.