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AUTOMOTIVE SERVICE MANAGEMENT Principles into Practice T H I R D
E D I T I O N
Andrew A. Rezin, Ph.D.
330 Hudson Street, NY, NY 10013
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Vice President, Portfolio Management: Andrew Gilfillan Editorial Assistant: Lara Dimmick Senior Vice President, Marketing: David Gesell Marketing Coordinator: Elizabeth MacKenzie-Lamb Director, Digital Studio and Content Production: Brian Hyland Managing Producer: Jennifer Sargunar Content Producer (Team Lead): Faraz Sharique Ali Manager, Rights Management: Johanna Burke Operations Specialist: Deidra Smith Cover Design: Cenveo Publisher Services Cover Photos: Sidelnikov/123rf.com, Kurhan/Shutterstock, Andrey_Popov/ Shutterstock, Tyler Olson/Shutterstock, ASE Campus Administrator Full-Service Project Management: Integra Software Services Pvt. Ltd. Composition: Integra Software Services Pvt. Ltd. Printer/Binder: LSC Communications, Inc. Cover Printer: Phoenix Color/Hagerstown Text Font: Times Ten LT Std Copyright © 2019, 2013, 2009 by Pearson Education, Inc. All Rights Reserved. Manufactured in the United States of America. This publication is protected by copyright, and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise. For information regarding permissions, request forms, and the appropriate contacts within the Pearson Education Global Rights and Permissions department, please visit www.pearsoned.com/permissions/. Acknowledgments of third-party content appear on the appropriate page within the text. Unless otherwise indicated herein, any third-party trademarks, logos, or icons that may appear in this work are the property of their respective owners, and any references to third-party trademarks, logos, icons, or other trade dress are for demonstrative or descriptive purposes only. Such references are not intended to imply any sponsorship, endorsement, authorization, or promotion of Pearson’s products by the owners of such marks, or any relationship between the owner and Pearson Education, Inc., authors, licensees, or distributors. Library of Congress Cataloging-in-Publication Data Names: Rezin, Andrew A., author. Title: Automotive service management : principles into practice / Andrew A. Rezin, Ph.D. Description: Third edition. | Upper Saddle River, New Jersey: Pearson Education, Inc., [2017] | Includes index. Identifiers: LCCN 2017045762 | ISBN 9780134709857 (alk. paper) | ISBN 0134709853 (alk. paper) Subjects: LCSH: Automobile repair shops—Management. | Service stations—Management. Classification: LCC TL153 .R46 2017 | DDC 629.28/72068—dc23 LC record available at https://lccn.loc.gov/ 2017045762 1 17
ISBN-10: 0-13-470985-3 ISBN-13: 978-0-13-470985-7
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BRIEF CONTENTS Preface xii Acknowledgments xiv About the Author xiv
SECTION 1
Service Operations 1
chapter 1
The Automotive Service Industry 2
chapter 2
Physical Resources 9
chapter 3
Human Resources 21
chapter 4
The Repair System 32
chapter 5
Repair Documents 44
SECTION 2
Management Theories and Principles 60
chapter 6
Classic Management 61
chapter 7
The Quality Movement 68
chapter 8
Leadership 80
chapter 9
The Complex Role of Management 89
chapter 10
Ethics and Stewardship 98
SECTION 3
Management Strategies 106
chapter 11
Vision, Mission, and Values 107
chapter 12
Strategic Planning 113
chapter 13
Developing Goals 119
chapter 14
Decision Making 125
SECTION 4
Financial Measurement 136
chapter 15
Income, Expenses, and Profit 137
chapter 16
Compensation Plans 146
chapter 17
Staffing and Shop Capacity 158
chapter 18
Analysis and Action 168
chapter 19
Financial Forecasting 176
BRIEF C ON T EN T S
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SECTION 5
Organizing and Managing Yourself 184
chapter 20
Managing Yourself 185
chapter 21
Organizing Tips and Tools 194
SECTION 6
Customer Relations 203
chapter 22
The Value of Satisfied Customers 204
chapter 23
Building Basic Communication Skills 215
chapter 24
Resolving Customer Disputes 225
SECTION 7
Employee Relations 234
chapter 25
Recruiting and Selection 235
chapter 26
Motivating Employees 245
chapter 27
Progressive Discipline 254
SECTION 8
Marketing and Merchandising Service 263
chapter 28
Marketing and Mass Media 264
chapter 29
Target Marketing and Building an Identity 274
chapter 30
Point-of-Purchase Merchandising 283
chapter 31
Selling Service 291
SECTION 9
Legal Issues and Responsibilities 301
chapter 32
Legal Guidelines For Service Operations 302
chapter 33
Warranties and Service Agreements 310
chapter 34
Workplace Safety 317
Appendix A 326 Appendix B 328 Appendix C 334 Index 336
iv BRIEF C ONTENTS
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CONTENTS Preface xii Acknowledgments xiv About the Author xiv
SECTION 1
SERVICE OPERATIONS 1 chapter 1
THE AUTOMOTIVE SERVICE INDUSTRY 2 "" Chapter "" Key
Objectives 2
""
The State of the Industry 2
""
Service Market Segments 3 6
practicing the principles key terms and definitions
6 7
7
chapter 2
PHYSICAL RESOURCES 9 "" Key
Objectives 9
Terms 9
""
Introduction 9
""
Facilities 9
""
General Facility Guidelines 9
""
Energy Efficiency 9
""
Facility Needs 11
""
Support Space 12
""
Customer Space 14
""
Tools and Equipment 15
""
Planning Your Investment 18
summary
""
Dispatcher 22
""
Claims Administrator (Booker) 23
""
Shop Foreman 24
""
Service Consultant 24
""
Lead Technician 25
""
Porter 26
""
Parts Specialist 27
""
Technician 27
""
Customer Relations Specialist 28
""
Service Manager 29
""
Service Director 29 30
key terms and definitions
Introduction 2
"" Chapter
Service Cashier 21
practicing the principles
""
references
Introduction 21
""
summary
Terms 2
summary
""
19
practicing the principles
19 definitions 20
30 31
chapter 4
THE REPAIR SYSTEM 32 "" Chapter "" Key
Objectives 32
Terms 32
""
Introduction 32
""
The Auto Repair System 32
""
Advanced Systems 34
""
Systems Thinking 34
""
The Repair Process 35
""
Charting the Workflow 37
summary
42
practicing the principles key terms and definitions
42 43
chapter 5
REPAIR DOCUMENTS 44 "" Chapter "" Key
Objectives 44
Terms 44
""
Introduction 44
""
The Repair Order 44
""
Green/sustainability Issues 46
HUMAN RESOURCES 21
""
Tracking the Repair Process 50
"" Chapter
practicing the principles
key terms and
chapter 3
"" Key
Objectives 21
Terms 21
summary
58
key terms and definitions
58 59
C ON T EN T S
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SECTION 2
chapter 9
MANAGEMENT THEORIES AND PRINCIPLES 60
THE COMPLEX ROLE OF MANAGEMENT 89 "" Chapter
Objectives 89
chapter 6
"" Key
CLASSIC MANAGEMENT 61
""
Introduction 89
""
An Ever-Changing Enterprise 89
"" Chapter
""
More Art than Science 90
""
The Major Management Roles 90 Qualities of a Manager 94
"" Key
Objectives 61
Terms 61
Terms 89
""
Introduction 61
""
""
Traditional Management 62
""
Scientific Management 64
""
Management by Objective 65
S ummary 96 P racticing the P rinciples 96 K ey T erms and D efinitions 97 R eferences 97
summary
66
practicing the principles key terms and definitions references
66 67
chapter 10
ETHICS AND STEWARDSHIP 98
67
"" Chapter
chapter 7
THE QUALITY MOVEMENT 68
"" Key
Objectives 98
Terms 98
""
Introduction 98
""
What is Ethics? 98
""
Applied Ethics 99
Introduction 68
""
Ethical Leadership 100
""
Quality 68
""
Stewardship 102
""
The Gurus of Quality 69
summary
""
Quality in the Twenty-First Century 75
""
Practical Approaches to Quality 76
"" Chapter "" Key ""
Objectives 68
Terms 68
summary
78
practicing the principles
78 key terms and definitions 78 references 79
LEADERSHIP 80 "" Key
key terms and definitions
Objectives 80
SECTION 3
MANAGEMENT STRATEGIES 106 VISION, MISSION, AND VALUES 107 "" Chapter
Terms 80
Objectives 107
""
Introduction 80
"" Key
""
What is Leadership? 80
""
Introduction 107
""
Management and Leadership 81
""
Vision 107
""
Leading 24/7 87
""
Mission 109
""
Values 110
summary
87
practicing the principles notes
87
88
references
Terms 107
summary
112
practicing the principles
key terms and definitions
88
104 105
chapter 11
chapter 8 "" Chapter
104
practicing the principles
88
key terms and definitions references
112 112
112
vi CONTENTS
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chapter 12
SECTION 4
STRATEGIC PLANNING 113
FINANCIAL MEASUREMENT 136
"" Chapter "" Key
Objectives 113
chapter 15
Terms 113
""
Introduction 113
""
Levels of Planning 113
""
Strategic Planning 113
INCOME, EXPENSES, AND PROFIT 137
""
Environmental Scan 114
"" Chapter
""
SWOT Analysis 115
"" Key
summary
117
Objectives 137
Terms 137
""
Introduction 137
""
Income 137
""
Expenses 138
""
Direct/Indirect/Overhead Expense Method 138
DEVELOPING GOALS 119
""
Fixed Expenses 141
""
Profit 141
"" Chapter
summary
practicing the principles key terms and
117 definitions 118
chapter 13
"" Key
Objectives 119
144
practicing the principles
Terms 119
key terms and definitions
144 145
""
Introduction 119
""
Setting Goals 119
""
Long-Range (Strategic) Goals 120
chapter 16
""
Operational Planning 121
""
Tactical Planning 122
COMPENSATION PLANS 146
summary
"" Chapter
123
practicing the principles key terms and definitions
123 124
chapter 14
DECISION MAKING 125 "" Chapter "" Key
Objectives 125
Terms 125
"" Key
Objectives 146
Terms 146
""
Introduction 146
""
Establishing Labor Charges 146
""
Variable Rate Pricing 149
""
Technician Skill Levels 150
""
Technician Pay Plans 151
""
Pay Plans for Other Service Employees 153
""
Fringe Benefits 154
""
Introduction 125
""
Is It Worth it? 125
""
Measuring Value 126
key terms and definitions
""
Return on Investment 126
references
""
The Ben Franklin Decision Model 127
""
Risk Versus Reward 128
""
Energy Efficiency 129
""
Control, Influence, and Frustration 130
""
The Three Levels of Performance 132
""
Practical Principles 133
summary
summary
key terms and definitions references
135
155 156
157
chapter 17
STAFFING AND SHOP CAPACITY 158 "" Chapter
134
practicing the principles
155
practicing the principles
134 135
"" Key
Objectives 158
Terms 158
""
Introduction 158
""
Technician Staffing Plans 159
C ON T EN T S
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""
Increasing Shop Capacity 162
summary
166
practicing the principles key terms and
167 definitions 167
chapter 18
"" Key
ORGANIZING TIPS AND TOOLS 194 "" Chapter
ANALYSIS AND ACTION 168 "" Chapter
chapter 21
Objectives 168
Terms 168
"" Key
Objectives 194
Terms 194
""
Introduction 194
""
Organizing Your Workload 194
""
Simple Tracking Tools 196 Organizing Your Records 199 Organizing Your Surroundings 200
""
Introduction 168
""
""
Achieving a Net Profit 168
""
""
Increasing Income 168
summary
""
Controlling Expenses 171
practicing the principles
summary
key terms and definitions
174
practicing the principles key terms and
175 definitions 175
FINANCIAL FORECASTING 176 "" Key
Objectives 176
Introduction 176
""
Projecting Total Sales 176
""
Building a Forecast 181
summary
key terms and definitions
"" Chapter
183 183
SECTION 5
ORGANIZING AND MANAGING YOURSELF 184 chapter 20
MANAGING YOURSELF 185 "" Chapter "" Key
Objectives 185
""
Introduction 185
""
What Do You Do Best? 185
""
Do What Makes You Feel Fulfilled 186
""
Establish Your Priorities 188
""
Getting Organized: The Three-Step Process 189 192
practicing the principles key terms and definitions references
193
"" Key
Objectives 204
Terms 204
""
Introduction 204
""
Customer Orientation 204
""
Measuring Customer Satisfaction 206
""
The High Cost of Cultivating New Customers 209
""
The Low Cost of Repeat Business 209
""
Word-of-Mouth Advertising 210
""
Fundamentals of Human Behavior 211
""
Quality Customer Service 212
summary
213
practicing the principles key terms and definitions references
Terms 185
summary
CUSTOMER RELATIONS 203 THE VALUE OF SATISFIED CUSTOMERS 204
182
practicing the principles
202
chapter 22
Terms 176
""
references
201 202
SECTION 6
chapter 19 "" Chapter
201
192 193
213 214
214
chapter 23
BUILDING BASIC COMMUNICATION SKILLS 215 "" Chapter "" Key
Objectives 215
Terms 215
""
Introduction 215
""
Basics of Communication 215
viii CONTE NTS
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""
Organizing Your Thoughts 216
""
Introduction 245
""
The Written Word 216
""
Setting Clear Expectations 245
""
Electronic Communication 217
""
Tracking Performance 246
""
Spoken Word 217
""
Measuring What is Important 246
""
Nonverbal Communication 218
""
Performance Evaluations 248
""
Questioning Techniques 220
""
Employee Compensation 250
""
Incentives 252
summary
223
practicing the principles
224 key terms and definitions 224 references 224
summary
252
practicing the principles key terms and definitions
253 253
chapter 24
RESOLVING CUSTOMER DISPUTES 225
chapter 27
"" Chapter
"" Chapter
"" Key
Objectives 225
Terms 225
PROGRESSIVE DISCIPLINE 254 "" Key
Objectives 254
Terms 254
""
Introduction 225
""
Introduction 254
""
The Rules of Complaint Handling 225
""
Progressive Discipline Process 254
""
Defusing the Situation 230
""
I Did Not Realize it 255
""
The Power of Thinking Win-Win 231
""
In the Wrong Place 255
""
Complaint Resolution Process 231
""
Discipline or Punishment? 256
""
Steps in the Process 256
summary
232
practicing the principles
233 definitions 233
summary
key terms and
practicing the principles
SECTION 7
261
key terms and definitions references
261 262
262
EMPLOYEE RELATIONS 234 chapter 25
RECRUITING AND SELECTION 235 "" Chapter "" Key
Objectives 235
Terms 235
SECTION 8
MARKETING AND MERCHANDISING SERVICE 263
""
Introduction 235
chapter 28
""
Defining the Job 236
""
Job Descriptions 236
""
Finding Candidates 239
MARKETING AND MASS MEDIA 264
""
Screening and Selection 241
"" Chapter
summary
243
"" Key
practicing the principles key terms and
244 definitions 244
chapter 26
MOTIVATING EMPLOYEES 245 "" Chapter "" Key
Objectives 245
Terms 245
Objectives 264
Terms 264
""
Introduction 264
""
The Five Goals of Marketing 264
""
Establishing Value 265
""
Characteristics of Value 265
""
Green Considerations 268
""
How Much is Too Much? 270
""
Advertising 270
C ON T EN T S
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summary
273
practicing the principles key terms and
273 definitions 273
chapter 29
TARGET MARKETING AND BUILDING AN IDENTITY 274 "" Chapter "" Key
Terms 274
""
Defining Your Market 274
""
Market Research 275
""
Wants Versus Needs 277
""
Awareness 277
""
Building Identity 278
""
Establishing An Image 280
""
Communicating Your Message 281
key terms and definitions
Selling in the Service Drive 292
""
Selling in the Shop 296
""
The Value of Increased Sales Per Vehicle 298
summary
299
practicing the principles key terms and definitions
299 300
chapter 32
282 282
chapter 30
POINT-OF-PURCHASE MERCHANDISING 283 Objectives 283
Terms 283
""
Introduction 283
""
The Goal 284
""
Merchandising Locations 284
""
Signage 285
""
Product Displays 286
""
Impulse Items 287
""
What Should I Merchandise? 288
summary
""
LEGAL ISSUES AND RESPONSIBILITIES 301
281
practicing the principles
"" Key
Support Services 291
SECTION 9
Introduction 274
"" Chapter
Introduction 291
""
Objectives 274
""
summary
""
289
practicing the principles key terms and
289 definitions 290
LEGAL GUIDELINES FOR SERVICE OPERATIONS 302 "" Chapter "" Key
Objectives 302
Terms 302
""
Introduction 302
""
Customer Issues 302
""
The Repair Order 302
""
Quality of Repairs 304
""
Repair Warranty 304
""
Safety and Reliability 305
""
Civil and Criminal Liability 306
""
New Vehicle Issues 306
summary
308
practicing the principles key terms and definitions
308 309
chapter 33
WARRANTIES AND SERVICE AGREEMENTS 310 "" Chapter
Objectives 310
chapter 31
"" Key
SELLING SERVICE 291
""
Introduction 310
""
Guarantees and Warranties 310
"" Chapter
""
Manufacturer Warranty 310
""
Extended Warranties 313
"" Key
Objectives 291
Terms 291
Terms 310
x CONTEN TS
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""
Used Car Warranties 314
summary
315
practicing the principles key
T erms
and definitions
315 316
""
OSHA 318
""
Green Considerations 321
summary
324
practicing the principles key terms and definitions
chapter 34
WORKPLACE SAFETY 317 "" Chapter "" Key
Objectives 317
Terms 317
""
Introduction 317
""
Workplace Safety Legislation 317
324 325
APPENDIX A 326 APPENDIX B 328 APPENDIX C 334 INDEX 336
C ON T EN T S
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PREFACE Automotive service is a very complex and ever-changing business. The products, the technology, and the needs and desires of the customer base change daily. At the same time, there are new competitors constantly entering the market with new approaches to cornering the market. This fast-paced industry requires continuous learning, constant vigilance, and an unfading passion if you desire to succeed. These same challenges, however, are exactly the ingredients that keep every day in this business fresh and new and challenging. There is never a dull moment. In the auto repair business, it is rare that a service management employee has the luxury to specialize in just one area. A manager in automotive service is expected to be a “jack-of-alltrades.” As a result, an effective service manager must possess a wide range of knowledge and skills to effectively address daily challenges, skills ranging from accounting and advertising to customer relations and scheduling—and beyond. In addition to the diversity of knowledge and skills required, few industries perform under more pressure than automotive service. The automobile that you purchase or lease is commonly the second-largest big-dollar investment that you will make, next to your home. The sheer dollar value makes the car an important commodity, but it goes beyond that. Not only does the average person invest heavily in his or her car, they also depend upon the car far more than any other purchase. The public’s extreme dependence on their automobile as a key to maintaining their way of life makes their ability (and yours) to keep their car up and running essential to maintaining their lifestyle. Whether you live in the city, the suburbs, or in a rural area, you could wake up any morning with problems ranging from a power outage to a leaking faucet. Even though these problems are upsetting, you can still go to work, go to church, go shopping, go out to eat, and have a social life while you’re waiting for the repairman to schedule a visit to fix your problem. That is not true when you have a problem with your car. Without reliable transportation, you can’t get anywhere. The loss of use of your car may result in the loss of your job—your means of income to support your family, your home, and your lifestyle. The interesting point is this scenario applies to just about everyone you know. That is high stakes! This book is an effort to share my extensive experience in the automotive service industry. I present it to you as an
overview of the many skills and knowledge required to succeed in this challenging business. It will not provide you with all the answers to all of the situations that you will encounter in the automotive service business, but it is a great start.
NEW TO THIS EDITION Key concepts pull-out boxes—Draw attention of reader to key concepts within the text to improve retention, assist in review, and improve ease of locating important content and concepts. Key content boxes are dispersed throughout the text in gold bubbles in all chapters of the book. Improved graphics—More than 65 new and many updated illustrations and figures. The added and updated graphics help to better illustrate and support written content to maintain student interest and improve information retention. Focus on new technology tools (technology tools/apps/ social media)—Special attention has been paid to address the use of new electronic tools that are integral for service operations to communicate more effectively with the twentyfirst-century customer body. These updates are integrated throughout the text. Increased focus on service consultants—A greater focus on the knowledge, abilities, and skills required for this essential entry-level service management position is provided in this edition and is integrated throughout the text. ASE C1 Service Consultant test tips and sample test—A new Appendix C has been added that provides test-taking tips along with a sample ASE C1 – Service Consultant test to prepare students for that important exam. Expanded content on leadership—Updated and expanded content and focus on this critical skill set for all employees are presented in Chapter 8—Leadership. New real-world examples—Several additional real-world examples have been added as pull-out boxes in the text. These examples help students to bridge the gap between theory and how it is really applied in the industry every day.
xii PREFACE
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The book is divided into the following sections:
""
Section 5: Organizing and Managing Your Efforts
""
Section 1: Service Operations
""
Section 6: Customer Relations
""
Section 2: Management Styles
""
Section 7: Employee Relations
""
Section 3: Management Strategies
""
Section 8: Marketing, Merchandising, and Selling Service
""
Section 4: Financial Measurement
""
Section 9: The Legal Issues and Responsibilities
SUPPLEMENTS To access supplementary materials online, instructors need to request an instructor access code. Go to www.pearsonhighered. com/irc to register for an instructor access code. Within 48 hours of registering, you will receive a confirming e-mail including an instructor access code. Once you have received your code, locate your text in the online catalog and click the Instructor Resources
button on the left side of the catalog product page. Select a supplement, and a login page will appear. Once you have logged in, you can access instructor material for all Pearson textbooks. If you have any difficulties accessing the site or d ownloading a supplement, please contact Customer Service at http:// support.pearson.com/getsupport
P REF A C E
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ACKNOWLEDGMENTS Special thanks to my wife, Shelley, and my entire family whose patience and lifelong support have allowed me to undertake this project and my lifelong career in the field that I dearly love, automotive service. Particular thanks are due to Mark Hambaum; Timothy Gilbert, Northwood University; Drew Carlson, Cosumnes River College; Carl Eric Anderson, Fullerton College; and Tom Grothous, University of Northwestern Ohio, for their assistance with the text review. I also wish to thank my friends and business associates at Germain Motor Company, Ricart Automotive Group, Clintonville Auto Repair Service, Boyd’s Goodyear Tire and Service, and Midwestern Auto Group in Columbus, Ohio, for
allowing us “free access” to their facilities to shoot the photos for the book. And, finally . . . thanks to all of those who I have worked with and learned so much from during my automotive career. Without your friendship, support, and examples, I would have had n othing to write about! I hope that you enjoy the journey and that it provides you with a solid foundation for a long and prosperous career in automotive service. I hope you enjoy it nearly as much as I have enjoyed my association with this industry and the great people that I have been privileged to meet and work with over the years. —Andrew A. Rezin, Ph.D.
ABOUT THE AUTHOR Andrew A. Rezin is Emeritus Chair of Automotive and A pplied Technologies at Columbus State Community College and Director of the Midwest Hydrogen Center of Excellence located at The Ohio State University Center for Automotive Research. Dr. Rezin brings a unique perspective to the subject of service management based on his diverse automotive background. Drawing upon twenty years of private sector
experience w orking for major automotive manufacturers and as a m anager in large retail service departments c ombined with his extensive e xperience as college instructor and department chair, he provides a unique and informed perspective based on real-life experience of the critical topics so necessary to be successful in the modern automotive service industry.
xiv ABOUT THE A UTHOR
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