|When you already have one ace up your sleeve, it’s much easier to lay down a royal flush. Heath Caldwell, owner of Norm Baker Motor Company, had his ace—a successful automotive dealership in Las Vegas, Nev.—what he needed was a successful service department to complete his hand.|
The dealership, which opened in 1977, is a Lotus franchise and also sells Superformance cars, Mercedes Benzes, Porsches and other luxury and performance cars. Although the dealership developed a loyal customer base over the next 25 years they had no way to deliver top-notch service to those customers.
Then in 2002, Caldwell started planning how win. To get there Caldwell had to have a plan. His plan included the right person to lead the new department, purchasing the correct equipment, hiring seasoned technicians and building a service customer base.
Caldwell started by hiring the right service director, Bob Ferdette. This selection brought a tremendous amount of management experience and education to the dealership. Ferdette worked with Caldwell for a year and a half before the service department ever opened to ensure the plan was a winner.
One perk for the dealership (and Caldwell) was Ferdette’s industry career. It began in 1962 when he was hired into the parts department at a dealership in the Chicago area. He later received an associate degree in automotive management from General Motors’ Institute of Technology, now known as Kettering University, in Flint, Mich. He’s held the titles of service director, service manager and body shop manager at some of the largest dealerships in the Chicago area. In 1989, he moved to Las Vegas and began building his career in a new city.
The Correct Equipment
Building a Customer Base
However, marketing was very low key. The dealership decided that direct mail was their best option since they had been developing a sales clientele base since 1977. There was special emphasis on customers that purchased extended warranties. The department also expected revenue from off-the-street customer pay service and body work to supplement their marketing efforts.
He said of Las Vegas, “Out here, you’re always dealing with a stranger because it’s a transient town. That gives tremendous opportunity to folks… to really build a business fast because people are looking for somebody who delivers, exceeds their expectations, is a good person and doesn’t lie to them.”
Ferdette strongly advises dealers who are contemplating opening a service department to hire a well-rounded individual to manage the department. “You really need somebody who understands the expense side of it, the personnel side of it and the mechanic side of it. It doesn’t have to be the person who’s opening the shop, but it’s got to be somebody… because there’s not a lot of excess profit. You don’t make a ton of money where you can make mistakes and just write them off. It’s not that lucrative of a business; it’s just not.”
Business is Booming
The department saw its most profitable year in 2006, grossing roughly $623,000. While Ferdette admitted the first quarter of 2007 seemed a bit off, the department is still maintaining more than $50,000 per month in gross profits. He noted that it wasn’t just Norm Baker’s service department seeing a slip in numbers, “In general in Vegas, for whatever reason, it’s been a little slow this year.”
This type of gross profit would be difficult to maintain if their service department only focused on the vehicles they sell. Instead they have the technicians and equipment available to complete over 400 repair orders per month on a wide variety of makes and models. They accomplish this with seven employees; three of the seven have worked there since the department opened. Along with Ferdette, who also fills the role of service writer, there are four service technicians, one body technician and one assistant service writer. With the current manpower and space constraints (only nine bays and lifts), Ferdette feels like the department has reached its peak; however, the department is growing—literally.
Behind the dealership, a new service facility is under construction. Once the addition is completed, the department will have 14 lifts. One of the technicians will move to the new building, and Ferdette will hire an additional technician. He hopes it will be ready for business by July 5, 2007, but he admitted that date is a “prayer.”
Vol 5, Issue 7
Black Book’s final depreciation report of 2018 finds prices for used cars and trucks decreased by 2.7% and 2.3%, respectively, with declines among compacts, minivans, and full-size utilities setting the pace.