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.

The Right Leader

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
Purchasing the proper equipment, a vital component of success for any service department, is an expensive investment for dealers. In the Norm Baker service department, you’ll find typical service equipment like lifts, brake lathes, a wheel balancer, jacks and a top-of-the-line parts washer, but you’ll also find a $30,000 machine specifically designed for work on Mercedes and other very expensive equipment that allows Ferdette and his team to work electronically on other luxury vehicle makes. He plans on purchasing another rather expensive piece of equipment called the Autologic Diagnostic System that will dramatically increase the number of repairs his shop can do on foreign luxury vehicles.

Seasoned Technicians
Ferdette easily filled the service department with able employees. He knew experienced and qualified technicians in the area to hire. “I’ve been able to build up rapport with many, many mechanics, and I’ve been lucky enough that they want to work for me… There’s a certain amount of camaraderie that goes with that and building up trust over time,” said Ferdette. While he enjoys the camaraderie he shares with his technicians, he remains a purpose-driven individual and is not afraid to make necessary personnel changes. Since the service shop opened at Norm Baker, he’s replaced two technicians; he said it was like trading “a fourth round draft pick for Peyton Manning.”

Building a Customer Base
Before the Norm Baker service department was even open for business, Ferdette was already attracting loyal customers. Because of the commitment to excellence and hard work he’d shown in previous service shops in the area, three vehicle fleets followed him to Norm Baker. Combined with Caldwell’s sales customer base, the department had plenty of people to market to.

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.

Favorable Circumstances
While Norm Baker’s success is a direct result of extensive planning and expertise, much of which was due to Ferdette, it’s important to note that a few parts of the winning hand were in place before Ferdette ever arrived. First, the dealership already had a successful sales department, located in the largest metropolitan city in the U.S. founded in the 20th century. Las Vegas, a largely transient city in Clark County, experienced an explosion in population from 2000 to 2006.  Ferdette just needed to bring his experience and caring attitude, and let the dealerships service speak for itself.

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
Since the service department opened in November of 2003, it has more than doubled its average monthly gross profit of $15,000-to-$20,000 per month. The service shop, which also includes a body shop, currently averages more than $50,000 per month in gross profits. The body work accounts for 15 to 20 percent of the department’s monthly gross profits.

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