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Analysis: Of Service And Profits

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A business absolutely devoted to service will have only one worry about profits; they will be embarrassingly large — Henry Ford

It is only appropriate that we open with a quote from the great Henry Ford, whose impact on the automobile industry revolutionised the world. His thought above, on how businesses that focus on service become hugely successful, is a refreshing and meaningful pointer for companies and consumers both. 
 
From the case, however, the situation in the auto industry today might be construed as one where manufacturers and dealers are not focusing on service and value delivery. Unfortunately, this is the reality that many car owners face today.
 
In the case, after Badal and Sridhar have expressed the problem, Mannan puts it very well (in addition to his invitation to all for lunch!) when he says that the more you get involved at the dealer’s, the better your chances of a positive experience. This means, first, being prepared to take the car to the dealer yourself. Then, asking questions about why a particular job item is being proposed or why it costs so much. The more you do this kind of stuff, the more you tend to get the correct picture. But you need to have the time and inclination to do this. 
 
Two other things that you can do are research on the Net about your car, and pick up customer feedback about the dealer. Does your model of car need certain parts to be changed after it has done a certain number of km (you can see this from the car’s manual as well)? Does your dealer have a reputation for charging a bomb, or for over-suggesting repairs? Being aware is a reasonable guard against being ripped off, though it’s not foolproof.
 
Now one observation. The three suggestions above place the onus of getting correct service at the correct price on the consumer himself.  So, does it finally boil down to consumer being aware and getting more involved? Keeping in mind Henry Ford’s wisdom, isn’t there anything progressive that manufacturers can do to positively impact their service? 
 
To my mind, there are three impactful changes that can be made by manufacturers. 
 
First, manufacturers should set up a system whereby the dealer has to provide a written quotation to the consumer. The consumer should be free to compare such quotes across dealers, before committing to the job. This will ensure reduction in irresponsible estimates and unnecessary repairs. It will also help in controlling  budgets better at companies like Delaware.
 
Next, there should be a system whereby the dealer must return the old part to the consumer. As some dealers already do this, it should not be difficult for others to follow. 
 
Finally, the manufacturer should have a ‘recycle box’ and a ‘re-evaluate window’ placed at each dealer workshop. When replaced car parts are given back to the consumer, he usually does not know what to do with them. So he dumps them into the garbage, which is an eco-hazard, or they reach via kabari hawkers to reconditioners who clean, recondition, repackage, and often resell them as new. Both these outcomes are hugely undesirable. The ‘recycle box’ will ensure that the used parts are properly recycled or disposed. Yes, the manufacturer will have to incur collection, shipment and processing costs on this, but will also gain from huge recoveries of recyclable parts and materials, apart from CSR benefits. To me this is a “big idea”.
 
A ‘re-evaluate’ window should be available at the dealer. If a dealer replaced a part and the car owner is not convinced if the replacement was required, the owner could just deposit the used part with his name and address at this window. The manufacturer would then evaluate if it really needed changing, and get back to the owner as well as the dealer with any corrective action or communication. This process will be especially useful for parts where a visual examination does not reveal if it was at, or near enough, the end of its life when the dealer replaced it. 
 
My guess is that along with the written quotation system proposed above, the additional recourse provided by the re-evaluate window would significantly reduce (if not remove) the instances of overcharging or unnecessary replacement of parts by dealers. The quotation system would ensure that dealers become more responsible, and consumers more aware. And as a result, the load on (or possibility of misuse of) the re-evaluation facility will reduce. 
 
At the same time, the increase in consumers’ perception of fair service, and the resultant strengthening of the manufacturer’s brand would be tremendous, leading to increased sales, profits and other sought-after outcomes!
 
I hope colleagues in the automobile industry are reading this, and evaluate these suggestions. After all, one of the key founders of this very industry shared these principles.
 
The author has worked in sales, marketing and business roles in companies like HUL, Pepsi and Nokia, among others. He is based in Gurgaon
 
(This story was published in Businessworld Issue Dated 15-10-2012)