The question of whether a dealership should outsource a service or perform it in-house is always financially motivated. The right answer, though, can vary widely from one dealership to another based on factors such as how specialized a skill set is required, what volume of work is available and even a storefront’s physical location.
For instance, location is a barrier for Cliff Lafreniere, dealer principal at Pinewood Park Motors Ford in Kirkland Lake, Ont., and vice-president of the Trillium Automobile Dealers Association. LaFreniere said that it would be beneficial for him to keep a dent-repair specialist on staff, but the relatively remote northern Ontario location of his dealership makes finding someone too much of a challenge.
“Our nearest person that we can actually hire to do this is two-and-a half to three hours away,” he said. Lafreniere said that the lost time of having inventory off his lot for repairs has a notable impact on his bottom line.
“If there is a dent…we can be anywhere from two to three weeks before we get it into a body shop, get it repaired, cleaned up, and then brought back on lot to be displayed,” he said. “If you have three vehicles [out for repairs], you could be tying up $100,000.”
‘TRAINING A COMPETITOR’
The flip side to that argument is that training people can carry more costs than education, especially in larger urban centres where staff have numerous employment options.
“Sometimes they will ... spend a lot of time, effort, and money training someone to do a paint-protection-film installation or truck bed liners,” said Bruce Lyons, president of Master Automotive in St. Albert, Alta. “What happens is they train them, get them up to speed, and then they end up having trained essentially a competitor, somebody that will just become their own business.”
Other services, such as wraps or upfitting for trades, are too specialized for dealerships to perform. Perry Iannuzzi, president of Pure Autographics, an automotive-wrapping company in Markham, Ont., said numerous payment structures for dealerships can make outsourcing profitable.
“For example, say Maple Nissan sells an NV [commercial van] and the buyer needs a wrap and racks put inside. They offer the graphics package as a tool that can be installed so-called ‘by the dealer’ so that you can actually finance your wrap with your purchase. As far as [customers] are concerned, the onestop shop was the dealership to get everything they needed.”
Jason Hewitt, client manager for Woodfield Canada, an industrial vehicle up-fitter with two locations in southern Ontario, said 35 to 40 per cent of the company’s business comes from dealerships. Dealers have an advantage, in that wraps and upfitting can be added to a customer’s financing to avoid having to pay upfront.
Specialized service vendors offer a variety of skills. Iannuzzi’s company has been in business for about 10 years and began working directly with Toronto-area dealers roughly three-and-a-half years ago to help buyers seeking higher customization of their vehicles. Some individual buyers want color changes or custom striping, but business users are a staple.
“Nissan dealers have NV vans, so we offer a custom design and wrapping service for the tradespeople who buy those vans,” Iannuzzi said. “For Mini Markham, they send all their Minis to us for custom striping.”
IS GOING OFF-SITE A HASSLE?