Denmark: PD for Automotive Dealership Success

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Author: Ahmet Günes

Positive Deviance Facilitator, Founder of Günes Consulting

Aunsbjerg Nielsen A/S is an automotive enterprise founded in 1926, initially as a repair shop, but started for earnest in 1956, when the second generation of Aunsbjerg Nielsen’s, Niels Aunsbjerg Nielsen, took over the Kolding garage. Aunsbjerg Nielsen A/S was a certified dealer of Morris, MG and Jaguar until 1986, when they shifted focus to French cars and has dealt in those ever since. The enterprise has a good reputation in the local community.

Aunsbjerg Nielsen A/S now consists of four dealers: Peugeot Haderslev, Peugeot Kolding, Peugeot Horsens and Mazda/Suzuki Kolding. In addition to these, there are two associated companies: Tidycar, a car preparation centre run in corporation with Ziebart, which also works for third parties, and SkadeXperten.dk, which is a body repair workshop that also services other makes of automobiles for other dealers.

The company currently employs around 100 people; 30 in the Peugeot Kolding dealership and aftermarket section. Aunsbjerg Nielsen A/S fully lives up to the current Peugeot Denmark quality standards, which is an up-rated version of the current ISO standard.

Burning platform

The car dealers in Denmark experience keener competition and lower prices which reduce corporate profits and future growth opportunities. Technological advances in telecommunications and the internet have made information more available and prices easily comparable. Companies find it hard to hold on to current customers due to the transparency of the market.

Increasing competition is beneficial for the consumers, who require constant improvements and changes. The constant flow of new developments reduces the products’ life cycle. It has become more difficult to get through to the customer and market the products and new initiatives.

The changes in the market has led to a paradigm shift in the automotive industry towards a more customer-oriented mindset. And particularly after the financial crisis, the industry has been forced to adapt to the current and future situation of the market.

The sales department’s declining sales and earnings and the significant social trends such as downsizing put the sales departments under pressure. Smaller cars mean less revenue per unit sold as well as less additional sales of accessories for the cars.

Increasing and stronger competition on the aftermarket, less cars sold, increasingly disloyal customers and lower revenue opportunities make it difficult for service departments to survive. In addition, the authorized dealerships have many commitments to their importer and brands, which I will elaborate on in the following section.

Structure and Future

An authorized dealership must live up to the many demands from the importer and the car factory. Many of these requirements for buildings, staff education level, equipment and tools, management etc., lead to high costs. In combination with the stretched earning potential mentioned above, the earnings and cost structure we know today is under pressure, but also hard to escape. New technologies such as electric and hybrid cars contain fewer parts to replace and thus less maintenance.

The supply chain and the services which dealers can offer, are being attacked from all sides. Roughly, the conditions require Aunsbjerg to either adapt or face a prolonged “death”.

In order to continue meeting the demands and expectations of the customers in the future, it is very important for an authorized car dealership such as Aunsbjerg to look into market conditions and the dynamics in the customer segments.
In Denmark, the automotive industry is known for being quite conservative and lacking innovative ideas and qualifications.

It is hard to find feasible, yet innovative ways to adapt to new trends and market conditions, because of the increase in demands and expectations from the customers and the increasing competition in the industry.

Working in a new way will force Aunsbjerg out of its comfort zone, and it requires a new mindset in the automotive industry and behavioural changes for the customers in the future. It is important to establish a good relationship with the staff, projects and associations involved in the process in order to access their data and share relevant information.

As a dealer you must know what it means to own a car, to drive a car and to choose a car as well as a rich understanding of the many different purposes that cars serve.

Decreasing customer satisfaction and loyalty in an automotive dealership – a wicked problem

The automotive dealer Aunsbjerg’s stores generally do well regarding customer satisfaction, and the enterprise is actually among the very best in Denmark (top 3 every year). However, one dealer workshop in particular has continuous problems with low customer satisfaction and a poor service level. In an industry where new customers are hard to attract, it is a considerable problem that the dealer is 62 out of 64 when it comes to customer satisfaction and loyalty. The workshop has two service managers, two parts managers and 14 mechanics and apprentices.

For two years, Aunsbjerg has tried to change the pattern with various traditional means such as best practice and lean. External consultants and coaches have tried to change the situation, but the efforts have been fruitless.

The dealer and in particular the team in the garage scare the customers away and the owners of Aunsbjerg has almost given up. Many members of staff are stressed and not happy with their jobs. There has been a staff turnover on many positions in both the garage and the office, but it has not improved the situation. The staff mistrusts and blames each other, and nobody takes responsibility for the errors made – inevitably at the expense of the customers.

On average, they are 30% less effective than other similar garages and make 20% more mistakes, which requires another service visit for the customer and that's generating a considerable amount of complaints. The staff does not acknowledge surveys from the various car brands. They say that the customers are different in their district and that the questions in these questionnaires are difficult to understand. The staff says that they do not have the resources to do the job, while management want to reduce staff to make business more profitable – the poor efficiency makes it hard for the owners to see why more hands are needed.

In a controlling set-up, the dealer has analyzed the figures and produced plans of action together with the team for each measuring point. Internal and external consultants supervised if the actions were taken.

The increased focus on the problem has had a minor impact for a short period of time, but impossible to retain.

Results after using PD approach:

- When we started our PD project - the dealership was rank nr. 62 out of 64 in Customer Satisfaction, Service and Loyalty in Denmark among Suzuki and Mazda Dealers. After 9 months working with PD, they were among TOP 3 I Denmark. It was 9 years ago, and they are still among the best dealers in Denmark.

- In the beginning, their repair shop was 30% less effective compared to other similar dealers in Denmark. After our PD process, they reduced it to 5% less efficient.

- When we started our PD project, they were making 20% more mistakes compared to other similar dealers and many customers had to come in again to get their cars fixed. After our PD process, they performed better and had 10% less mistakes in their diagnostic and repair of the cars.

- The dealership got more satisfied and happy employees, better collaboration and lower staff turnover.