AUTOMOTIVE

SERVICE
MANAGEMENT
Principles into
Practice
T H I R D E D I T I O N

Andrew A. Rezin, Ph.D.

330 Hudson Street, NY, NY 10013

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Library of Congress Cataloging-in-Publication Data

Names: Rezin, Andrew A., author.
Title: Automotive service management : principles into practice /
  Andrew A. Rezin, Ph.D.
Description: Third edition. | Upper Saddle River, New Jersey: Pearson
Education, Inc., [2017] | Includes index.
Identifiers: LCCN 2017045762 | ISBN 9780134709857 (alk. paper) |
   ISBN 0134709853 (alk. paper)
Subjects: LCSH: Automobile repair shops—Management. | Service
stations—Management.
Classification: LCC TL153 .R46 2017 | DDC 629.28/72068—dc23 LC
   record available at https://lccn.loc.gov/

2017045762

1 17

ISBN-10: 0-13-470985-3
ISBN-13: 978-0-13-470985-7

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 BRIEF CONTENTS
Preface xii

Acknowledgments xiv

About the Author  xiv

SECTION 1 Service Operations  1

chapter 1 The Automotive Service Industry  2

chapter 2 Physical Resources  9

chapter 3 Human Resources  21

chapter 4 The Repair System  32

chapter 5 Repair Documents  44

SECTION 2 Management Theories and Principles  60

chapter 6 Classic Management  61

chapter 7 The Quality Movement  68

chapter 8 Leadership 80

chapter 9 The Complex Role of Management  89

chapter 10 Ethics and Stewardship  98

SECTION 3 Management Strategies  106

chapter 11 Vision, Mission, and Values  107

chapter 12 Strategic Planning  113

chapter 13 Developing Goals  119

chapter 14 Decision Making  125

SECTION 4 Financial Measurement  136

chapter 15 Income, Expenses, and Profit  137

chapter 16 Compensation Plans  146

chapter 17 Staffing and Shop Capacity  158

chapter 18 Analysis and Action  168

chapter 19 Financial Forecasting  176

 BRIEF C ON T EN T S     iii

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 SECTION 5 Organizing and Managing Yourself  184

chapter 20 Managing Yourself  185

chapter 21 Organizing Tips and Tools  194

SECTION 6 Customer Relations  203

chapter 22 The Value of Satisfied Customers  204

chapter 23 Building Basic Communication Skills  215

chapter 24 Resolving Customer Disputes  225

SECTION 7 Employee Relations  234

chapter 25 Recruiting and Selection  235

chapter 26 Motivating Employees  245

chapter 27 Progressive Discipline  254

SECTION 8 Marketing and Merchandising Service  263

chapter 28 Marketing and Mass Media  264

chapter 29 Target Marketing and Building an Identity  274

chapter 30 Point-of-Purchase Merchandising  283

chapter 31 Selling Service  291

SECTION 9 Legal Issues and Responsibilities  301

chapter 32 Legal Guidelines For Service Operations  302

chapter 33 Warranties and Service Agreements  310

chapter 34 Workplace Safety  317

Appendix A  326

Appendix B  328

Appendix C  334

Index 336

iv    BRIEF C ONTENTS

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 CONTENTS
Preface xii "" Introduction 21
"" Service Cashier  21
Acknowledgments xiv
"" Dispatcher 22
About the Author  xiv "" Claims Administrator (Booker)  23
"" Shop Foreman  24
SECTION 1 "" Service Consultant  24

SERVICE OPERATIONS  1 ""

""
Lead Technician  25
Porter 26
"" Parts Specialist  27
chapter 1 "" Technician 27
THE AUTOMOTIVE SERVICE "" Customer Relations Specialist  28

INDUSTRY 2 ""

""
Service Manager  29
Service Director  29
"" Chapter Objectives  2 summary   30
"" Key Terms  2 practicing the principles   30
"" Introduction 2 key terms and definitions   31
"" The State of the Industry  2
"" Service Market Segments  3
chapter 4
summary   6
practicing the principles   6 THE REPAIR SYSTEM  32
key terms and definitions   7
"" Chapter Objectives  32
references   7
"" Key Terms  32
chapter 2 "" Introduction 32

PHYSICAL RESOURCES  9 ""

""
The Auto Repair System  32
Advanced Systems  34
"" Chapter Objectives  9 "" Systems Thinking  34
"" Key Terms  9 "" The Repair Process  35
"" Introduction 9 "" Charting the Workflow  37
"" Facilities 9 summary   42
"" General Facility Guidelines  9 practicing the principles   42
"" Energy Efficiency  9 key terms and definitions   43
"" Facility Needs  11
"" Support Space  12
"" Customer Space  14
chapter 5
"" Tools and Equipment  15 REPAIR DOCUMENTS  44
"" Planning Your Investment  18
"" Chapter Objectives  44
summary   19
"" Key Terms  44
practicing the principles   19
key terms and definitions   20
"" Introduction 44
"" The Repair Order  44
chapter 3 "" Green/sustainability Issues  46

HUMAN RESOURCES  21 "" Tracking the Repair Process  50

summary   58
"" Chapter Objectives  21 practicing the principles   58
"" Key Terms  21 key terms and definitions   59

 C ON T EN T S     v

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 SECTION 2 chapter 9
MANAGEMENT THEORIES THE COMPLEX ROLE OF
AND PRINCIPLES 60 MANAGEMENT 89
"" Chapter Objectives  89
chapter 6 "" Key Terms  89
Introduction 89
CLASSIC MANAGEMENT  61
""

"" An Ever-Changing Enterprise  89

"" Chapter Objectives  61 "" More Art than Science  90
"" Key Terms  61 "" The Major Management Roles  90
"" Introduction 61 "" Qualities of a Manager  94
"" Traditional Management  62 S ummary   96
"" Scientific Management  64 P racticing the P rinciples   96
"" Management by Objective  65 K ey T erms and D efinitions   97
R eferences   97
summary   66
practicing the principles   66
key terms and definitions   67 chapter 10
references   67
ETHICS AND STEWARDSHIP  98
"" Chapter Objectives  98
chapter 7 "" Key Terms  98
THE QUALITY MOVEMENT  68 "" Introduction 98
"" Chapter Objectives  68
"" What is Ethics?  98
"" Key Terms  68
"" Applied Ethics  99
"" Introduction 68
"" Ethical Leadership  100
"" Quality 68
"" Stewardship 102
"" The Gurus of Quality  69 summary   104
practicing the principles   104
"" Quality in the Twenty-First Century  75
key terms and definitions   105
"" Practical Approaches to Quality  76
summary   78
practicing the principles   78 SECTION 3
key terms and definitions   78
references   79
MANAGEMENT STRATEGIES  106

chapter 8 chapter 11
LEADERSHIP 80 VISION, MISSION,
"" Chapter Objectives  80
AND VALUES 107
"" Key Terms  80 "" Chapter Objectives  107
"" Introduction 80 "" Key Terms  107
"" What is Leadership?  80 "" Introduction 107
"" Management and Leadership  81 "" Vision 107
"" Leading 24/7  87 "" Mission 109
summary   87 "" Values 110
practicing the principles   87 summary   112
notes   88 practicing the principles   112
key terms and definitions   88 key terms and definitions   112
references   88 references   112

vi    CONTENTS

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 chapter 12 SECTION 4
STRATEGIC PLANNING  113 FINANCIAL MEASUREMENT  136
"" Chapter Objectives  113
"" Key Terms  113 chapter 15
Introduction 113
INCOME, EXPENSES,
""

"" Levels of Planning  113

"" Strategic Planning  113 AND PROFIT 137
"" Environmental Scan  114 "" Chapter Objectives  137
"" SWOT Analysis  115 "" Key Terms  137
summary   117 "" Introduction 137
practicing the principles   117 "" Income 137
key terms and definitions   118
"" Expenses 138
Direct/Indirect/Overhead Expense Method  138
chapter 13 ""

"" Fixed Expenses  141

DEVELOPING GOALS  119 "" Profit 141
"" Chapter Objectives  119 summary   144
"" Key practicing the principles   144
Terms  119
key terms and definitions   145
"" Introduction 119
"" Setting Goals  119
"" Long-Range (Strategic) Goals  120 chapter 16
""

""
Operational Planning  121
Tactical Planning  122
COMPENSATION PLANS  146
"" Chapter Objectives  146
summary   123
"" Key Terms  146
practicing the principles   123
key terms and definitions   124 "" Introduction 146
"" Establishing Labor Charges  146
chapter 14 "" Variable Rate Pricing  149

DECISION MAKING  125 ""

""
Technician Skill Levels  150
Technician Pay Plans  151
"" Chapter Objectives  125 "" Pay Plans for Other Service Employees  153
"" Key Terms  125 "" Fringe Benefits  154
"" Introduction 125
summary   155
"" Is It Worth it?  125 practicing the principles   155
"" Measuring Value  126 key terms and definitions   156
"" Return on Investment  126 references   157
"" The Ben Franklin Decision Model  127
Risk Versus Reward  128
chapter 17
""

"" Energy Efficiency  129

"" Control, Influence, and Frustration  130 STAFFING AND SHOP
"" The Three Levels of Performance  132 CAPACITY 158
"" Practical Principles  133
"" Chapter Objectives  158
summary   134
"" Key Terms  158
practicing the principles   134
key terms and definitions   135
"" Introduction 158
references   135 "" Technician Staffing Plans  159

C ON T EN T S     vii

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 "" Increasing Shop Capacity  162 chapter 21
summary   166
practicing the principles   167 ORGANIZING TIPS AND
key terms and definitions   167
TOOLS 194
chapter 18 "" Chapter Objectives  194
"" Key Terms  194
ANALYSIS AND ACTION  168 "" Introduction 194
"" Chapter Objectives  168 "" Organizing Your Workload  194
"" Key Terms  168 "" Simple Tracking Tools  196
"" Introduction 168 "" Organizing Your Records  199
"" Achieving a Net Profit  168 "" Organizing Your Surroundings  200
"" Increasing Income  168 summary   201
"" Controlling Expenses  171 practicing the principles   201
key terms and definitions   202
summary   174
references   202
practicing the principles   175
key terms and definitions   175

chapter 19 SECTION 6
FINANCIAL FORECASTING  176 CUSTOMER RELATIONS  203
"" Chapter Objectives  176
"" Key Terms  176 chapter 22
"" Introduction 176 THE VALUE OF SATISFIED
""

""
Projecting Total Sales  176
Building a Forecast  181
CUSTOMERS 204
"" Chapter Objectives  204
summary   182
"" Key Terms  204
practicing the principles   183
key terms and definitions   183 "" Introduction 204
"" Customer Orientation  204

SECTION 5 "" Measuring Customer Satisfaction  206

"" The High Cost of Cultivating New Customers  209
ORGANIZING AND MANAGING "" The Low Cost of Repeat Business  209
YOURSELF 184 "" Word-of-Mouth Advertising  210
"" Fundamentals of Human Behavior  211
"" Quality Customer Service  212
chapter 20
summary   213
MANAGING YOURSELF  185 practicing the principles   213
key terms and definitions   214
"" Chapter Objectives  185
references   214
"" Key Terms  185
"" Introduction 185
chapter 23
"" What Do You Do Best?  185
"" Do What Makes You Feel Fulfilled  186 BUILDING BASIC
"" Establish Your Priorities  188 COMMUNICATION SKILLS  215
"" Getting Organized: The Three-Step Process  189
"" Chapter Objectives  215
summary   192
"" Key Terms  215
practicing the principles   192
key terms and definitions   193 "" Introduction 215
references   193 "" Basics of Communication  215

viii    CONTE NTS

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 "" Organizing Your Thoughts  216 "" Introduction 245
"" The Written Word  216 "" Setting Clear Expectations  245
"" Electronic Communication  217 "" Tracking Performance  246
"" Spoken Word  217 "" Measuring What is Important  246
"" Nonverbal Communication  218 "" Performance Evaluations  248
"" Questioning Techniques  220 "" Employee Compensation  250
summary   223 "" Incentives 252
practicing the principles   224 summary   252
key terms and definitions   224 practicing the principles   253
references   224 key terms and definitions   253

chapter 24
RESOLVING CUSTOMER chapter 27
DISPUTES 225 PROGRESSIVE DISCIPLINE  254
"" Chapter Objectives  225 "" Chapter Objectives  254
"" Key Terms  225 "" Key Terms  254
"" Introduction 225 "" Introduction 254
"" The Rules of Complaint Handling  225 "" Progressive Discipline Process  254
"" Defusing the Situation  230 "" I Did Not Realize it  255
"" The Power of Thinking Win-Win  231 "" In the Wrong Place  255
"" Complaint Resolution Process  231 "" Discipline or Punishment?  256
summary   232 "" Steps in the Process  256
practicing the principles   233 summary   261
key terms and definitions   233 practicing the principles   261
key terms and definitions   262
SECTION 7 references   262

EMPLOYEE RELATIONS  234

chapter 25 SECTION 8
RECRUITING AND SELECTION  235 MARKETING AND
"" Chapter Objectives  235
MERCHANDISING SERVICE  263
"" Key Terms  235
"" Introduction 235 chapter 28
Defining the Job  236
MARKETING AND MASS
""

"" Job Descriptions  236

"" Finding Candidates  239 MEDIA 264
"" Screening and Selection  241 "" Chapter Objectives  264
summary   243 "" Key Terms  264
practicing the principles   244 "" Introduction 264
key terms and definitions   244
"" The Five Goals of Marketing  264
"" Establishing Value  265
chapter 26 "" Characteristics of Value  265
MOTIVATING EMPLOYEES  245 "" Green Considerations  268
"" Chapter Objectives  245
"" How Much is Too Much?  270
"" Key Terms  245
"" Advertising 270

C ON T EN T S     ix

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 summary   273 "" Introduction 291
practicing the principles   273 "" Support Services  291
key terms and definitions   273 "" Selling in the Service Drive  292
"" Selling in the Shop  296
chapter 29 "" The Value of Increased Sales Per Vehicle  298
TARGET MARKETING AND summary   299

BUILDING AN IDENTITY  274 practicing the principles  

key terms and definitions  
299
300
"" Chapter Objectives  274
"" Key Terms  274
"" Introduction 274 SECTION 9
"" Defining Your Market  274 LEGAL ISSUES AND
Market Research  275
RESPONSIBILITIES 301
""

"" Wants Versus Needs  277

"" Awareness 277
"" Building Identity  278 chapter 32
""

""
Establishing An Image  280
Communicating Your Message  281
LEGAL GUIDELINES FOR SERVICE
summary   281 OPERATIONS 302
practicing the principles   282 "" Chapter Objectives  302
key terms and definitions   282 "" Key Terms  302
"" Introduction 302
chapter 30 "" Customer Issues  302
POINT-OF-PURCHASE "" The Repair Order  302

MERCHANDISING 283 ""

""
Quality of Repairs  304
Repair Warranty  304
"" Chapter Objectives  283 "" Safety and Reliability  305
"" Key Terms  283 "" Civil and Criminal Liability  306
"" Introduction 283 "" New Vehicle Issues  306
"" The Goal  284 summary   308
"" Merchandising Locations  284 practicing the principles   308
"" Signage 285 key terms and definitions   309
"" Product Displays  286
"" Impulse Items  287
"" What Should I Merchandise?  288
chapter 33
summary   289 WARRANTIES AND SERVICE
practicing the principles  
key terms and
289
definitions   290
AGREEMENTS 310
"" Chapter Objectives  310
chapter 31 "" Key Terms  310
Introduction 310
SELLING SERVICE  291
""

"" Guarantees and Warranties  310

"" Chapter Objectives  291 "" Manufacturer Warranty  310
"" Key Terms  291 "" Extended Warranties  313

x    CONTEN TS

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 "" Used Car Warranties  314 "" OSHA 318
summary   315 "" Green Considerations  321
practicing the principles   315 summary   324
key T erms and definitions   316 practicing the principles   324
key terms and definitions   325

chapter 34 APPENDIX A  326

WORKPLACE SAFETY  317 APPENDIX B  328
"" Chapter Objectives  317
"" Key Terms  317
APPENDIX C  334
"" Introduction 317 INDEX 336
"" Workplace Safety Legislation  317

C ON T EN T S     xi

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 PREFACE
Automotive service is a very complex and ever-changing busi- overview of the many skills and knowledge required to succeed
ness. The products, the technology, and the needs and desires in this challenging business. It will not provide you with all the
of the customer base change daily. At the same time, there answers to all of the situations that you will encounter in the
are new competitors constantly entering the market with new automotive service business, but it is a great start.
approaches to cornering the market. This fast-paced industry
requires continuous learning, constant vigilance, and an unfad-
ing passion if you desire to succeed. These same challenges,
however, are exactly the ingredients that keep every day in
this business fresh and new and challenging. There is never a
NEW TO THIS EDITION
dull moment.
In the auto repair business, it is rare that a service manage- Key concepts pull-out boxes—Draw attention of reader to key
ment employee has the luxury to specialize in just one area. A concepts within the text to improve retention, assist in review,
manager in automotive service is expected to be a “jack-of-all- and improve ease of locating important content and concepts.
trades.” As a result, an effective service manager must possess Key content boxes are dispersed throughout the text in gold
a wide range of knowledge and skills to effectively address daily bubbles in all chapters of the book.
challenges, skills ranging from accounting and advertising to
Improved graphics—More than 65 new and many updated
customer relations and scheduling—and beyond.
illustrations and figures. The added and updated graphics help
In addition to the diversity of knowledge and skills re-
to better illustrate and support written content to maintain stu-
quired, few industries perform under more pressure than au-
dent interest and improve information retention.
tomotive service. The automobile that you purchase or lease
is commonly the second-largest big-dollar investment that you Focus on new technology tools (technology tools/apps/
will make, next to your home. The sheer dollar value makes social media)—Special attention has been paid to address
the car an important commodity, but it goes beyond that. Not the use of new electronic tools that are integral for service
only does the average person invest heavily in his or her car, ­operations to communicate more effectively with the twenty-
they also depend upon the car far more than any other pur- first-century customer body. These updates are integrated
chase. The public’s extreme dependence on their automobile throughout the text.
as a key to maintaining their way of life makes their ability (and
Increased focus on service consultants—A greater focus on
yours) to keep their car up and running essential to maintaining
the knowledge, abilities, and skills required for this essential
their lifestyle.
entry-level service management position is provided in this edi-
Whether you live in the city, the suburbs, or in a rural area,
tion and is integrated throughout the text.
you could wake up any morning with problems ranging from a
power outage to a leaking faucet. Even though these problems ASE C1 Service Consultant test tips and sample test—A new
are upsetting, you can still go to work, go to church, go shop- Appendix C has been added that provides test-taking tips along
ping, go out to eat, and have a social life while you’re waiting with a sample ASE C1 – Service Consultant test to prepare stu-
for the repairman to schedule a visit to fix your problem. That is dents for that important exam.
not true when you have a problem with your car. Without reliable
Expanded content on leadership—Updated and expanded
transportation, you can’t get anywhere. The loss of use of your
content and focus on this critical skill set for all employees are
car may result in the loss of your job—your means of income
presented in Chapter 8—Leadership.
to support your family, your home, and your lifestyle. The inter-
esting point is this scenario applies to just about everyone you New real-world examples—Several additional real-world ex-
know. That is high stakes! amples have been added as pull-out boxes in the text. These
This book is an effort to share my extensive experience examples help students to bridge the gap between theory and
in the automotive service industry. I present it to you as an how it is really applied in the industry every day.

xii    PREFACE 

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 The book is divided into the following sections: "" Section 5: Organizing and Managing Your Efforts
"" Section 1: Service Operations "" Section 6: Customer Relations
"" Section 2: Management Styles "" Section 7: Employee Relations
"" Section 3: Management Strategies "" Section 8: Marketing, Merchandising, and Selling Service
"" Section 4: Financial Measurement "" Section 9: The Legal Issues and Responsibilities

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P REF A C E    xiii

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 ACKNOWLEDGMENTS
Special thanks to my wife, Shelley, and my entire ­family whose allowing us “free access” to their facilities to shoot the photos
patience and lifelong support have allowed me to ­undertake for the book.
this project and my lifelong career in the field that I dearly And, finally . . . thanks to all of those who I have worked
love, ­ automotive service. Particular thanks are due to Mark with and learned so much from during my automotive career.
Hambaum; Timothy Gilbert, Northwood University; Drew
­ ­Without your friendship, support, and examples, I would have
­Carlson, ­Cosumnes River College; Carl Eric Anderson, Fullerton had n ­ othing to write about!
College; and Tom Grothous, University of Northwestern Ohio, I hope that you enjoy the journey and that it provides you
for their assistance with the text review. with a solid foundation for a long and prosperous career in
I also wish to thank my friends and business associ- ­automotive service. I hope you enjoy it nearly as much as I have
ates at Germain Motor Company, Ricart Automotive Group, enjoyed my association with this industry and the great people
Clintonville Auto Repair Service, Boyd’s Goodyear Tire and that I have been privileged to meet and work with over the years.
Service, and Midwestern Auto Group in Columbus, Ohio, for —Andrew A. Rezin, Ph.D.

ABOUT THE AUTHOR

Andrew A. Rezin is Emeritus Chair of Automotive and A ­ pplied experience w
­ orking for major automotive ­manufacturers and
Technologies at Columbus State Community College and as a m­ anager in large retail service departments c
­ ombined
Director of the Midwest Hydrogen Center of Excellence
­ with his ­extensive e ­xperience as college instructor and
­located at The Ohio State University Center for ­Automotive ­department chair, he ­provides a unique and informed per-
Research. Dr. Rezin brings a unique perspective to the spective based on real-life experience of the critical topics
­subject of service management based on his diverse automo- so necessary to be successful in the modern automotive
tive background. Drawing upon twenty years of private sector ­service industry.

xiv     ABOUT THE A UTHOR

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