By Jeff Balke
By Aaron Reiss
By Angelica Leicht
By Dianna Wray
By Aaron Reiss
By Camilo Smith
By Craig Malisow
By Jeff Balke
Don't just focus on the customer's problem with a car -- "Isolate and Upsell." Mark up parts prices nearly 300 percent over costs, and ditch those pesky words such as price or expensive. Better to use the positive spin of "investment." A problem is actually an "opportunity." And the biggest no-no is the word "no" -- as in no sale.
That's the gospel according to America's Service Station, as dictated in the official ASS manual, a virtual how-to handbook for generating hefty profits.
After complaints from motorists using ASS, the Houston Press recently conducted a sting on the chain's automotive garages. It turned up a variety of problems ranging from unneeded repairs to questionable charges, shoddy work and inferior replacement parts (see "Pain in the ASS," by Randall Patterson, June 1).
To be certain, most sections parallel those of typical company sales guides. One theme of ASS is to "wow" customers with unique -- "outrageous" -- service that will keep them coming back. It also reminds workers that quality work counts most. "All the great customer service, professionalism, and integrity in the world mean nothing if we did not properly fix the customer's vehicle." One section says, "We must always be sure we are only recommending and selling repair work that is indeed necessary."
However, the section on repair estimates gives a blunt lesson in profit margins, under the heading "Mark Up the Higher, Buy from the Lower." It refers to a minimum allowable increase of 275 percent on repair parts. Employees are advised to call two auto supply outlets to get quotes on part prices, then multiply those by 2.75. Put the highest total on the estimate sheet -- then buy the lesser-priced product.
"There is another method that is encouraged, but not mandatory," the manual states. "If you would like to increase your profit margins even further, you will probably utilize this system." It simply says to call an auto dealer's parts section and use its price, but only if the dealer is higher than the 275 percent markup by ASS on the auto supply outlets. The profit margin increases because ASS charges the highest price to the customer, but pays the lowest price from the supplier.
When the auto dealer is the only available source, ASS is content to take its discounted price -- usually 20 percent off -- and mark that up a mere 225 percent to the customer. The manual does stress that the employee shouldn't buy "junk" and shouldn't pass off a remanufactured part as a new one.
"Whenever possible, use the least costly aftermarket supplier's part once the job is sold," the manual says.
Chad Buxton, ASS's chief financial officer, defended the 275 percent markups as an industry standard. The manual says the practice is a "safety net" so the company will not take a hit by quoting a lower parts price, then finding out that part is not available. As for using the dealer's price, the manual says, "We deserve to get just as much for parts as the dealer is getting. We provide a service that is well above & beyond the services that they provide." It did not say whether they also deserve to get 225 percent more than the dealer receives for a part that cannot be found in auto supply outlets.
Sampson says pricing was one of many problems he had with the company's approach and ethics. He was an assistant manager of the Clear Lake store for almost five months and says he was fired after complaining too loudly for too long about the company's business practices. The 32-year-old man has a marketing degree from Texas Southern University and has worked at automotive aftermarket chains such as Western Auto, Discount Tire and National Tire and Battery.
The manual obtained by the Press was from 1997 and included updates from last year. Sampson says actual practices deviated from the company manual and its pitches. There were none of the sophisticated diagnostic computers at his outlet, he says, and none of the promised mechanics with certification from the nonprofit National Institute for Automotive Service Excellence (ASE).
"It was a joke," Sampson says. "Most of the time, [the repair] was just guesswork. They didn't know what they were doing, so they fixed everything, no matter whether it needed to be fixed or not."
Buxton, the ASS CFO, says every outlet is fully equipped and computerized, and that ASE-certified mechanics are at each store to handle repairs requiring that expertise.
Asked about the manual, Dan Parsons of the Better Business Bureau says, "You have guys at the top with great intentions. But you have guys in middle management who have been around the business for a long time; you have a lot of maybe bad old managers."
The BBB has logged many complaints about ASS, although Buxton says his company's record has been distorted. "We've had 80 complaints in the Houston area, but we have fixed over 400,000 cars," he says. However, some chains with far greater volumes of business have only a handful of complaints to the BBB.