Sullivan Ford Auto World

IntroductionA Ford dealer of new and old cars, with a

service and repair bay.Started by Walt Sullivan in 1981. He was a

great salesman and an entrepreneur.Carol Sullivan Diaz had to take over after her

father’s heart attack leaving her health care management job.

Company performance is not up to the mark. It is running in red for the last six months. It has lower sales, margin and discouraging sales forecast.

Company Profile1.Front end of the business consists of sale of

new cars as well as pre-owned vehicles.2. Back end of the business was a service

centre and a repair bay.3. Sells about 1100 cars a year (50% is new)4. Revenue- $26.6Million (last year 30.5m$)

from car sales and $ 2.9 Million( last year3.6)m$

Cntd… New car margins are substantially lower

than used cars.Contribution margin should be around 5.5%

of sales revenue and 25% from the revenues from the service.

60%bmargin contribution from sale of car and 40% from service.

Recent year contribution margin is 4.6% and 24% respectively- insufficient to cover fixed cost also.

Current issuesFinancial problems- Cash loss, rising

accounts payables, two months behind in the mortgage payments.

Lower customer satisfaction in service department as per the survey conducted.

Falling sales forecast.Low employee’s morale.Should Carol run this business or sell it off to

Bill Froelich

Service Work Flow Schedule appointments with customers for

repair and maintenanceWriting up each work order and prepare cost

estimate and the customerTaking the vehicle and hand over to mechanic

and complete the repair , part change and service.

Prepare the invoice incorporating guarantees and warranties conditions

Hand over the car to customers after receiving the payments

Auto Service Centre Vs Health CareIf we assume that human body is also like a

machine, we will find lot of similarity between health care biz. And auto service centre.

Basic processes are same except the fact that health care is much more complex as it deals with human sufferings and pain.

Health care work flow is very similar to the service centre work flow as given above.

Car sales Vs Service dept.Car sales is about a product sale. It employed

10 people including a sales Manager, an Office manager and a secretary.

Customer had discomfort in leaving their cars and not getting on time. If they had to come again it irritated them even more.

Cntd…Every customers would have different

requirement and needed personalized service.

Mechanics not only needed to be trained in repair and service of car but also in dealing with customers like a sales person should.

Customers would demand and negotiate at every step and expect personalized service.

Complaints will be immediate, on the face.

Marketing of product (car) Vs ServiceCustomers were attracted by the Ford brand

value or for used cheaper cars. Value propositions and customer expectations were well defined and it was one time deal.

On the other hand service department has much more complex value proposition and customer expectations also are not very clear. This led to mismatch and friction.

Solution/ ConclusionCarol with an MBA and experience in health

care business is well qualified to turn around the business.

She has to train all the employees of service department to ensure customer focused behavior and approach.

Benchmark the service department processes with health care industry and bring improvement.

Solution/ ConclusionImprove the quality of the service and repair

to ensure higher customer satisfaction.Make a action plan to improve the ratings as

pointed out in survey report.Bring in accountability among all employees

and stream line the process to align it with customer satisfaction index.

Make changes in organization as required to achieve above goals.