The Million Dollar Mistake Manufacturers Make

Hey Cool Car Fans,


One of the most amazing things that I’ve witnessed over the years is how automobile manufacturers lose their customer base over service issues.  I thought I would end the year by writing an article on this topic because I find it fascinating.  I could write a book as The Cool Car Guy on sales and marketing and how dealers and manufacturers do such a wonderful job ticking off their clients.  Any other industry would probably take the time to figure this out because they care about their customers, but I’ve watched this happen year after year in the automotive industry.

I’m talking about how fast an automobile manufacturer is willing to give up their clients to a competitor, after the sale.  The automobile industry spends hundreds of millions of dollars on advertising to try to get a customer.  If you watch any football game, you’re going to see beer commercials, prescription drug commercials, credit card commercials and automobile commercials.  These ads are not cheap.  Automobile manufacturers will spend millions of dollars to try to get people to drive a VW, Lexus, Infiniti, Audi, BMW, Mercedes, Subaru, Chevy, Ford, GM, Chrysler, Kia, Honda or Toyota. When I start naming off these brands, it’s very easy to think about the commercials that we’ve seen for each brand mentioned above and any that I may have left out.  The Lexus “December to Remember” or “Jan” sitting at the front desk talking to someone coming into the dealership to buy a Toyota, how someone has fallen in love with their Subaru, how Ford trucks are built “Ford Tough” or how you can “sign then drive” off in a new VW, each brand trying to earn our new business.

bentleyYou know what I’m talking about because everyone knows these brands and their advertisements.  When you buy one of these vehicles, the manufacturers even hire a third-party company to take surveys from their customers to rate the salesperson and the dealership on the experience they had.  If the salesperson doesn’t get a “10” out of “10” it will show negative on the dealership and the salesperson.  What the manufacturers are failing to realize though is that this is not the real problem with their brand.  It’s not the initial sale that is the issue, but it is what happens once someone owns their vehicle.  The real problem is the service side of their product.

Let me illustrate what I’m talking about with my own experience with Apple computer.  I’ve used Apple products since the Apple IIe, which was way back in the 1980’s.  I sold over $12 million in PC computers in the early 90’s when I worked for a company called ZEO’s International and I still used Mac’s for my personal computers at that time.  I’ve owned iPods, iPads, iPhones, Macbooks, iBooks, just about everything that Apple sells, but recently they really ticked me off.

computer laptopNow you would think that if someone has spent tens of thousands of dollars with your computer company over the years that you would want to take care of the client?  Apple doesn’t care though because they are Apple and that’s how most car companies act as well.  What changed my opinion of Apple Computer?  My daughter spilled water on my computer by accident and fried it, so I went into the Apple Store and they basically said, “Sucks for you Mr. Customer.  We are Apple and you need us, but we don’t need you.  Spend another $2,000 on a computer and we’ll help you out.”  Now, anyone who has ever sold anything in their life knows that if you treat your customers like they are not important that they will find another place to spend their money.  You risk that your customer will do what I’m doing, which is telling potentially hundreds or even thousands of people who read about my bad experience with Apple.

This is exactly how automobile manufactures treat their clients and it is pretty psychotic.  I mentioned last month that I had a client recently that needed a $5,000 repair on their Mercedes Benz.  They loved their Mercedes, until they found out that the differential on their vehicle went out with under 100,000 miles on it.  Since it was out of “warranty” it was going to cost them big time.  Do you think Mercedes Benz is smart enough to make sure that they save this client by figuring out how to reduce a $5,000 repair through their Dealer network?  Nope.  They instead allowed a third-party, an automobile mechanic at a local shop, to offer them a better deal than their own dealer network.  Does this make any sense?  Wouldn’t it be worth it to save a client by doing the repair at your cost and keep that client in your vehicle, so that they can get another Mercedes-Benz in the future?  Instead Mercedes-Benz will give millions of dollars to an advertising agency to try to get a new client, while ticking off their existing client. The client went and leased a Toyota Highlander and I doubt that they will ever own a Mercedes Benz again.  The customer is gone. So much for the survey when selling that new vehicle because it doesn’t matter.  Who cares, if you are going to lose them down the road when the vehicle needs a costly repair?

It’s not just Mercedes-Benz that does this, but they all do it.  I had a woman tell me recently her nightmare about owning her Chevy and how she will never buy a Chevy again.  It was almost identical to the people with the Mercedes-Benz, but a different problem with her vehicle.  She had a repair that was required on her vehicle and it was thousands of dollars, but the dealership cost was more than the third-party vendor.  She had nothing good to say about her Chevrolet and she hates the company because of the repair her vehicle needed.  What about the Subaru that needs the head gaskets replaced at 80,000 miles and is a $2,500 repair at the dealership?  How about the transmission that went out on the Nissan Pathfinder that I delivered to a client new and several years later when it was out of warranty based on the miles, the dealer gouged them to get it repaired?

How about the client who purchased a Ford Escape from me and two years later they called me angry because the transmission went out on it and the dealer quoted them $3,000 for the repair?  I knew of a third-party repair shop in Colorado Springs and they fixed their transmission without having to rebuild it completely for about $700.  Ford may want to send me an advertising fee for saving their client for them.  If we couldn’t have done that though, I would have traded them out of it and they probably would have never purchased a Ford again.Why couldn’t the Ford Dealership have done that for them? Why would you allow a third-party service provider to offer a better deal on repairs to your vehicle brand than your own dealer network?  Think Apple Computer is all I have to say about that one.

Automobile manufacturers are arrogant, but where would GM and Chrysler be without the American taxpayer loaning them money to stay in business?  Where is Pontiac, Oldsmobile, Hummer, Saturn, and Suzuki?  If you don’t take care of your customers they will find another place to go with their business.  My entire business model is based on service.  People pay for me to bring them their vehicles and they utilize me to save them time, money and hassle.  If the automobile manufacturers asked me for my opinion, I would suggest that they take some of those advertising dollars and spend money on keeping their existing customers happy.  It’ s much easier and more cost effective to save an existing client than to find a new one.


John Boyd

Auto Consultant – John Boyd: The Cool Car Guy

John is an auto consultant with his license at a car dealership in Denver, Colorado. He can help you save time and money on any make or model, new or used, lease or purchase – nationwide! Call or email John about your next vehicle! or Twitter @coolcarguy