Performance shops tend to see the local dealership as the enemy. It charges a lot, it turns away modified cars, and it seems to have endless money. Kevin Dubois opened this 2016 episode with a different view. Most dealerships make money and a lot of performance shops don't, so a shop owner should study how they do it.
His guest was Don Herring Jr., part owner of Don Herring Mitsubishi in the Dallas area. In 2016 the family ran three Mitsubishi stores with about 100 employees, a large wholesale parts operation, a parts website, and separate real estate and self-storage businesses. Don had also spent years at Evo track days and meets, which is how Kevin knew him.
The conversation covered how a dealership plans its year, routes work to technicians, staffs the service drive, controls parts, pays techs on book hours and handles angry customers. Most of it scales down to a small shop.
From washing cars at 12 to running his own store
Don grew up in the car business. His father sold Oldsmobiles in Fort Worth and later worked at a Volkswagen and Subaru lot in Oak Cliff, where Don started washing cars at 12. He went to college planning to be a doctor, switched majors, and joined Air Force ROTC. When the Cold War ended, the Air Force cut back and told him it didn't need him.
By then he was selling cars part time and making about twice what a new graduate in his field would earn. In 1993 he joined his father's business. The family took on Mitsubishi in 1988, added a second store in 1996 and a third in Irving in 2005. Irving was the first store Don ran on his own. Within three years he was living through 2008, the worst car market he had seen. He kept the store afloat, and by 2016 the Plano store was having one of its best years since 2003.
If I make fifty-one percent correct decisions, I'll be successful. And the reality is most of the wrong decisions we can change.
That was his father's advice, and Don leaned on it. He compared business to baseball, where a hitter who fails seven times out of ten earns millions. You learn from a mistake, put it behind you and keep going.
A yearly plan, checked every week
The structure behind the stores was simple and strict. Every November, Don's team built a plan for the next year, broken down month by month and department by department, covering revenue, gross profit and expenses. Every week the managers met and compared where they stood against that forecast in each line: new car sales, finance gross, used cars, service and parts. When a line was off, they asked why and what it would take to get back on track.
Don didn't bother with five-year plans. After 2008 he felt the market changed too fast. By the end of a single year, the plan usually needed tweaking.
The plan also showed where the money really came from. Don explained that new car margins had almost disappeared because buyers could look up the dealer's cost and incentives online. More profit came from arranging financing. Service and parts carried a large share of the gross. In 2016 it was 41 percent at the Dallas store, 39 percent at Plano, and 59 percent at Irving, which ran the wholesale parts business and shipped Mitsubishi parts to shops as far away as Alabama and Kansas.
How work gets to the right tech
Kevin asked Don to walk through what happens when a car pulls into the service drive. A service advisor greets the customer, ideally with the vehicle's service history already pulled, and finds out what the complaint is. Jobs are rated A through D by difficulty, and techs range from trainees to masters. The advisor dispatches the job to the next available tech in the queue who has the skill for it.
The point is cost and risk. A master tech is too expensive to spend on an oil change for a car with 5,000 miles, and a trainee shouldn't be pulling a head. The dealership's management system enforced it, so an advisor could not assign a transmission job to a trainee.
Staffing followed numbers too. One service manager per store. Advisors were based on car count, because one advisor could handle about 15 customers a day. Techs were based on shop hours, with roughly one technician for every 50 hours of work per week.
Parts never leave the counter uncharged
Kevin admitted that most performance shops get parts control wrong, his own included. At Don's stores the parts department was completely separate. A tech took the repair order to the parts counter, and before the counter person handed over a part, it was typed onto that repair order. Techs couldn't walk into the back and grab something, because a tech in a hurry will forget to bill it.
Don ran inventory just as tightly. A part that hadn't sold in a year was obsolete, and the store didn't want to stock it. He also got daily stock deliveries, so a tech rarely waited on a part. Don granted that a dedicated parts person is hard for a small performance shop to justify. The principle still holds. A part goes on the ticket at the moment it leaves the shelf.
Book hours, comebacks and paying techs
Dealers charge from book hours. If a clutch job books at 10 hours, the customer pays for 10 whether the tech takes 8 or 12. Don said this keeps the price fair, since every customer pays the same for the same job. It also rewards fast, careful techs. One who turns 10-hour jobs in six or seven hours can bill a 50-hour week in under 40. A slow tech gets paid only the book time. The hours came from a computerized labor guide that had replaced the old printed manuals.
Mistakes were on the tech. Under Texas law at the time, a tech who caused a comeback fixed it unpaid, or gave the hours back if someone else fixed it. Don noted these rules vary from state to state. Mitsubishi's standard was a comeback rate under 3 percent, and some months the stores hit zero. Kevin pointed out that performance shops rarely measure this at all, even though their rate is likely higher.
Handling unhappy customers
Don's mission was to exceed customer expectations, and he backed it with extras such as a year of free dent repair. He also paid a company to scan review sites and forums every day. When a complaint surfaced, the store tracked down the customer and called. He found that an upset customer who gets taken care of tends to become very loyal.
He didn't pretend every case ends well. He told the story of a highly modified Evo the store sold with a signed notice that the modifications weren't covered. The car was over-boosted, the motor let go, and the buyer wanted a new engine. Don compromised by installing a crate motor and told the buyer it was a stock motor now. Another customer sued over an engine that failed after the car tore off its drain plug. The judge ruled for the dealership before its attorney presented a case. For honest mistakes by a tech, the store carried garage liability insurance.
Advertising that brings people in
Asked what he struggled with most, Don named advertising. Repeat and referral business wasn't enough on its own. The internet drove the most traffic, and direct mail came second. Sending the same mailer every month got it thrown away, so the message had to keep changing.
If you've got something that you're spending a lot of money on and you can't tie a sale to it, then we've got to stop doing it.
He tracked cost per sale on every channel and dropped lead sources that stopped producing. He felt TV and radio built name recognition but didn't bring cars into the service drive. His favorite shop tool was a digital red, yellow and green inspection report that could be emailed to the customer, so they knew what was coming due before it failed.
Key takeaways
- Build a yearly plan by month and department, then compare actual results to it every week.
- Rate jobs by difficulty and match them to tech skill, so expensive techs aren't doing cheap work.
- Charge every part to the job at the moment it leaves the shelf.
- Measure comebacks. Mitsubishi held its dealers to under 3 percent.
- Track what each ad source costs per sale and cut the ones you can't tie to revenue.
- In hard times, watch expenses and spend your hours on work that produces income.
Running a smaller shop like a dealership
A performance shop doesn't need a dealership's budget to use Don's habits. My Shop Assist tracks time on every job and task, so you can see how long work really takes against what you quoted. Parts are added to the job and ordered through purchase orders, which keeps them on the bill. Inspection checklists and forms give customers a clear picture of their car, and text messaging keeps them informed. Jobs export to QuickBooks for accounting. Read more about how MSA fits service and repair shops.
If you want to put those systems in place, start a free 30-day trial.
