Dealership Service Rates

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OK, here's a new thread because I've realized I didn't fully appreciate how these guys work. This springs from my other thread about the pinion seal on the rear diff.

I always assumed that the dealer service center pulled the time for a job out of the FSM (in hours) and multiplied that by the shop rate (which right now seems to be about $80/hr for Toyota and $120/hr for Lexus). I've spoken to a service manager at one of my local dealers, and he says this is how it works for warranty work, and that the labor rate multiplier is lower for warranty work as well.

Now, here's the issue: to drop the rear prop shaft and replace the pinion seal, two different dealers are quoting me 1.5 hours of labor. A third says 2-2.5, and the fourth says 4 hours! The guys quoting 1.5 hours say they are pulling it from the manual, and the other two have "talked to a tech, and this is what he said it would take."

Is this stuff not standardized? I thought that we paid more for repairs than Toyota on warranty work because the multiplier was different. But now I'm finding that these guys are basically charging labor times well in excess of what I would actually think it would take them. (The total P/L for the exact same job at different dealers has ranged from $145 to $380).

I'd love to hear from you guys inside the dealerships, and find out what's going on here.
 

e9999

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well, I imagine that they may have some sort of agreement with Toy to use the books for warranty work.

As far as for the general public it is a free market I hope: They tell you what they would charge. And you decide where you'd like to go or make a counterproposal. They may or may not use the book rates, but it's their decision I would think. I doubt Toy tells them what they can or can not charge. Be happy neither Toy -nor worse, the gov't- tells them what they can or should charge. Remember that likely most folks don't pay MSRP on their new cars. Ultimately, you can have the satisfaction of calling the service manager and telling him what you think of his service rates... :)
 
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well, I imagine that they may have some sort of agreement with Toy to use the books for warranty work.

As far as for the general public it is a free market I hope: They tell you what they would charge. And you decide where you'd like to go or make a counterproposal. They may or may not use the book rates, but it's their decision I would think. I doubt Toy tells them what they can or can not charge. Be happy neither Toy -nor worse, the gov't- tells them what they can or should charge. Remember that likely most folks don't pay MSRP on their new cars. Ultimately, you can have the satisfaction of calling the service manager and telling him what you think of his service rates... :)

This is really fascinating. I always thought they were regulated. After all, when they're a franchise of Toyota NA, it's no longer truly a free-market economy at the dealership level. Independently-owned franchises always have to observe a set of rules set forth by the licensing company (think about Subway or Chipotle). FYI, the shop time for the pinion seal (if under warranty) is LESS than 1.5 hours.

Comparing this to MSRP for new car sales is more akin to the markup they charge on parts, not service. Back to the original point, I see your argument and I don't necessarily disagree. I had just assumed some uniformity of labor time estimates. If that's not the case, I will get estimates from several local dealers and use this as a basis for determining a fair price.

If you can't tell -- I'm new to the whole dealer service thing. I've always used indy mechanics, but had a recent bad experience with one. I haven't found one locally that I trust yet. I've since figured that my odds are better at the dealer of finding a tech with some LC experience.
 

e9999

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I do not know for a fact that an independently owned dealer does not have to have an agreement with Toyota on fixed rates.

I hope that's not the case (the fixed rates). I like free market whenever possible.

All the same, though, from a practical point of view, it may make sense for the dealer to use book times for convenience and uniformity. But I'm also sure that they will gladly go over the book whenever they feel they can get away with it.
 
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Uh, look out, you just placed the soap box in front of me.
Warranty rates are set by the manufacturer, Toyota TELLS the franchise dealer what they will get paid for warranty repairs, they can ask for "straight time" in strange cases but it takes a reps OK to get the claim paid.

Most dealers now are "flat rate" based meaning that the mechanic gets paid by the job going by the "manual". But the manual is based on a perfect world with all the right tools and clean conditions. Service writers sometimes bump up these times to reflect added items. Service writers are mostly paid on base salary plus commision. The more "time" they sell, they more their commision check is, hence the variations of times in dealers. They are trying to make a living like the rest of us, and you're walking in the door driving a $60,000 vehicle.
Do the math, you have a large target on your forehead that says I have money. Add on the view of an ARB bumper ($800-$1200), a winch ($900), expedition rack ($500+) or for the mall crowd, a set of 20's ($3500+) and you're asking for the "other rate". Hang on, I'm almost done ranting...

Mechanics have to train hundreds of hours (or should) to keep up with all the different models, and are are expected to be experts on all. They purchase their good tools from Sanp-On, Mac, Matco, or other tool dealers at 4-5 X's the cost of Craftsman tools so they don't have to run to Sears every time one breaks. A good mechanic that has a well built collection can have $35,000 to $60,000 in tools purchased over a 10-20 year period. That's right, he has a tool box possibly worth more that your car. But he earns his living with it like you use your Blackberry, computer, carpenter tools, chef's knives, or aluminum brief case. He also spends 10 minutes washing his hands every night before he goes home and still hears "you stink" when he walks in the door.

As I've said in the past, try walking in the service office with a smile and a box of cookies for the crew, and see what reaction you get. If you don't want to pay dealer prices for repair, or don't trust them, find some one you DO trust and build a relationship with that one service writer or mechanic. They are not Walmart and remember it's still "you get what you pay for" sometimes. And if you still don't like it, learn how to get greasy and fix it yourself. Sometimes it's fun.

Rant over.

Jeff,
Certified ASE Master Technician, ASE Parts Technician, Nissan Master Technician, Infiniti Master Technician with 18+ years on the line.
And yes, I spent some time at a Toyota Dealer too.
And all of that get's you a Mocha at Starbucks for $3.80, uh correction, now $4.35



And after reading this back to myself, to all those I've upset, pissed off, or whatever - :crybaby:
to those who learned something and might buy donuts next time...:cheers:
 
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Service writers sometimes bump up these times to reflect added items. Service writers are mostly paid on base salary plus commision. The more "time" they sell, they more their commision check is, hence the variations of times in dealers. They are trying to make a living like the rest of us, and your walking in the door driving a $60,000 vehicle.

There is the problem right there. Service shouldn't be on commision; save that for sales.

And after reading this back to myself, to all those I've upset, pissed off, or whatever - :crybaby:
to those who learned something and might buy donuts next time...:cheers:

Frankly I love to hear this side of it:)
 

e9999

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Camp, if the book were to call for 1hour and the service guys gets 2hrs worth out of the customer, I imagine the tech still gets paid only 1 hr labor?


(aside: although I'm naturally inclined towards the "bring Donuts" attitude -life is too short-, our dealership has 4 service guys up front in a little booth and there is a 10 car line waiting early in the a.m., so I didn't do it so far cuz I thought it would look weird or fake. Waddaya think? Advice?)
 
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Nobody's arguing that mechanics shouldn't be paid for what they do, at least none of us on here. I figure if it was really easy I'd be doing it myself. These guys have to learn a lot in order to be a good mechanic, and some really take that seriously.

The whole thrust of this thread is 'what are the dealerships doing?' Camp, you shedding some light on how the mechanics get paid really helps out a lot. On the flip side, paying grossly inflated rates that go to an ASM's commission or (God forbid) a greasy dealership owner as profit is something I'm not that interested in. Again, I'm not saying that all these people don't deserve to earn a living, but I'm pointing out that the difference between the low and high quotes for the same work were threefold different, and nobody could explain why.

When I say 'some mechanics take this seriously,' I mean just that. My last mechanic didn't, and he's gone. A few years ago, I owned a 1988 Porsche 911. My mechanic (different guy) only handled Porsches, plus the odd Audi or BMW. He made enough money to put his wife in a brand-new E350. Why? Because he worked on Porsches, knew them inside and out, and knew every Porsche in New Orleans that he worked on. And he charged what people thought he was worth, which is to say he charged a lot. Everything got fixed right, the first time, and I never minded paying what he asked. Neither did anyone else. There was always a wait to get in.

I worked at several GM and Ford dealerships during college. The service managers were crooks, the ASM's were kind of scaly, and the techs generally didn't know which end of the screwdriver to hold. Granted, that's GM and Ford, not Toyota, Lexus, or Infiniti, where I think the standards are higher. Still, I haven't been able to find a shop I trust (yet). With the dealerships, that's because I don't trust people who get defensive and can't explain their methods of developing estimates.

I've paid the price on the other side too. I got an alternator replaced on an old Maxima at one of those cheap-o shops (I won't mention the name, but Manny, Moe and Jack hosed me). Wrong mounting bracket, I went through 4 belts in 2 weeks before they believed me that it was installed wrong. Penny-wise, pound foolish. At this point I'm still looking for a guy who doesn't bulls*** me and is going to charge top-drawer prices for top-drawer service.
 
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Interesting discussion. And thanks to IH8MUD.com we can all easily learn the "ins and outs".

When living in Dallas I made the HUGE mistake in taking my Audi to the dealership. Only once, but enough to get burned for a lot of $$$$.
Thanks to (back in mid-90ies) an "Audi Internet list", I found a very small independant mechanic in Garland. He was (is) from Croatia, trained in Germany on MBs, Audis, Porshes, and VWs. He had foul temper, but he did excellent work for decent prices. He also right away told you "no, there's no need to do that now, you can wait XXXX miles". To this day, I have never heard anyone that was not happy with his work!

And I still have to find that type of mechanic up here (WA state) for LCs, even though I do most of the work myself on the 100. Access in most cases is so easy (starter excluded), but there will always be times when there's not time do do it home, or the "urge" to get greasy is just not there.

I think however that in our private lives, we far to seldom bring a tray of donuts or coffee to the mechanics. I always used to do it when I was selling high tech equipment to wireless carriers (and someone else paid for the donuts), and will start the same now when taking the cars in for service. Thnx Campfire!
 
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Camp, if the book were to call for 1hour and the service guys gets 2hrs worth out of the customer, I imagine the tech still gets paid only 1 hr labor?

Well. that's a good question. Sometimes Writers sell extra time and then "give it" to the mechanic saying "I got you an extra hour on this, you deserve it." But what he means is "now you owe me". Or the cheats will leave the mechanic with 1 hour and put the second hour to the job and their commision. It's more of the first though.

Remember that dealerships or independant repair shops still have overhead. Dealerships get "Special tools" shoved down their throats at huge costs just to continue to be a franchise dealer. I've seen $30,000 worth of tools show up and have no use what so ever for them. Owners see the bill and threaten Service managers unless the recoup the cost. Independant repair shops can's afford or don't have access to certain tools that dealers have, thus the reply of "you have to take it to the dealer..."
Finding a trusting soul who will be honest is tough, but keep looking...

Interesting discussion......

I think however that in our private lives, we far to seldom bring a tray of donuts or coffee to the mechanics. I always used to do it when I was selling high tech equipment to wireless carriers (and someone else paid for the donuts), and will start the same now when taking the cars in for service. Thnx Campfire!

A long long time ago, at a parts seminar before the internet, a speaker said
"On the average, if someone is happy with a job, they'll tell three people. If their unhappy, they'll tell seven people."
Now throw in the Net with everyone having access to forums like this and we all hear the negative X's 10.
But you will be on a first name basis fast if you can find a good service writer backed by good mechanics, and give the dogs a bone now & then.

Q.) When you get your hair cut, what's on the wall? A.)A license.
Q.)when you see the doctor, what's on the wall? A.) A diploma
Q.) When you seek legal advice, what's on the wall? A.) Diplomas, BAR cert. etc.
Q.) What's it take to get a job as a mechanic? A.) A set of tools usually.

Look for ASE or Factory certifications displayed in the service office proudly, and you might find someone who takes their job seriously.

Lecture over, I'm going for a beer.
 

sleeoffroad

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Now a little from the independent side. Other than warranty books, there are Alldata etc etc. When we started the shop I looked into these and found them to be totally lacking for LC work. Over 6 years we have developed our standard times to do work and that is what we charge. These are based on average times collected on doing the same job over and over. We are lucky, we specialize in one brand and more so, one subsection of a brand.

Sometimes you beat those times, sometimes you don't. A bolt breaks, rust, dirt etc etc, all slow jobs down. If the technician is good, he can beat the times, if not, he won't. It is a fine balance to put rewards systems in place to make sure the technicial gets rewarded for being efficient, but not rush jobs, just to make time.

Average dealer technicians bank on getting 60+ hours in a 40 work week. They normally do not get a base pay. So if the only get 1 oil change a day, they get the .5hrs pay for that day. Tough, but when the going is good, it normally is pretty good.

For some jobs, we can just not charge the straight time, because you will never get the work. Most times those are electrical installs. Dual batteries take 20-30 hours to install. We get $850 in labor to do that. That is only paying for 10 hours. Even at that, it is expensive and people complain.

In most cases, what you can get for the job is market driven, plus your own overhead etc comes into play.

So why the differences in times quotes, maybe one dealership has done it, and they know the time, one has never done it, doesn't want to loose his shirt, so overquoted, and one was slow, so they figured they would rather get the money, even if their average rate will be low for the given job.

It is the same we do, sometimes we loose our shirts when we under quote on a unfamiliar job, sometimes we score since we have done it so many times and we know the short cuts (call it experience and having the right tools, and the customer pays for it) and sometimes we just hit the mark.
 
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How do shops charge for "diagnostic time"? If it is misdiagnosed the first time, should the customer pay for a second diagnosis and the labor and parts expended on the first diagnoses?
 
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Thanks everyone for the input, especially Camp and Slee for the inside look.

As it turns out, it was a plugged breather tube, not the pinion seal. It was a quick enough fix that they just charged me for parts, no labor, and the whole thing came to about $15. To give praise where it's due, this is Motorcars Toyota in Cleveland Heights, and I'm bringing some donuts next time.

I did speak with the service manager at the other dealership (the one which quoted me 4 hours labor on the pinion seal). I wasn't even calling to complain, really I just wanted him to know that one of his ASM's had left the res. He was genuinely disappointed that his guys had come up with that estimate, and was really happy that someone let him know about it. I was glad we talked, I just might give them another shot at some point. And I really couldn't have spoken intelligently about the steps in replacing a pinion seal without the background I got on here from my original question.

Slee, I think it's terrific that you guys have a set of standardized rates based on the reality of the work. That's the way it should be. But unless you just handle one type of vehicle, it's hard to get enough numbers to form a statistically accurate picture of the time involved. My old Porsche guy did the same thing, I think.

For me, the moral of the story is to get estimates for the same work from a few places, then make a decision. This applies to the dealerships, anyway; I'm still hoping to find a good independent shop run by a Cruiserphile.
 
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Even if you have the dealer do the work, if you have the FSM, you can at least see what the recommended method is to make the repair and get an idea if the dealer price is reasonable to you.
 
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Sorry, lots of reading and no time to answer - trying to get my truck and a few others ready for cruise moab.

Christo is lucky because he works on such a small niche, that he can base all of his times.

Dealer rules (usually). Book time from Alldata or Mitchell flat rate labor guides. If repair is not listed then use the Toyota warranty flat rate book and multiply by 1.5. Usually brings the total close to the above references. That being said I guarantee you could call the same dealer and talk to each writer and get at least 2 different estimates, maybe all could be different:eek: . Unfortunately that is the nature of the business.

Other thing to keep in mind which alot of people don't know about is most dealers no, especially big ones are on a grid pricing system. So if the rate is 120/hr. That may fly for a 1-2 hr job. You get 3-10 hrs and the effective hourly rate could be as high as 150/hr. Then above 10 it defaults back to 120. It sucks. I think personally it's a rip off. Somebody in a dealer found a way to squeeze more money out of the customers. Just remember dealers are all about the #'s. Lexus is better to the customer, but you pay for it.

Good luck.
 

ToyotaDon

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From the Mitchell labor time guide, the rear diff pinion seal pays 2.0 hours, if you add the crush sleeve (which is recommended) it adds another 1.7 hours. Grand total-3.7 hours, most would just round up to 4 hours.
BTW-Our shop rate is $100 per hour.

As for diagnosis, if I make a mistake on diag, I check further without charging more. The exception is smog repairs, which can't always be corrected on the first shot. Usually, I'll find 1 or 2 items which could cause the failure, repair those, then recheck. The other method is the shotgun method, replace/repair everything that could cause the failure, then keep your fingers crossed.
I prefer to save the customer as much $$ as possible, but it could mean calling them back a few times, then they think you're "nickel & diming" them.
 
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It's all pretty simple IMHO, people like doing business with, and taking care of, other people they LIKE.. be an ass, get treated like one. Wanna know how I got my main ECU and key transponder all replaced for FREE at the dealer when it was out of warrenty? I treated them REALLY well. I didn't even say boo when they had my car for 3 days and were mystified by the problem, brought my writer a bottle of Makers Mark after he helped me out (and I told him I'd do it, and I followed through) and he introduced me to the service manager and I chatted him up for a bit... plus we all chatted about all the people that are just plain RUDE customers and treat these guys like crap. They are good people, working hard and making a living. They know I can afford the work and could have paid for the $1500 to replace things, but again, taking of them, and being NICE can often times get you taken care of in return. Actually, I think so many people are rude these days (and they get the BIG repair bills) that these writters LOVE to see nice people and will bend over backwards to "do a good thing" since they don't get to very often these days....

whew - sorry, back to normally scheduled programing...

fish
 

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