by David Zatz
Years ago there were rumors that Mopar was planning to go into full scale multiple brand retail, like Motorcraft and AC/Delco. Did anything come of that?
What we did, and I think your web site reported, last year we launched a partnership with Magneti Marelli. Through this partnership we offered 3,000 parts for competitive makes. So today we have the opportunity to support customers of GM, Ford, Nissan, Toyota, Honda, Hyundai, and Kia vehicles, about 85% of the cars that are on the market. That is our strategy. We still sell to our dealer market and to our customers but we give to our dealers the opportunity to take care of every make.
Are there any plans to sell full range outside of the dealers?
No, we have a relationship with some wholesale distributors that we use for some selective segments of the market but our main channel is with our dealers. And we have a lot of dealers that are engaged in selling to independents and warehouse distributors.
Is there a plan to integrate Mopar and Magneti Marelli worldwide.
Well, Magneti Marelli is a component maker and is working for many different manufacturers. So we have a two different type of businesses. Magneti Marelli is a worldwide partner for original made parts. But we work in two different markets. They are a component maker for OEMs, we [Mopar] are an aftermarket brand. So we are their exclusive distributors in North America for after sales. We will expand this partnership in the rest of the world but they have their own market.
What have been your greatest challenges and achievements since you got to Chrysler?
I don’t like to say what my achievements are since that is something someone else should say. I would say that definitely the first task at Mopar was to reestablish the strength of the brand as a component of the Chrysler Company that can add value to every other brand, so Dodge, Jeep, etc.
Before the new company was created in 2009 I would say the brand had been a bit neglected. We used to say we are a bit in the basement. It was probably that there was simply no understanding of the value and power of the brand.
So we have been working diligently to recreate the foundation of the quality of our brands. For instance, not only for the vehicles but for the parts, there was an attmept to follow too-quick-to-market choices with poor quality that in the end were not aligned with our policy.
I was discussing with another journalist in this room, a few minutes ago, he was asking me, how we do we benchmark the aftermarket business? What about the price differential that we can sometimes have? I made an example, graphics, there was a recent discussion that we had about some graphics on the market, one third of the price of our graphics. Our graphics all go through ultraviolet testing because if I put a graphic on a car, I want to be sure that the graphic will last as long as the car is on the market. This is not a concern for an aftermarket company, they just want a price that is attractive to the customer. So our parts today are undergoing the same level of testing as our cars.
This was one of our first actions.
The second element is to reestablish the quality of service to our dealers. You need to be consistent in delivering quality to our dealers. Quality means quality of parts, quality of service, and quality of tools.
Last but not least, we are establishing the connection with our enthusiasts. I said last but not least because this is very important, you are obviously part of that world. The launch of the Mopar plan, the Challenger with the Mopar badge coming out of the plant has been a statement of “Mopar is back.” Actually it is back with something that has never happened [before], with a car coming out of production plant with the Mopar badge.
[I've already told this story three times today, but] when I came aboard, Jim [Sassorossi] and his team were very afraid that “Here we are again,” after the Germans, the bankers, now there is an Italian that doesn’t understand the heritage of the brand, etc. So they gave me a bunch of books to look at, Mopar Muscle, etc.
So I started, and I am a relatively fast learner, so I went through the books and I came back and said “Okay, I got it.” There are more than 400 enthusiast clubs around the world, a number of independent magazines with the Mopar name on them, the websites and press that support Mopar. So I got it.
So I saw all these Mopar cars, every car is from Mopar, but none of these cars came out with a Mopar badge, so I asked why we don’t do that. They looked at me like I am an idiot and say “They will never allow you to come out with a vehicle with that.” Two months later the Mopar 10 Challenger was rolling out of the plant. That is also an indication of the different attitude of the company to Mopar.
So I think that if I look back, reestablishing the connection with the enthusiasts, the quality of our parts and the service to our dealers, these were the three main challenges. Did we accomplish solutions to these challenges? You are better to evaluate this than me. I know today that we are constantly growing, not only in terms of business but in terms of attention of the press for what we do. We have good feedback from dealers. They feel that we are back to high quality service.
Going back to dealers, can you tell me anything about progress in reducing warranty and post warranty work?
Warranty is both a good and bad story. The good story is that warranty, the better quality of our cars is going to naturally reduce warranty work. That is an important achievement of the company, to have cars that are going up in the consideration of the customers for report.
As a consequence, what I have been stressing with the dealers is that they need to be more focused on the maintenance and repair business. That is the reason why we launched the expansion of the Saturday opening for service, the Express Lane, simply because we need a dealer network that is engaged to attract customers for maintenance and repairs.
You need to start with maintenance; you need to start with the very beginning to keep the customer loyal. The customers are not naturally visiting dealers for maintenance, not for a matter of price. Most of our dealers can match the price but it is the convenience. They do not feel that they will get quick service. We have been very vocal with the dealers to challenge this.
We have had pretty good success. We started in 2009 with only 60% of our dealers open on Saturday for business and we are now at 77%. So we are almost 2 years in advance to our plan that was to get to 80% in 2013. We have almost one-third of our network is offering Express service, so they are able to deliver an oil change in less than half an hour. And this is increasing retention and by the way this is also increasing their business. All the dealers that open on Saturday they show their business increasing at least 20% in the first six months. So this is a huge contribution.
There is a lot more beyond warranty. Not to mention the huge push we put on accessories, launching 1500 accessories in the last 24 months has been boosting the accessory business. Dealers are actually selling almost half again the dollars per car of accessory that they were selling before [that is, per car, they are selling around 50% more in accessories, as measured by the dollar amount]. The Dart is going to be our perfect canvas with more than 150 accessories. We believe that it is going to be the most accessorizable car in the compact sector, by far.
How do you make it accessorizable?
We start developing accessories when the first sketch of the car is available. You need to start at the very early stages. We have an engineering team, a designer for the planners that are working with the product development team since the beginning to make sure that we exploit all the possibilities. On top of that we have intensive benchmark to see what is available in the market; exploring markets that are not typical for a car company.
For instance, on the Dart we are going to offer what we think is going to be the first wireless phone charger for the car. You just drop your phone onto a mat and you are there. We are expanding the business beyond the traditional accessory business.
I would like to ask you a little bit more about the dealer service end because that is where most customers get their impression of the company. They go to the dealer and they say that I've just been to Dodge, for better or for worse. Can you describe how you plan to help dealers to fix cars quickly and correctly?
A couple of areas. We start at the very early stages of the development of the cars with a team that is called the serviceability team. The serviceability team is a little sort of a squad that is working with engineering at the very early stages of the development of the car to be sure that every maintenance and repair operation can be performed and executed flawlessly. Little things, like how long does it take to take out the filter, how you access the battery, this kind of stuff. There are occasions where you have to change a bit of metal a couple of millimeters to be sure that the flow of oil can come out of the car flawlessly, this kind of stuff.
Secondly, with what we consider one of the most advanced diagnostic system that we offer our dealers where they can make a diagnosis of the car as soon as the car comes into the service lane. We are working to develop further tools to allow the dealers to make the diagnosis at the very beginning of the reception of the car in the service line. And last but not least, we are providing the best in class parts and service to the dealers. We have one of the most advanced systems to replenish the stock of the dealers, the inventory of parts. Every day we open the inventory and every day we push parts to the dealers according to their demands. We definitely see an engagement. Not to mention training, we heavily expanded our training requirements to be sure we have people trained with the right skills.
When I pay a warranty job and I see that the job has been done by an untrained technician, there are two problems in that situation. First you run the risk of disappointing the customer because you may not have had the right skills. And you know how much the cars have become more technologically complex.
The second point is that you also risking worsening the productivity of the dealer because an unskilled technician does not perform the work at the same speed by definition. So I think it is a win-win for Mopar and the dealer to have qualified technicians.
Our statistics show that the more the technician is qualified then the more the dealer can retain the technician. You know how important technician retention is.
Do you have any way to handle dealerships that are not cooperative; that consistently fails to live up to your goals and don’t do the repairs as needed.
We have 2,400 dealers. The beginning of the story is that the company came out from bankruptcy and the new company was created with an optimized dealer count. I don’t want to go back to whether it was perfectly set, but it definitely came out with the right size, that is always important, because the right size means, normally, more potential of dealers doing best because you don’t have intra-brand competition. As usual, you also have some also some tail ends in the distribution of dealers.
When we have dealers that are not living up to the standards that we are setting we are challenging them in every possible manner. What I would say in true fairness, we have found a very cooperative dealer network. We have moved from 60% to 77% of dealers open on Saturday, we have tripled the number of Express Lanes. These are signs that overall the dealers are moving in the right direction. There is always a positive effect of new cars, enthusiasm, dealers of today believing that the company will deliver a great car so it’s usually a bit of a snowball.
Jim: You see more dealers today that are not only business people but car people also. I think that helps a lot.
I think that today there is a good connection between the company and the dealer. We have very productive dealer council meetings. We have enough after sales subcommittee that is focused on discussing and understanding what we can do together to improve the customer experience. And actually sometimes we accept their point of view and we make changes.
I have been working with dealers for many years in all my jobs and I always respect the dealer because at every morning they are the ones that are opening the door and meeting the customer who is considering them Chrysler. The customer is not thinking about Pietro, Jim, or Brian, they don’t know us. For the customer Chrysler is the “Joe Smith” that they meet at the reception of the dealership or the service advisor. So I respect the dealer because keep the flag of the company with the customer.
It is a huge task, if you look at the dealer network, 2,400 dealers means about 150,000 people that every day are representing Chrysler. It is like moving a mass that is three times the size of Chrysler. So once you have aligned the company you have another 3 times the number of people to move. And in the end, that guy is the guy that is influencing the customer.
As I handle customer care I usually start the day or end the day, I used to say whether or I want to spoil my day or spoil my evening, by reading the top customer complaints. I read all the customer complaints that are sent to me, to Sergio or to executives, so I get the cream of the complaints.
I take care of every one individually, looking into the details as to why they have a complaint. Now when you look at the complaint you see that in most of the cases the complaint starts with a technical problem or a financing problem, but when from a complaint you move to a drama, a tragedy, something where you get customer who is pissed off, is when there is a broken human interaction. Customers understand if there is a breakdown, they accept even if they may complain, but when they really, really, realy get upset and break the relationship with the company is when there is a broken human interaction.
If there is a wrong comment, either from service advisor or someone in the call center, someone not acknowledging the problem or there are stupid comments like this, how were you driving, accusing the customer of creating the problem, this is usually were you get an irate customer. The “soft” factor, it’s not really soft, is the human interaction between the customer and the dealer or the call center representative. That is always when you start potentially having problems. We need to take care of that, and dealers are very receptive.
Are there any plans to have a centralized technology so that dealers can have customers make appointments online?
That is a very good question. We have already launched online searching for appointments with localbiznow.com. You can go there and find the nearest dealer and make a call. So it is not online, but that is definitely something I am interested in pursuing.
Jim: We do have some dealers today that do offer scheduling off that site or even off the dealer’s links.
That is one of the areas we need to get agreement with dealers to be sure that we deliver what we promise to the customer, otherwise you have a big problem. We are not there yet.
A few years ago, Chrysler cut back on the diagnostic time that was allowed to mechanics to figure out what the problem was before the repair. Has there been any adjustment to that policy since you have joined Chrysler?
You mean reducing the labor operations for diagnostics? We are definitely working with the dealers and we have already announced the reversal of that policy.
To be totally honest, we had already adjusted labor operations since the beginning of last year so the number of vehicles that were affected by that policy was very limited. But you never stop someone thinking that there was a problem that has never been fixed. At the beginning of the year we announced that we will have given back every single labor time that was taken out during bankruptcy. Actually, we have added some labor operation for diagnostics. So that has been one of the achievements of the council.
One aspect that we haven’t touched on yet is the buying process. Have you been working with dealers to improve the way customers experience dealers when they actually buy?
Absolutely, when they look at the accessories, we have been very strong with the dealers in promoting when and how you have to sell accessories. We have been promoting the walk around and inspection of the car with the customer that is part of the process. We deliver to the dealers what we call the quality assurance process that is really for every step of the after sales business sort of the steps that you have to follow to be sure to not only improve the experience of the customer but also improve the quality of your sales. We have been able, through that process, to almost double the number of accessories that we sell for every car in the last 2 years. So this is the best evidence that it is working.
How about customer satisfaction with the process, how are the metrics on that area?
They are right there, tracking in the right direction. Customer satisfaction with the process is a process that takes time, but they are tracking. [Unintelligible.] But they are definitely tracking in the right direction. Good feedback is coming from Consumer Reports, they are starting evaluating our vehicles again among the top, they’re recommended.
Jim: Do you want to mention what we are doing with Mopar Elite which helps the sales process and customer satisfaction?
We launched a program that we call Mopar Elite, there is nothing really strange but it is simply going and looking at dealerships and saying these are the best practices that there are in the market. We went and we made an assessment of our 25 top dealers in terms of performance and we came out with a list of 24 best practices that all of our most successful dealers have. So we enroll dealers in this program Mopar Elite where we evaluate how many of the best practices are they following.
Some of these are very simple things like the handover of the customer from the sales to the service department. The cost of that process is zero, so taking the customer and introducing the customer to the service manager and visa versa. The cost of that process is zero but it creates a totally different loyalty for the service shop.
Looking at the whole company, Chrysler and Fiat together, Chrysler has their UConnect, Fiat as far as I know has been using Blue & Me. Are there plans for Fiat to adopt UConnect?
This is a question for the product development side of the company. What I can tell you is that the companies are always looking for opportunities to integrate.
Actually, Mopar is the best evidence of that integration. Mopar is today the brand, this is something that maybe you don’t appreciate yet, I am in charge of service and parts for the whole Fiat and Chrysler partnership. So that means that we are taking the Mopar brand globally to support both Fiat and Chrysler. You have seen, because I think that you have published on your site, that we have opened centers in Dubai, in Shanghai.
So Mopar is global and is the natural integration point of the two operations for the simple reason that when you have a Dart, it is sharing components with Alfa, from an after sales standpoint you need to be integrated. You need to get out from the doubt of whether that is an Alfa part, or a Chrysler part, that is a Mopar part. As Mopar we support all the brands of the combined corporation.
Diagnostically, you mentioned diagnosis, with the WiTech, we have become the supplier of diagnostic equipment for Fiat so that all our dealers across the globe will have the same diagnostic system. So that you can drop into the dealership with whatever model you want.
Jim: WiTech Tech is the one you mentioned earlier, about diagnostic equipment, it reads it on your laptop.
The connection is wireless. There is a little card that you drop into the car that is called POD that you plug in and it is transmitting, you can walk around with any laptop.
Jim: We got out of selling diagnostic equipment, the dealers can get into any Best Buy and get a bunch of laptops and use them. The first thing that comes up is the diagnostic codes, any history about the vehicle, and trouble that it is having, is all at the technician’s fingertips in less than 30 seconds.
If you are skilled.
Having worked both sides of the ocean, so to speak, what would you say are cultural differences and similarities between Chrysler and Fiat in engineering?
Well I would say that the major similarity is the passion for cars. I know this sounds obvious but when I walked for the first time, I remember — I am a Fiat guy, 20 years with Fiat, my father spent 30-some years with Fiat, so I'm used to the Fiat world — and I remember when I walked for the first time in [Chrysler headquarters,] it was a Sunday, raining, February 2009. I remember, I distinctly started breathing the same passion, also the history of the car was there, 100 years... So these kinds of things, you find in both companies, really the passion for the car, no arrogance, I would say Chrysler has always been the underdog here, you need to be humble.
When you look at the marketplace, Fiat has a longer tradition of what we would call “muscle car” in Europe, I think about the launch of the [?] Rallye, or the Alfa Romeo. The difference is, in the US the car is part of the family. That is much more than in Europe, in Europe is more a means of transportation. The number of people buying our car simply for minimum transportion is higher than the number of people buying our car in the United... In the US, due to the size of the country and the space, etc., you need a car.
So as a consequence, you don’t want to have a boring car, looking like every other car there is on the road, a statement of who you are, a groundbreaking car, not boring. So that gives an incredible space for Mopar to work with the personalization and accessorization of the car, giving every customer the possibility to make his or her car unique. Whether it is appearance or performance, or many kind of utilities inside the car such as smart phone charger, or this kind of stuff, we would like to provide.
Jim: Useful but personal.
Remember that 2012 is the 75th anniversary of Mopar.
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