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UBC Theses and Dissertations

Simulation of an automobile service department Christie, John Macnichol

Abstract

Since General Motors initiated its automobile dealer franchise system in about 1930, it has had a vested interest in the survival of those who have signed the 'Dealer Sales and Service Agreement’. Through its Motors Holdings dealers,General Motors makes a direct retail profit, and so its concern for them is obvious; but they are a small proportion (i.e. less than 10 percent of all General Motors Dealers in Canada), and its major concern is to ensure that those privately owned GM franchised dealers remain in business through both good and bad economic times, to bring in the wholesale revenue to the corporation through the sale of G.M. cars, trucks, parts, and accessories. Deducted from the Gross Sales Revenue of the Dealership, are the many factors in the category called Cost of Sales, to give the Gross Profit. Two significant factors in the Cost of Sales category are the building rent factor, and the employee salaries. Efficient management of each, independently and together, contributes greatly to the profits of a business. It has for a long time been a GM policy to encourage its franchised dealers to have its Service and Parts Department cover at least eighty percent of the total overhead of the business in order to permit the Sales Department to operate competitively in the new and used car markets. By its success in those markets, increasing Service and Parts business is generated. However, if the customers are not satisfied with the Service and Parts sales, they will not return to buy new and used cars, so the Service and Parts departments are in fact playing key roles in the growth and profitability of the automobile dealership. A basic assumption in this thesis is that a service customer who obtains fast, low cost, quality service is a satisfied one. Thus to capture service business, and as pointed out above, in turn, new and used car sales, the dealer must concentrate his efforts on meeting each of the three requirements as best he can. His means of doing so is to properly manage his employees and facilities, and as the size of his business increases, this task becomes more and more complex The relative effect of a manpower plan and a facility plan is difficult to assess, considering all of the possible interactions a service customer's job may have with each; and so, at best it has been an intuitive judgement on the part of a General Motors Service Department advisor, or the dealership General and Service managers. The technique of computer simulation offers a better insight into the effects of manpower and facility operating policies and changes in those policies, by quantifying every basic element, and determining the interaction of every element with every other one, in order to eliminate that intuitive requirement of previous techniques. Computer simulation does not however make the final decision, but if properly employed can be offered as a strong, new tool to back up those important decisions which must be made.

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