3 Parameter to check After-sale Performance-Level 1 As a service manager how he can measure his workshop & technician performance and plan for improvement

1. Level-1
3 Parameter to
check After-sale
Performance
A Rahman
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2. ABSORPTION RATIO
The Aftersales absorption ratio
shows a dealership how much of the
company’s fixed costs are covered by
aftersales revenue
In other words, it tells you what is going to happen when you suddenly stop selling
or sales slow down.
Let us first examine how a company should determine the absorption ratio. The
Indicator is calculated by dividing all aftersales profits (both parts and labour
related) by the costs they cover, including all fixed and semi-fixed expenses such as
rents, salaries, and other expenses.
Dealerships often aim for higher than 80% aftersales absorption ratios, most
likely to survive a poor sales period.
A low aftersales absorption ratio indicates that it is time to start increasing your
aftersales revenue by, for example, campaigns, and packages to keep the
company’s business as stable as possible. 2
AFTERSALES ABSORPTION RATIO
AFTERSALES DIRECT PROFIT
TOTAL OVERHEADS
100
INDUSTRY BENCH MARK
80 %
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3. UTILIZATION
How much of a technician’s time on
workshop is actually spent working
productively?
Utilization refers to the relation between the time a mechanic spends working on
vehicle and the total time spent in the workshop.
For example, a mechanic might come to work at 9 a.m. and return home at 6 p.m.,
spending eight hours in the workshop. Further, the mechanic might spend 6.5 hours
working on specific vehicle jobs. The rest of the time may be spent between service
orders and breaks, waiting for parts, or other internal activities. Therefore, the
utilization of this mechanic is equal to 81% (6.5 divided by 8).
Usually, efficient dealerships aim for a range of 85% to 95%.
Utilization shows us how well we have organized the workshop processes and how
well our mechanics follow company standards. High utilization percentages indicate
a well-organized team, good cooperation between the workshop and parts
department, and highly efficient assignment of tasks.
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UTILIZATION
TOTAL HOURS WORKED
HOURS ON VEHICLE REPAIR
100
INDUSTRY BENCH MARK
80~90 %
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4. PRODUCTIVITY
Measure the technician’s ability to
complete work within the estimated
time frame
Productivity is the relation between the time mechanics spend to perform their jobs
and the standard time provided by the manufacturer or the time the customer has
committed.
For example, if the standard time for replacing a oil filter is invoiced as 2 hours but
the mechanic has completed the job in 1.5 hours, his efficiency is equal to 133% (2
divided by 1.5).
Dealerships often aim for a range of 110% to 150% to consider the performance
of the mechanic as productive.
Productivity indicates the quality and skill level of the team. High productivity
implies that the mechanics are well trained, properly equipped, and experienced.
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PRODUCTIVITY
STANDARD TIME
ACTUAL TIME TAKEN
100
INDUSTRY BENCH MARK
110~150 %
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5. NEED
Essentially, the parameters of utilization and productivity allow the
service manager to understand how much time the mechanics and
the workshop have available to better plan how much time can be
service to customers coming for service jobs.
WHY DOES IT MATTER?
Let us take a look at the history of how markets have
developed. Most countries have experienced their “peak of
the golden era.” The economy is improving, and optimism
has encouraged consumption. It is a profitable and easy time
for dealerships’ business. However, there will come a period
when the economy will slow down, and the first thing
people will delay is buying a vehicle.
There are two types of dealers when market conditions are
changing: those who will survive and grow, and those who
will vanish. When a market enters maturity and sales slow,
it is crucial to keep a close eye on the aftersales department
and start upselling there because it becomes a key area of
revenue flow at such times. 5

6. SATIATE
Our Motto
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8. INDUSTRIES SERVING
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9. THANK
YOU!
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+91-9900246597
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www.satiateconsulting.com
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