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Evaluation of the Vehicle After-Sales Services Offered in South Africa by Competing Brands

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The South African automotive industry is the third largest sector in the national economy, This industry employs a significant number of people and it accounts for about 7.6% of the country's GDP. It operates in a highly competitive and dynamic environment that is growing at a tremendous rate due to international competition and changing demands of the customers. Furthermore, new competitors are countinuously entering the market introducing new competing brands which make it even more difficult for different brands to be competitive and profitable. A combination of a literature review and narrative enquiry was used in this study, that is qualitative and non-statistical in nature. The objective is to evaluate strengths and weaknesses of the servitization strategies adopted by competing brands in the after-sales service industry in South Africa to understand factors that give the competing brands a competitive advantage. The research study particularly focuses on views from a passenger-car dealership perspective.
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Evaluation of the Vehicle After-Sales Services Offered
in South Africa by Competing Brands
Khutso Mashigo
1
, Richard Weeks
1
, Louwrence D. Erasmus
2
1
Department of Engineering and Technology Management, Graduate School of Technology Management (GSTM),
University of Pretoria, South Africa
2
Integrated Systems Group, DPSS, Council for Scientific and Industrial Research (CSIR), Pretoria, South Africa
Abstract–The South African automotive industry is the third
largest sector in the national economy, This industry employs a
significant number of people and it accounts for about 7.6% of
the country’s GDP. It operates in a highly competitive and
dynamic environment that is growing at a tremendous rate due
to international competition and changing demands of the
customers. Furthermore, new competitors are countinuously
entering the market introducing new competing brands which
make it even more difficult for different brands to be competitive
and profitable. A combination of a literature review and
narrative enquiry was used in this study, that is qualitative and
non-statistical in nature. The objective is to evaluate strengths
and weaknesses of the servitization strategies adopted by
competing brands in the after-sales service industry in South
Africa to understand factors that give the competing brands a
competitive advantage. The research study particularly focuses
on views from a passenger-car dealership perspective.
I. INTRODUCTION
The South African automotive industry is classified as an
industry that operates in a highly competitive environment
characterized by growing international competition and
increasingly demanding customers [2]. This dynamic
environment makes it very difficult for competing brands to
be competitive and profitable. At the same time the
automotive industry context is highly competitive and
fragmented [4].
Source: Ambe and Badenhorst-Weiss [2]
Fig. 1. Contribution of the South African Automotive industry to the GDP
The automotive industry is a key sector in the South
African economy, that employs a significant number of
people and it accounts for 7.6% of the country’s GDP [7].
The automotive industry, and specifically passenger motor
vehicles, has experienced rapid growth in the last few years,
with record sales of all brands being experienced in South
Africa [7]. Sales of passenger motor vehicles in 2006 saw an
increase of 13.3% [7]. Fig. 1 shows the growth in
contribution of the automotive industry to the South African
GDP between 1999 and 2008.
This growth in the automotive industry is supported by the
South African government through policies that advances the
industry through the Motor Industry Development
Programme (MIDP) with a policy framework to support
industry growth under a liberalised trade environment
implemented in 1995 [14].
The key objective of this initiative was to develop an
internationally competitive and growing automotive industry
that would be able to:
Provide high-quality, affordable vehicles and components
to the domestic and international markets.
Provide sustainable employment in support of the
National Development Plan (NDP).
Promote supplier development.
Assist the industry to be more competitive and provide a
greater contribution to the economic growth of the
country through increased production and achieving an
improved sectoral trade balance [14].
The automotive industry in South Africa is growing at a
significant rate and is adapting to meet ever-changing
customer needs. New competitors are also constantly entering
the market, introducing new competing brands and it is
becoming more difficult to compete in such a complex
environment. It therefore becomes critical to ensure that
adopted servitization strategies drive service innovation that
is deemed essential to gain a competitive advantage and
ensure growth and sustainability of the local industry. In
supporting the development of a plan of action to resolve this
problem (outside the scope of this paper), it is important to
evaluate the effectiveness of the current servitization
strategies used in the automotive industry in South Africa,
particularly after-sales services (inside the scope of this
paper).
The primary objective of this study is to gain an
understanding of the servitization strategies adopted by
dealers within the South African automotive industry with
particular reference to after-sale services rendered to clients.
The secondary objectives are to:
Identify the different types of product/ service packages
currently offered by competing brands in the vehicle after-
sales service sector.
Ascertain factors that give the competing brands a
competitive advantage.
Determine accessibility levels of competing brands to
customers.
Verify how reliable the after-sales services of competing
brands are.
Ascertain the operating hours of the dealerships of the
competing brands.
Establish levels of innovation that exist within the
industry.
Determine if a motor plan/warranty provides a
competitive advantage to competing brands.
Gain an insight into the key challenges experienced by
competing brands with regards to innovation within the
automotive service sector.
Ascertain factors that prevent the competing brands from
having a competitive advantage.
II. SERVITIZATION AND AFTER SALES-SERVICES
A. Definitions
Servitization is widely used today as a term describing an
organisational process, where value is created by shifting
from predominantly “selling products to selling integrated
products and services that deliver value in use” [3]. The
concept of servitization has been reviewed by many authors
over the years. A simple and basic definition of servitization
is the transition from manufacturing products to providing
combinations of products and services that are expected to
have many financial and strategic benefits for manufacturing
firms [5]. Servitization can be described as the innovation of
an organisation’s capabilities and processes to shift from
selling products to selling integrated products and services
that deliver value in use [3]. Increasingly, the offering of
more comprehensive market packages or “bundles” of
customer-focused combinations of goods, services, support,
self-service, and knowledge appears to be gaining in strategic
relevance.
Servitization has been regarded as one of the main strategies
through which firms address increasing competition, stabilize
revenues, and increase customer loyalty [5]. Services could
minimize the risk of customers being persuaded by
competitors [22]. The nature of services could be regarded
less visible and more labour dependent, thus these unique
characteristics can give organisations a sustainable source of
competitive advantage [12]. Services lead to co-creation of
value based on the competencies of both the company and the
customer, which leads to resources that are unique and hard
to imitate [12]. A strong focus on service differentiation
allows organisations operating in a highly competitive
environment to be less sensitive to increasingly complex
customer needs and enables a firm to gain a competitive
advantage [12].
A study into the importance of servitization in the automotive
sector discovered that profit margins on the actual vehicle
sales in Belgium were very low. Spare part and maintenance
margins were under constant pressure from new market
entrants, third party vendors and parallel imports. These
pressures are making after-sales a vital source of income for
most dealerships and manufacturers in Belgium. While all
automotive manufacturers operate after-sales customer
service departments, their degree of sophistication varies
greatly [26].
An interesting phenomenon can be observed in Fig. 2 on how
service attributes can be associated with the service transition
process. Service providers that use products as an ad-on to
services, with the major share of the company’s value
creation stemming from its services rendered, generally
translate to high service revenue and customer satisfaction.
On the other hand, an unsuccessful transition process is
attributed to a large number of services and increased costs,
but low corresponding value creation through services [11].
Source: Gebauer and Friedli [11]
Fig. 2. Transition from product manufacturer to service provider
Most companies find it extremely difficult to manage the
transition successfully [11]. Most transitions lead to increased
service offering and higher costs, but not to correspondingly
higher returns, because of increasing costs and a lack of
corresponding returns, the service contribution fails to meet
its intended objectives. However, [11] could not explain why
some companies have previously achieved a successful
transition and others not. In an attempt to unpack what was
not discovered from [11], [21] developed a service continuum
from pure-product to pure-service providers.
The continuum have been applied on service organisations
to understand key factors that can make organisations want to
move from being just a manufacturing firm towards adopting
a servitization approach successfully. When developing a
service continuum, the thought of manufacturing firms
moving along the services axis as they incorporated more
product-related services is depicted on Fig. 3. At the extreme,
a service organization is envisioned for which products are
forming a small part of the value proposition. The transition
occurs in stages and a process theory for this transition is
shown in Fig. 3 and can be described as follow [21]:
Stage 1 - Most manufacturing firms provide services to
sell and support their product; in a way, they already are
in the market of product-related services. Those services,
however, have traditionally grown in different parts of the
organization, are fragmented and considered an
unprofitable necessity to sell the product. The first step is
to consolidate existing service offerings under a single
organizational unit. The consolidation process is normally
driven by a desire to sell more products and to improve
the service performance.
Stage 2 - Entering the services market implies identifying
a profitable opportunity within the service arena and
setting up structures and processes to exploit it. The
realization of the profit potential often comes via the
monitoring mechanism implemented in the previous stage,
or after seeing a competitor work with high margins in the
service market.
Stage 3 – Transition of the service offering takes place
once the core functionality of the service organization has
been set, and it occurs through two distinct
transformations. The first transition is to change the focus
of the customer, as well as transition from products to
services.
Stage 4 - The move into the field of operational services,
which includes taking over an end-user’s maintenance or
operating organization.
Source: Oliva and Kallenberg [21]
Fig. 3. Process theory: transition from product manufacturer to service provider
B. Gaining a competitive advantage in automotive after-
sales services
1 Service Quality Management
Service quality is defined by comparing perceptions of
service received with expectations of service desired[10].
Similarly, service quality is the degree of discrepancy
between consumers’ perception and expectation [1].
The requirements of service quality in the automotive
after-sales service from the customers are mainly reflected in
the service method and service attitude given to customers by
employees at the dealership. Service providers must have the
ability to service the vehicle as required the first time,
perform maintenance checks correctly, and offer a courtesy
vehicle for customer convenience, when the customer is
entitled one [9].
Expectations and perceptions are important aspects in the
delivery of service quality [27]. A high level of customer
satisfaction is one of the most powerful indicators for the
future of a business. Satisfied customers are loyal customers
and ensure a lasting cash flow for the business into the future
[19].
Similarly, after-sales service quality affects customer
satisfaction, which in turn affects customer behaviour. It is
becoming increasingly important to offer supplementary
services to the core service offered, making more and more
companies invest heavily in offering additional services
under the scope of differentiation and distinctiveness [22].
The quality of after-sales service not only affects customer
satisfaction but also impacts on the choice to purchase the
next time [8].
Organisations that are able to meet customer requirements
based on the service quality dimensions can gain customer
satisfaction and loyalty. These dimensions consists of three
broad sub-dimensions [22]:
The personnel-related, which relates to the attitude of the
service personnel rendering the service.
The tangible offering related, this is described as the
actual core service being rendered to the customer.
The service-scape-related, which is about the physical
appearance of the location where the service is rendered.
SERVQUAL is a simple and inexpensive means of
assessing service quality in automobile retails [27]. The tool
can provide some useful information to the dealerships on
how consumers are likely to judge the quality of their
business. Regular assessments of the SERVQUAL scores can
assist automotive dealerships to track whether or not,
customers’ expectations of the service are changing over
time. The 5 dimensions to define and measure service quality
are [27]:
Tangibles—refer to physical facilities, equipment and
employee dress and appearance.
Reliability—refers to the ability to perform the promised
service dependably and accurately.
Responsiveness—refers to employee willingness to help
customers and provide prompt service.
Assurance—refers to knowledge and courtesy of
employees and their ability to inspire trust and confidence.
Empathy—refers to the caring, individualized attention a
firm provides to customers.
The SERVQUAL instrument was applied to develop a
detailed framework of the quality parameters that can be used
to measure quality in the automotive after-sales services [27].
The measures are categorized within the five SERVQUAL
quality dimensions. Table 1 depicts important service quality
parameters considered in measuring customer expectations of
automotive after-sales service for automotive dealerships that
can affect customer satisfaction [27].
In service quality, five gaps have been identified that
could occur and they should be measured, organized,
managed and minimised. The gaps are best understood
within a service quality gap model as shown in Fig. 4. and
they are [27]:
Gap 1 – The gap between the consumers expected service
and the management perceptions of consumer
expectations.
Gap 2 The gap between the management views and the
actual specifications of the customer experience.
Gap 3 The gap between the specification for the
experience and that of the service delivery.
Gap 4 – The gap between the service delivery and the
external communications to consumers.
Gap 5 – The gap between a customer’s perception of the
experience and the customer’s expectation of the service.
The narrowing of the five gaps can assist organisations to
attain a high level of customer satisfaction and gain a
competitive advantage [27].
Another useful model is the Kano quality service model in
Fig. 5 that distinguishes between three different types of
customer requirements [19], namely:
Must-be requirements, if these requirements are not
fulfilled, the customer will be extremely dissatisfied. On
the other hand, as the customer takes these requirements
for granted, their fulfillment will not increase his/her
satisfaction. The must-be requirements are basic criteria
of a product.
One-dimensional requirements, with regard to these
requirements, customer satisfaction is proportional to the
level of fulfillment; the higher the level of fulfillment, the
higher the customer’s satisfaction and vice versa. One-
dimensional requirements are usually explicitly demanded
by the customer.
Attractive requirements, these requirements are the
product criteria which have the greatest influence on how
satisfied a customer will be with a given product.
Attractive requirements are neither explicitly expressed
nor expected by the customer. Fulfilling these
requirements leads to more than proportional satisfaction.
TABEL 1. FIVE QUALITY DIMENSIONS OF AUTOMOTIVE AFTER-SALES SERVICES
Source: Yan and McLaren [27]
Source: Yan and McLaren [27]
Fig. 4. Service quality gap model
Source: Miyuan, Xuechang and Xin [20]
Fig. 5. Kano quality model
TABLE 2. SUMMARY OF CONCEPTS THAT CAN INCREASE CUSTOMER VALUE
Customer Value-add
concept Description of the Concept
Customer reception The reception personnel must undergo rigorous training, not only to master the specialized knowledge of
automotive repair and maintenance but also for good individual self-cultivation and industriousness at work and
at the same time supply timely and professional answers to the doubts and needs of the customer.
Product quality control Pure oil products and original manufacturer spare parts must be provided in the maintenance processes, with
assurance that specifications, materials, dimensions and tolerances are exactly the same as replacement parts,
and the new parts work together with the all the components of the vehicle when all the repair work is finished.
Product price The technician must provide a comprehensive, transparent and reasonable price list and man-hour expense list.
Auto delivery service When work has been completed after-sales personnel should show the customer maintenance outcome and
explain maintenance content and costs. When customers are satisfied with the results of the maintenance work,
staff must accompany them to settle account and inform them of any points for attention.
Repair techniques Technicians must change service concepts completely, not only fix the bad products but also improve product
shelf life, through the maintenance data; the technician cannot remain at the subjective level but respect the facts
and communicate fully with the owners so as to attain the objective of mining valuable information from
subdivision customers.
After-sales tracking After-sales personnel should pay a return visit within 3 days, contents included whether the customer vehicle
breakdown has been solved, at the same time record the details on the system
Source: Huaige [15]
By knowing to what extent a product/service feature
influences the perceived product quality, in turn influences
customer satisfaction [19]. Customer value added concepts
are listed in Table 2 that can assist organisations to increase
customer value in the automotive after-sales services [15].
Two conclusions that can be drawn from the above
discussion are:
Different elements such as knowledge and skills of
reception, personnel, price, customer convenience, ability
to service customer vehicles right the first time and fitting
parts that conform to specification form part of service
quality. They can be deemed as key enablers for
dealerships to win customers in the market place and gain
a competitive advantage in the after-sales service
environment.
Organisations that can accurately determine customer
requirements can identify which unique and attractive
products and services they can offer customers that
competitors are not offering, to gain a competitive
advantage.
2 Service Innovation Management
The importance of innovation for a company's competitive
advantage and survival in increasingly intense and changing
markets is undisputed amongst scholars and managers [17].
Service innovation can give competing brands in the
automotive after-sales services a competitive advantage.
There are three categories of innovation [25], namely:
Incremental - Improvements to a current product or
service or class of products and services. It entails minor
modifications of existing products or services,
refinements, enhancements and simplification of products
and services.
New-to-the-market - Novel replacements, including new
to society products/services. It comprises of new products
or services that an organisation can introduce into the
market to gain a competitive advantage.
Breakthrough - Includes changes within the particular
business or development of a new industry. This is
“moments in history” that set the stage for the future,
regarded as major innovations.
3 Service Encounter
The way employees feel and act has an impact on quality
of the service delivered [13]. In agreement with this, a good
quality service is a direct result of effective and productive
people in customer contact positions [23].
The cycle of failure in services results from employee
dissatisfaction, which translates into poor perception of the
service by the customer, and concequently, lowers sales.
Organisations that operate within the cycle of failure in
services cannot be competitive and profitable [27]. Fig. 6
shows how the cycle of failure in services can manifest itself.
Organisations that fail to invest in the training and
development of their employees will not be able to be
competitive and profitable. Dissatisfied employees will most
likely have a poor attitude towards customers, which can lead
to poor service quality delivered and customer dissatisfaction.
Employees that are dissatisfied will fail to develop customer
loyalty, which will also cause lack of continuity in
relationship with the customer [23].
Some of the strategies for breaking the cycle of failure in
services [23]:
Careful selection of employees during recruitment.
Providing extensive training to employees to ensure
competency.
A focus on the nature of the job and early job experiences.
Employee empowerment.
Employee awareness of their role in customer satisfaction
and economic success.
Integration of employees into winning teams.
The strategies that assist organisations to achieve high
levels of customer satisfaction and gain a competitive
advantage in the market, as described by Schlesinger and
Heskett [23], are presented in Fig. 7. They reflect the cycle
of success in services.
Source: Schlesinger and Heskett [23]
Fig. 6. The circle of failure in services
Source: Schlesinger and Heskett [23]
Fig. 7. The circle of success in services
Organisations that operate within the cycle of success in
services will have satisfied employees that have a positive
service attitude [23]. They will be able to understand and
resolve customer problems and be more competitive and
make the organisation profitable.
4 Servicescapes
Physical settings also influence the customer’s ultimate
satisfaction with the service. This includes the effects of
atmospherics or physical design and décor elements on both
consumers and workers [6]. Servicescapes play an important
role in many service organizations. Understanding of the
emotional effects of servicescapes can help service providers
and designers to create pleasant, effective servicescapes
which will have an influence on the customer’s ultimate
satisfaction with the service [18]. Three components of
servicescapes identified by [14] are:
Facility exterior - exterior design, signage, parking,
landscaping, and the surrounding environment.
Facility interior - interior design, equipment used to serve
the customer directly or used to run the business, layout,
air quality, and temperature.
Other tangibles - such items as business cards, stationery,
billing statements, reports, employee appearance,
uniforms, and brochures.
III. RESEARCH DESIGN AND METHODOLOGY
The study was limited to automotive after-sales services
for competing dealers, for brands that have manufacturing
facilities based in South Africa. The population was
represented by all competing brands across the nine provinces
in South Africa for the following brands:
General Motors,
Mercedes Benz,
Toyota, and
BMW.
Semi-structured interviews were limited to senior and
middle management within the retail businesses, which
includes Service Managers, Customer Relationship
Managers, Service Foreman and Service Consultants of the
competing brands. The study focused on dealerships based in
the Gauteng province in South Africa and was limited to
dealers that deal in passenger cars. The interview questions
are listed in Table 3 along with the research objective of each
the question.
TABLE 3. SUMMARY OF RESEARCH QUESTIONS WITH CORRESPONDING RESEARCH OBJECTIVE
Interview question Research objective
1 What servitization strategies have your organisation adopted to gain a competitive
advantage? Is it based on price, quality or location, and why did you choose that specific
strategy? Please elaborate?
Identify servitization strategies adopted in
the automotive after-sales service industry.
2 What are the products/services that are currently being offered to your customers? Identify the products or services that are
currently being offered to customers by
competing brands.
3 What gives your organisation the ability to gain a competitive advantage; can you also
provide examples of products/services that you introduced to gain a competitive advantage
over competitors?
Ascertain factors that give the competing
brands a competitive advantage.
4 Customer accessibility: What factors do you focus on when selecting a location? Where
are your dealerships located? How many dealerships do you have in South Africa? And
why?
Establish accessibility levels of competing
brands to customers.
5 Reliability: What is the percentage of rework of cars serviced at your dealership on
average per month?
Establish reliability levels of competing
brands to customers.
6.1 Service availability: Which products/services do you offer to customers on weekdays,
and which products/services are offered on weekends, and why the difference?
Establish the operating hours of dealerships
of the competing brands.
6.2 Service availability: on average per month, what is the percentage of customers you are
unable to service due to spare part unavailability? What action plans have you put in place?
Please elaborate.
Determine the availability of spare parts for
the competing brands
7 Does motor plan/warranty give a competitive advantage to your organisation? Please
elaborate.
Establish if a motor plan/warranty gives a
competitive advantage to competing brands.
8 What type of innovations have been proposed and implemented by your organisation in
the past 5 years? How many of these have been implemented to gain a competitive
advantage?
Establish the innovation levels within the
industry.
9 What are the key challenges experienced by your organisation with regards to
innovation?
Identify key challenges experienced by
competing brands within the automotive
after-sales industry.
10 Can you site an instance where the products that you offer have given you a competitive
advantage and instances where services rendered have failed to do so?
Ascertain factors that prevent competing
brands from gaining a competitive
advantage.
IV. SUMMARY OF THE MAIN FINDINGS
A. Primary Objective:
Identify servitization strategies adopted in the automotive
after-sales service industry.
Key Research Findings
Literature: Strategy focuses on aspects ranging from
quality to reliability and supply of parts, claims, maintenance,
technical training and the client service experience to gain a
competitive advantage [15]. Organisations competing in a
highly competitive environment can make use of concepts
such as service quality, innovation, service encounter, and
servicescapes as part of the strategy to gain a competitive
advantage [6, 14, 15, 18, 19, 22, 27]. Strategic management
process serves as a key foundation for building an integrated
strategy as it gives guidelines on how servitization strategies
can be synchronized with the overall business strategy [3, 5].
Interviews: Interviews conducted revealed that service
quality is an important part of servitization strategies for
dealerships. However, some of the dealerships have
misalignment between strategic objectives and current
business models. Innovation forms part of the strategic
statement for some of the competing brands yet the concept
of innovation is not well understood in the organisation. In
addition, few dealerships mentioned using pricing as part of
their strategy to gain a competitive advantage, which
contrasts with their strategic statement.
B. Secondary Objective 1:
Identify the products/services that are currently being
offered to customers by competing brands.
Key Research Findings
Literature: Organisations that operate in a highly
competitive environment need to offer unique services that
will distinguish their service offerings from those offered by
competitors [5, 8].
Interviews: Results from the empirical studies do not
correlate with literature as most dealerships offer very similar
products while operating in a highly competitive
environment. Only a few dealerships offer unique services
such as service of hybrid vehicles.
C. Secondary Objective 2:
Ascertain factors that give the competing brands a
competitive advantage.
Key Research Findings
Literature: Service encounter forms part of service
quality rendered to customers. Ability of the service
employees to understand needs and how to deal with
customers has an effect on the overall quality of the service
rendered to customers. Organisations that are able to match
the skills of the employees to the needs and expectations of
the customer can use the service encounter as a source of
gaining a competitive advantage [13, 23]. Servicescapes,
which include the effects of atmospherics, or physical design,
decor elements, on both consumers and workers, can be used
to gain a competitive advantage [6, 14, 18].
Interviews: Dealerships interviewed gave different views
of what gives them a competitive advantage. Some of the
dealerships mentioned using capacity as a source of gaining a
competitive advantage. Most of the dealerships also managed
to gain a competitive advantage by changing their business
models from outsourcing some of the service operations such
as wheel alignment, where they now have built the capability
in-house which allows them to manage the quality of the
service better. Observations during the interviews revealed
that servicescapes concepts adopted at the dealerships
correlates with literature reviewed. Some of the dealerships
acknowledged that they are not fully making use of service
encounter as a source of gaining a competitive advantage
specifying that some of their Service advisors are not able to
deal with customer needs and expectations due to lack of
experience of training and experience required to deal with
customers.
D. Secondary Objective 3:
Establish service levels of accessibility competing brands
to customers.
Key Research Findings
Literature: Location of the service is an important
element that determines customer convenience for customers
that have to travel for that particular service [6, 22].
Interviews: Customers have to travel to dealerships for a
service which makes it important for dealerships to be located
in areas that are convenient for customers. Dealerships
interviewed confirmed that their dealerships located in area
they consider convenient for their customer but used different
approaches to achieve that. Some of the brands that focus on
servicing the upper and middle class have most of their
dealerships located in the area of Gauteng with a very few
dealerships located outside Gauteng region. On the other
hand, dealerships for brands that focus on servicing the lower
income market segment have a significant number of
dealerships outside of Gauteng. In general the dealerships are
located according to the market segment chosen by each of
the competing brands.
E. Secondary Objective 4:
Establish reliability of competing brands to customers.
Key Research Findings
Literature: Service reliability is considered an important
service quality dimension in the automotive after-sales
services environment. The dimension includes elements such
as delivering a service accurately, on time, as expected by the
customer without any errors [1, 10, 19, 20, 27].
Interviews: Few dealerships had problems with vehicle
“comebacks”. Most of the dealerships interviewed did
indicate that they used to have a high percentage of vehicle
“come backs” which they managed to reduce significantly by
introducing the concept of engaging the customer to deal
directly with the technicians when describing the problems
that they were experiencing with the vehicle.
F. Secondary Objective 5:
Establish the operating hours of the competing brands.
Key Research Findings
Literature: Service availability – Dealership operating
hours form part of the criteria used by customers when
selecting a service provider. Other factors are the number of
days an organisation operates in a week to service customers
and availability of service information on the Internet for
customers [27].
Interviews: Dealerships that participated in the research
study operate differently. Some dealerships specified that
they also operate on Saturdays and they are ably to be
profitable because of the quality service that they offer. These
dealerships further supported their argument by indicating
that they have customers that drive long distances to service
their vehicles at the dealerships, indicating that the quality
service they offer enables them to gain a competitive
advantage when operating during weekends. Most of the
dealerships interviewed indicated that they do not operate
during weekends due to low customer demands.
G. Secondary Objective 6:
Establish if a motor plan/warranty give a competitive
advantage to competing brands.
Key Research Findings
Literature: Convenience forms an important part of
competitive dimensions that are used by customers to make a
choice to buy a service among competitors [27].
Interviews: Offering a courtesy vehicle to customers
remains a problem for most dealerships. One of the reasons
causing this is the fact that dealerships do not make enough
effort to distinguish between customers that “deserve” a
courtesy vehicle and customers that just “demand” a courtesy
vehicle. Customers that have warranty cover deserve a
courtesy vehicle yet they sometimes have to “fight” to get a
courtesy vehicle. Most of the dealerships acknowledged that
motor plan/warranty can give them a competitive advantage,
but pointed out that there is plenty of room to improve on
service packages that they are currently offering their
customers.
H. Secondary Objective 7:
Establish the innovation levels within the industry.
Key Research Findings
Literature: Innovation can be used as a source of gaining
a competitive advantage and also ensure growth and
sustainability. Different types of innovation exist, service
organisations have options of implementing either Product
innovation (changing the product or service offered by the
business), Process innovation (changing the methods used to
create and deliver the product or service), Market innovation
(changing the market or positioning of the product or service)
and Business model innovation (changing the value chain or
structure of the business) [17, 25].
Service innovation can be implemented using the
Incremental approach, which involves making small
improvements on an existing service alternatively or the
breakthrough approach which involves major improvements
such as introducing new technology to enhance service
delivery [25].
Interviews: Only a few dealerships managed to
enumerate the little innovations implemented at their
dealerships in the past 5 years. Most of the dealerships
interviewed could not highlight what the key challenges are
that they are experiencing with regards to innovation. This
could possibly be due to the limited knowledge they seem to
have on the concept of innovation.
I. Secondary Objective 8:
Identify key challenges experienced by competing brands
within the automotive after-sales industry relating to
innovation.
Key Research Findings
Literature: Service innovation in essence requires
integration among people, products, and technology to be
implemented successfully. Organisations need to build
innovation into the overall strategy of the business and also
develop incentive systems that will encourage employees to
drive innovation [13, 23].
Interviews: Few of the dealerships interviewed seemed to
have a basic understanding of the concept of innovation.
J. Secondary Objective 9:
Ascertain factors that prevent competing brands from
gaining a competitive advantage.
Key Research Findings
Literature: Literature reviewed exposed a large number
of customer complaints attributed to poor service quality
rendered by competing brands in the automotive after-sales
service environment (http://hellopeter.com). Skills shortage
in the industry also affects organisations negatively that
compete in the industry. Lack of new technology and
innovation in South Africa is also considered a challenge that
limits many players in the automotive industry from being
more competitive [2, 3, 4, 7, 27].
Interviews: Effective use of the Internet came out as one
of the key challenges in the automotive after-sales services.
Dealerships are still unable to use the Internet effectively to
allow customers to book vehicle service via the Internet.
Some of the dealerships indicated that there is a gap with
regards to training of staff, some of them indicating that they
have experienced problems where Service Consultants were
unable to understand the customer needs and expectations
due to a lack of training for staff at the dealerships.
V. RECOMMENDATIONS
It is recommended that automotive dealerships should:
Consider introducing an incentive system to encourage
employees to be innovative.
Invest in training of both new and existing personnel to
ensure that they can understand customer needs and are
able to solve problems for customers to gain a competitive
advantage.
Review their service offerings to ensure that they can
distinguish themselves in a highly competitive
environment with an objective of gaining a competitive
advantage and increasing business profits.
Ensure that customers that have warranty on their vehicles
are offered courtesy vehicles when this is required to
avoid customer inconvenience, which can lead to
customer dissatisfaction and loss of customer loyalty.
Adopt technology such as making bookings using the
Internet. Electronic booking offers convenience to
customers and would enable dealerships to gain a
competitive advantage.
Use strategic management models that can assist
leadership to deal with the complex problems in the
highly competitive environment they operating in.
Adopt service business models, such as service blue
prints, to assist them in the executing on strategies in the
future without overlooking some of the business process
requirements when introducing new services.
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