Jim Roche of Cox Automotive Explains How the KBB Auto Repair Guide Can Help Drive Additional Revenue to Your Dealership

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On today’s show, Cox Automotive Vice President, Jim Roche joins CBT to discuss the many capabilities of Kelley Blue Book‘s brand new auto repair guide.

VIDEO TRANSCRIPT:repair guide

Jim Fitzpatrick: Hi everyone. I’m Jim Fitzpatrick. Thanks so much for joining us on another edition of CBT News. Today, I’m so excited to have my good friend back, Mr. Jim Roche who is vice president of Cox Automotive and a service expert. You’ve seen him here before on CBT News. We always love having you in Jim, so welcome back.

Jim Roche: Thank you. Good to see you again. Glad to be here.

Jim Fitzpatrick: Yeah, likewise. So I want to hear all about this. Kelley Blue Book is now launching a new auto repair guide. What is that all about? That sounds pretty cool.

Jim Roche: I know after 90 years of putting out new and used car valuations, we’re adding something new. Essentially, it’s to help consumers manage the entire life cycle of their vehicle through purchase and sale and now through service. The auto repair guide has three fundamental areas. You can go in and you can look up maintenance. What maintenance do I need to get done on my car? What does the manufacturer recommend?

Jim Roche: You can look up recalls. That’s a very popular one. Are there any open recalls on my vehicle. And most interestingly you can go and you can see, what should a repair that I need to get done cost?

Jim Fitzpatrick: Wow.

Jim Roche: I know, I know. We have average repair pricing and let me be specific, it’s not dealer prices, but it’s average repair prices. We took a look at over 200 million repair orders and we sort of pulled all that together and then looked at the most common services and averaged the prices out. So we’ll tell you, just to give you an example, what does a lube oil and filter in my area cost? And we might say, “Hey, you should pay between 55 and $75.” Again, not dealer pricing, just a guide to consumers so they have some sort of an idea of what a range would be. Those are the three main areas.

Jim Fitzpatrick: That is really cool. Do you think 200 million is enough of a sampling? 200 million? My god.

Jim Roche: Yeah. Yeah, I know. I know. That’s a pretty big number. We think that that’s probably a good starting point.

Jim Fitzpatrick: I guess so. So why did Kelley Blue Book decide to go into the fix ops business?

Jim Roche: It’s a great question. For a couple of reasons. One, as you and I have talked in the past, fixed ops now makes up over almost 50% of the total dealer gross profit. So it’s just really, really important for the health of the dealer. And if you look at the retention for dealers nowadays, by the time you reach year five, 71% of consumers have left the dealership for service. Only 29% … I know, I know. You and I’ve talked about this many times.

Jim Fitzpatrick: I know. It’s crazy.

Jim Roche: Only 29% are still coming back. Yet we found in a Cox study that if you visited the dealership for service just once in the last 12 months and it’s time to buy, 74% of consumers will take a look and buy again. You haven’t visited the dealer for service, only 35%.

Jim Fitzpatrick: Wow.

Jim Roche: So driving that additional service revenue and leading back to the next vehicle sale, it’s just critical for dealers going forward. So that was the driving reason for dealers. And then we took a look at something you and I again have talked about in the past, the Cox Service Industry Study, and we looked at the top five reasons that consumers say they defect from the dealer. And four of the top five have to do with service pricing. And it’s obvious that there’s still work to do with consumers when it comes to how dealers price service. So it just seemed like a natural all the way around, a win for dealers and a win for consumers.

Jim Fitzpatrick: Yeah. There’s that stigma attached to dealers out there with regard to fixed ops that it’s going to cost me a lot more. It’s going to take a lot longer and, and why go back to the dealership when I can just go right over here to Walmart or Jiffy Lube or wherever else might be the case, right?

Jim Roche: That’s exactly right. And the really funny thing, Jim, is it’s a myth. So you look at, okay, what do consumers say? Four of the top five reasons for defection have to do with service prices. Yet when you look at the most common maintenance and repair prices, dealers are at parity with the aftermarket. So we scratched our head about that for a while. We concluded that dealers don’t have a pricing problem, they have an awareness problem. Kelley blue Book, I mean, 90 years, the most trusted automotive consumer brand, we could help that awareness by getting these average prices out there and helping consumers deal with some of that just lack of knowledge that they have.

Jim Fitzpatrick: Sure. Why is a third-party source important for helping dealers improve their service loyalty?

Jim Roche: Well, it’s interesting. If you look around throughout life, not just automotive, but just about any place, we see where third parties, trusted third parties, come in and they can help make situations better. Whether it’s in politics with a neutral third party helping two countries come to the table, whether it’s in business, when third parties help negotiate mergers or acquisitions, even to our personal lives, when we’re having trouble in our relationships, you go see a mediator and they help pull the parties together. So-

Jim Fitzpatrick: I wouldn’t know anything about that last one. My relationships are just perfect, Jim.

Jim Roche: Me too. But I’ve read a book about it someplace.

Jim Fitzpatrick: I just say, “Yes, honey, you’re right. I’m wrong. I’ll never happen again.”

Jim Roche: That always seems to work, doesn’t it?

Jim Fitzpatrick: That always works. Always works.

Jim Roche: You and I have been in the business a long time and we know that we have literally spent, as an industry, decades and billions trying to improve trust, trying to improve loyalty. Yet we’re still at 29%. so I think a fresh approach certainly can’t hurt and I really think it’s going to help.

Jim Fitzpatrick: Oh, there’s no question about it. What do you say to the dealers that are listening to us right now that say, “Oh, what if my pricing is … I priced it over above what the Kelley Blue Book says the consumer should pay in that market for that service”?

Jim Roche: If, if you’re priced a little bit above the range, it just has to be defensible. Again, these are average prices. It’s impossible to cover every possible permutation of every vehicle and every repair. So if you can explain it to someone in a way that’s understandable and that creates trust, that’s fantastic. Again, we’re not trying to override what dealers say. We’re trying to begin a conversation and giving dealers, or excuse me, consumers, a data point.

Jim Roche: It really went back to … When you think about what’s happened over the last little while, vehicles, as we know, just getting way more complex, right?

Jim Fitzpatrick: Oh, yeah.

Jim Roche: And this creates confusion and anxiety with consumers because it’s a major purchase. You don’t know what to do with it. But if you scrape away a lot of the confusion, there are four fundamental questions that consumers always want answered. Tell me what I need. Tell me when I need to do it. Tell me who can do it and tell me about what it will cost. And what we built at Kelley Blue Book, along with our partner Xtime, is the answers to all those questions in one easy to discern way at a single website.

Jim Fitzpatrick: Yeah, that’s great. It also puts to rest, those service advisors and such in the dealership that think you’ve got to discount your services to be competitive. I bet 9 times out of 10 you find out that guess what? We already are competitive with the others in the marketplace. Right?

Jim Roche: Right, exactly. This not only arms consumers, but it can arm service advisers, much in the same way that in the showroom we use Kelley Blue Book now to pull up and say, “Here’s the Kelley Blue Book value.” Now you can do that in service and it educates and it creates trust.

Jim Fitzpatrick: Yeah. I could see dealers that would take a pricing strategy that says let’s be at or below the new Kelley Blue Book price. So that, to your point, not only is it defendable, but it’s marketable. You could then say, “Hey, here we are, they’re at this, and we’re at that.” So right off the bat, you feel like you’re having or making a good deal if you’re a consumer move.

Jim Roche: You remove that lack of information and it just creates trust or at least it creates an area where you can have knowledgeable dialogue on both parts.

Jim Fitzpatrick: That’s right.

Jim Roche: And Kelley again, 90 years and the most trusted automotive brand, why wouldn’t you use it?

Jim Fitzpatrick: That’s right.

Jim Roche: Yeah.

Jim Fitzpatrick: Yeah, for sure. Is this something that will live on a dealer’s website, so if a consumer wants to use it? Walk me through that. Where is the consumer referencing this data and information?

Jim Roche: Sure. So it won’t be on the dealer site, it lives at KelleyBlueBook.com, kbb.com. If you go to the main page at the top you’ll see service prices. And in there you can click and go in and look at recalls or maintenance or repairs. You can go into the repair section and again see that suggested range based on averages, not specific dealer prices, but average dealer prices for the most common services.

Jim Fitzpatrick: Okay. Is this something, a tool, that will be marketed to the masses, in your advertising and such to say, “Hey consumers, we’ve got this great resource for you”?

Jim Roche: Dealers could do that, although we just launched the site on September 16th, so it’s about as brand new as it gets. We’re really going through our learnings right now. We’ve got approaching about a million and a half consumers a month are coming in and doing a lot of serious work there. And what we’re seeing is many of them are going through the entire process. They’re doing the research and then they’re clicking to schedule an appointment with a local dealer. And one of the really exciting things is so far, and again it’s only been live awhile, but what we’re seeing is that over 60% of the people who click on the scheduled service button are new to the dealer. They’ve never been there before.

Jim Fitzpatrick: Ah, that’s nice.

Jim Roche: So again, it’s early in the game, but what we’re saying, the objective is to create that trust and drive consumers back to the dealer. And so far it’s looking pretty good.

Jim Fitzpatrick: That’s great. What are the OEMs’ take on this project? How do they view something like this? It seems like it could help them but maybe also viewed as not so much. What their take?

Jim Roche: Yeah, so we’ve had some preliminary conversations and so far it seems to be cautiously optimistic. Again, we’re not trying to dictate pricing. We’re taking existing pricing for parts and service that are already out there and we’re just informing consumers. The fact that we’re, again, we’re trying to be that trusted third party to pull consumers back to the dealer. Of course, that helps the OE. Sell more parts and ultimately more vehicles as we go forward. We feel pretty good that the OEs are going to be on side. Kelley Blue Book has been around a long time, helping to sell cars, and now we’re going to help service cars.

Jim Fitzpatrick: That’s fantastic. I think it’s long overdue for a resource like this to be out there for consumers. So kudos to you guys for knocking the cover off the ball on this and bringing it out and. And who better than a Kelley Blue Book or KBB to launch something like this? I mean, as to your point, 90 year reputation of providing good data to consumers is pretty strong, right?

Jim Roche: Well, thanks for the kudos. That’s why we put it in Kelley Blue Book. We felt that that was the best resource inside of Cox Automotive to really establish that bridge quickly to consumers for service.

Jim Fitzpatrick: Sure, and-

Jim Roche: So next time talk to you, I’ll have a lot more information about how we’re doing and look forward to our next conversation about it.

Jim Fitzpatrick: Yeah, that’d be great. Before I let you get out of here, switching gears a little bit. What advice would you give to a dealer on improving online service appointments? Question that always comes up and I know you’re the guy that can help with something like this.

Jim Roche: Well, I hope so. I think the first thing I would say is you’ve got to have price transparency, right? If you’re a consumer, you want the answers to those four fundamental questions and one of them is, about what should I pay? If you go to a website to schedule an appointment and it doesn’t have any prices, you’re just starting off on the wrong foot. I mean, Jim, you and I travel all over the place and we always buy our tickets online. When was the last time you bought a ticket from an airline that said, “I’ve got the flight that you want and I’ll tell you what it costs when you get to the airport.”

Jim Fitzpatrick: That’s Right.

Jim Roche: I mean, not having your prices, especially in today’s internet game, is just crazy. So start with price transparency. Get your prices up there. And then you’ve still got to provide that great experience. We’re not turning away from the fact that the experience needs to be great. That’s just table stakes. So you’ve got to provide a technology-enhanced experience. You’ve got to provide the great amenities, Wi-Fi and maybe Lyft or Uber, and you’ve got to smile and hustle. None of that’s changed.

Jim Fitzpatrick: No, it hasn’t. It really has it. Those are the things dealers can do very quickly too. That doesn’t take a too big of an act right there to make those fundamental changes. Well, Jim Roche, vice president of Cox Automotive, I want to thank you so much for joining us once again on CBT News. Can’t wait till the next time that we meet and you’ve got some more data to talk about from how this is being rolled out with dealers and how it’s being received with consumers. So again, thanks so much and congratulations to you on this new project.

Jim Roche: Thanks for having me, Jim. It’s always good to see and talk to you. I look forward to the next time.

Jim Fitzpatrick: Likewise, take care.

Thank you for watching the official news source of the retail automotive industry. This has been a JBF business media production.

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