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would have to bring in the car to the service centre as soon as a problem is found. This would
most definitely improve throughput of the service centres. Finally, since the cost of the five
year maintenance has been accounted for in the price of the vehicle, the actual revenue
stream for the service centres will be more predictable. Furthermore, the costs for the five
years maintenance programme would have been collected at the point of sale of the vehicle.
This money could be used to generate better cash preservation initiatives as well as rolling
capital for other investments.
Organizational Strength
Like any other industry, the automotive industry is plagued with a host of management
concerns. Due to the complexity of the business it is imperative that these concerns, ranging
from the product development, raw material purchases, manufacturing, sales and distribution,
have to be carefully orchestrated in order to support the smooth running of the business.
Therefore having an organization that works together between divisions well is definitely an
advantage. In most cases, working in silos is a problem. Divisions find it difficult to cooperate
and get a cross functional task done efficiently and effectively. However, in Toyota, the
workforce culture is second to none. The culture of „Kaizen‟ or continuous improvement has
been the foundation for the sustainable continuous improvements. The „Ohno‟s Circle‟ is
where a manager is asked to stand within a circle drawn out of chalk. The circle is just big
enough to stand in. The idea is that the manager has to look at the production line as it is
running and note every little detail which could be improved. This may go on for two hours
and the superior will then ask for a detailed report the following day. This is to ensure that the
manager is in touch with the shop floor.
Potential Promotional Ideas
To counter the concern by customers that the service and maintenance costs of a vehicle are
too high, an OEM may offer service vouchers at the point of sale of the vehicle. This set of
vouchers may be for as long as three years. Instead of giving the vouchers for free, the OEM
may offer the vouchers to the customers for a fraction of the total price of maintenance. In this
way, the customer does not have to worry about maintenance costs escalating over the years.
Proton Edar could offer the customer to buy the service package as a pre-paid deal at a
discounted rate. Assumng the total cost of maintenance is RM1,500 for the given period, the
customer could opt to purchase the service vouchers at a 40% discount at say RM900 only.
Since the vouchers explicitly mention the parts and labour carried out at each service interval,
the customer no longer has to be concerned about escalating maintenance costs since for the
given period, the cost has been paid for upfront. In this way, Proton Edar will be able to offer
the customer peace of mind. In addition, this system will also guarantee that the customer will
come back to service the car at the recommended mileage intervals. It also provides cash
upfront to Proton Edar and this is something very much needed at this juncture. Although the
vouchers are sold at a discount, the typical profit margins for parts and labour are 40%
anyway, which means that the vouchers can be sold either at cost or even slightly higher than
cost and yet please the customers with a large discount. In economic slowdowns, customers
typically try to avoid periodical maintenance on their vehicles. This can impact car
manufacturers in two ways. Firstly, the throughput into service centres will decrease resulting
in a contraction of revenues. The second impact is that since the customers do not maintain
their vehicles, these cars may ultimately break down in the middle of the road and this will
give a negative connotation to other motorists about the particular brand of car.
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