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Japanese Connection owner diversifies to maximize profits
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Colorado Springs, Colo.--The mantra of many niche independent shop owners is to do one thing and do it well.  Many do so, however, knowing that they're passing up business that may already be in their door, said Kraig Hermes, general manager and owner of Japanese Connection Inc.

Japanese Connection Owner Kraig Hermes said he's been able to boost business by adding domestic vehicle service for his existing customer base.
"I found that many people that had a Japanese car also had a domestic vehicle," Hermes said.  So, when it was time to increase sales about five years ago, rather than find new customers, he said he chose to add domestic service.  The move has paid off, he said, and domestic work now accounts for nearly a third of the shop's work.

 
When comparing domestic and import work, there is a distinct difference in vehicle engineering and owner demographics, Hermes said.


"We maintain Japanese cars and repair domestics," he said, adding that Asian vehicles simply require fewer repairs than domestic makes.


Hermes pointed to two vehicles in the shop to illustrate his point.  A 2002 Honda CRV was in for a 90,000-mile service, which included new spark plugs, a new cabin air filter, and coolant flush; and a Chevrolet van similar in age and mileage was in the shop for an axle replacement.


"People that own Japanese (vehicles) are more inclined to perform factory-scheduled maintenance," Hermes said, adding that Service Adviser Matt Isner does a good job of promoting scheduled maintenance at the counter.


"Most maintenance services will not yield immediate results," Isner said of fluid exchange services.  "We position it as a preventive maintenance so customers get longer life out of their vehicle."


To perform flushes, Isner said the shop is equipped with most of BG Product's service machines and tools, including an EGR service tool, transmission, fuel induction, power steering, and the diesel injection service, all of which were purchased from Kenz & Leslie Distributing Co. in Denver.


The EGR service tool is extremely useful when servicing the Honda 3.0-liter and the Acura 3.2-liter engines that have carbon buildup problems, Isner said.


"If you don't service the EGR, you may have to 'drill out' the carbon, which is costly," he said.  "We try to get people to keep that clean so they don't have a big expense in the future."  That can be a tough sell because the customers' don't see the damage happening, he said.


The addition of domestic work didn't require the shop to retool, as most of the equipment and scan tools accommodate most makes and models.  The shop's Snap-On Modis can handle domestic and import manufacturers and is more than adequate in pulling trouble codes on ABS brake systems, automatic transmissions, and engine trouble codes, he said.


For service information, Hermes said he relies on Mitchell 1's OnDemand5 DVDs, but is switching to the online version, which is automatically updated monthly, unlike the quarterly updates through 11 DVDs.  "We can call them if the repair information isn't there," he said, adding that they'll get the factory information to him.

Mike Baughn, a technician at Japanese Connection, prepares to do a transmission flush on a 2004 Honda CRV, part of its 90,000-mile service.
When it comes to choosing which suppliers to do business with, Hermes said he looks for ones that carry quality products and are willing to develop a long-term relationship.


"We try to provide our customers with the best quality they can afford," he said.  For example, he said he sells lesser known tire brands--Kumho, Multi-Mile, and Toyo -- ones that customers may not immediately recognize but offer great value for the dollar.


The shop gets tires from nearby Foree Tire Distributors.  "We have built a working relationship with them," Hermes said.  "Their service is nearly as important as price."


For replacement parts, Hermes said he makes most of his purchases from WorldPac, Factory Motor Parts, and Undercar Plus.  OEM parts are obtained through Burt Subaru, Front Range Honda, Liberty Toyota, and Al Serra Chevrolet.


When choosing which type of replacement part to install, Hermes said there are certain applications in which he'll use only OEM.  On Hondas, for example, the shop will only use OEM brake pads and water pumps.


The shop has never had a squealing or dusting problem with Akebono, Sumitomo, or Nissen brakes, all original equipment on Hondas, he said, adding that he stands behind his 12,000-mile 12-month warranty on all repairs.


With an intimate knowledge of Hondas and their needed repairs, Hermes said he has been able to create an additional profit center for the shop by purchasing lease return vehicles with low mileage, thoroughly inspecting and servicing them, and selling them on his lot.


"It keeps the techs busy when it's slower," he said, adding that he also takes trades that may need more work.  Once the vehicles are fixed up, he said he markets them on Craigslist.org and Autotrader.com.  "You can make enough money to make it worth your while," he said, adding that since last November, he's averaged three sales a month.


In addition to vehicle sales, other areas of income include fleet work and sublet undercar work from nearby Rocky Mountain Body & Paint, Hermes said, all of which adds to the bottom line.

 





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