April business- record lows

[tyrguy]

I've been in business for 37 years this November. Started with myself and 1 tech straight out of voed school. Business grew thru the years to 1.5M in sales with myself, 2 service advisers, 3 full service techs, and 2 tire techs. Had a pretty good run for the first 29 years but the last 8 have been rough. 2008 was the last normal year we had. At that point we had had a run of 15 straight years of 96-97% hours billed. Then the recession hit and things have never recovered. Every year our hours billed continued to drop. Last year we billed about 73% of our hours. It's all due to declining car count.

Two weeks ago that first employee came to me and said that he was retiring from this business to concentrate on a non auto business he was running at home. It was a bittersweet moment for me because being together everyday for 37 years he is like family to me, but on the other hand, I truly haven't needed 3 techs for the last few years. So it saved me from laying a tech off, something I promised myself I would never do.

Three years ago when we ended 2013 billing about 85% of our hours I thought it was the end of the world. However, at this point, 2013 seems like the good old days.

We have a beautiful shop, built in 2007. We have great online reviews. We are doing more marketing than ever before. I still have a great staff that averages 16 plus years of service here. We keep up to date with electronic inspections, etc. I'm here everyday fighting the good fight. Even at last year's numbers, I made money and had a positive cash flow.

But....what in the world is going on this spring. Talk about soft. We just had one of the worst months we ever had. Down 30% from last April. And it's not just me. EVERYONE I talk to here in NE Ohio is dead.. The foreign car shop we do alignments for is never slow because he specializes in German cars. He's slow so now he is working on domestics. A small shop across town had one small job yesterday and nothing on his schedule for the rest of the week. A customer that works for a steel company told me April was his worst month in 10 years. I truly believe we will find out that we are already in a new recession.

I guess I just want to hear from you guys that it's like this all over, misery loves company. Plus hearing it helps me to sleep at night. Sorry for the long rant.

Edited May 3, 2016 by tyrguy

[HarrytheCarGeek]

I been in business for 37 years this November. Started with myself and 1 tech straight out of voed school. Business grew thru the years to 1.5M in sales with myself, 2 service advisers, 3 full service techs, and 2 tire techs. Had a pretty good run for the first 29 years but the last 8 have been rough. 2008 was the last normal year we had. At that point we had had a run of 15 straight years of 96-97% hours billed. Then the recession hit and things have never recovered. Every year our hours billed continued to drop. Last year we billed about 73% of our hours. It's all due to declining car count.

Two weeks ago that first employee came to me and said that he was retiring from this business to concentrate on a non auto business he was running at home. It was a bittersweet moment for me because being together everyday for 37 years he is like family to me, but on the other hand, I truly haven't needed 3 techs for the last few years. So it saved me from laying a tech off, something I promised myself I would never do.

Three years ago when we ended 2013 billing about 85% of our hours I thought it was the end of the world. However, at this point, 2013 seems like the good old days.

We have a beautiful shop, built in 2007. We have great online reviews. We are doing more marketing than ever before. I still have a great staff that averages 16 plus years of service here. We keep up to date with electronic inspections, etc. I'm here everyday fighting the good fight. Even at last year's numbers, I made money and had a positive cash flow.

But....what in the world is going on this spring. Talk about soft. We just had one of the worst months we ever had. Down 30% from last April. And it's not just me. EVERYONE I talk to here in NE Ohio is dead.. The foreign car shop we do alignments for is never slow because he specializes in German cars. He's slow now is working on domestics. A small shop across town had one small job yesterday and nothing on his schedule for the rest of the week. A customer that works for a steel company told me April was his worst month in 10 years. I truly believe we will find out that we are already in a new recession.

I guess I just want to hear from you guys that it's like this all over, misery loves company. Plus hearing it helps me to sleep at night. Sorry for the long rant.

 

From what I can see, your experience is the norm, the pie is currently shrinking. Due to such low interest rates, it has really skew the economy, lots of people that should be out of business still have to fail, you will need to re-organize and keep your eye on expenses. Market aggressively, get involved in your community events, schools, associations. Just like Japan, we are experiencing deflation, people are being overburdened by rent or mortgage payments and income is flat.

 

My $0.02cents? Own your real estate, keep expenses low, compete and seek the best customers.

[kars]

2016 has been total crap for me. Over the past 4 years I have averaged 30-40 percent growth every year. I invested everything in growing the shop, adding help etc.. figuring on a another 20-30 percent growth this year. Pretty much doubled my expenses trying to outfit for the growth. So far all I can do is match last years numbers which nets me about a 3k per month loss.

I'm going for some Vin Waterhouse training this week. Hopefully it will help me with getting my numbers right.

[Elon Block]

You're in a high traffic, highly populated area. Those people are getting their

vehicles serviced somewhere. Why not at your shop?

 

Especially considering the average age of vehicles on the road today are

older than ever. Depending on what statistics you want to look at, the

average age of vehicles are between 11 and 14 years!

 

That's a lot of mileage with lots of parts and systems wearing out every

single day!

 

What that means to you is: There are more opportunities than ever

to do very well in the auto repair business!

 

Here are some things to be aware of. As a result of independent shops and

the big chains marketing with loss leader coupons and discounts, today's

customers have come to believe all repair shops do the exact same thing.

 

Auto repair shops have fallen into the commodity category!

 

In other words, today's customers believe everyone does oil changes. Anyone
can take care of their brakes and anyone can mount a tire. Therefore, it all boils

down, in their mind, to who has the best price.

 

That's why your phone is ringing off the hook with people asking how much

you charge for (alignments, brakes, tires, etc.)

 

What that means is: unless you can explain to them why they should

use your shop over all of their other choices, they're going to pick the

guy with the lowest price - every time. (Competing on price is a race to

the bottom!)

The Auto Care Association published a startling report, which revealed that
1 out of every 3 customers are doing research and/or getting a second
opinion after receiving a diagnostic about their vehicle.

That number goes up to 1 out of every 2 customers, when the vehicle
owner is between the ages of 18-44 years.

 

I wish I had a dollar for every time I've seen a customer pull out their phone

to shop around for better prices on an estimate they just received from

a service advisor who wasn't skilled at communicating with today's internet-

driven customers.

 

The bottom-line is your service advisors have to become skilled at two things:

 

1) Being able to convert those price shoppers into appointments. And

equally important...

2) Making sure your people have a selling system that removes 100% of

the customer's doubts that:

• Your recommendations are legitimate
• Your pricing is fair and
• Your shop is the obvious choice to do the work.

 

What does an effective selling system look like? First of all, your people

need to be able to convert those price shopper phone calls and walk-in's

into appointments.

 

Then, when the customer comes in, there must be a step-by-step process

for demonstrating to that customer why they should not only have that

work done at your shop. But also why they should have all of their

auto service done at your shop.

Once they can do that, your bays will be full with profitable jobs, your

schedule will be booked two to three days out, your techs will be busy

and your numbers will be where they should be.

You're a tire store so that gives you an even bigger advantage in the
marketplace because you can position yourself as the "one stop shop"

for all of their automotive service and repair needs!

 

The key is to know what today's customers need to hear so they

automatically choose you for all of their automotive needs.

[tyrguy]

As far as customers going somewhere else, that could very well explain the general decline in car count since the recession. We have a few more bays in town than we previously did. And I work on that everyday.

However, this thread was more about the last 5 weeks and this unprecedented dead April and early May. Something strange is going on. It's a general slowdown. It's the Walmart Tire and Lube who's bays are within 150 yards of where I am sitting. It's the NTB a half a mile down the street. The Valvoline quick lube and Midas in town. My buddy's shop I mentioned previously. I'm hearing it from the local NAPA store owner, my other parts sales people and my ATD contacts. The car dealerships that buy tires off me haven't been because they are slow. I was told the other day that the dealerships parts truck normally make 15-17 deliveries a morning made 2 that day. It's other business' like my significant other's carper/ flooring store. EVERYBODY IS DEAD.

Is it the cold spring here? Is it uncertainty due to the political climate? I wish I knew.

Edited May 4, 2016 by tyrguy

[tyrguy]

double post

Edited May 4, 2016 by tyrguy

[xrac]

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[CMillet86]

I've had my best year ever so far, were talking a 100% increase over last years sales at this point. This last month has been a little slower, but I'm not worried yet. I'm taking on as much work as I can by myself, my biggest issue is finding help.

[HarrytheCarGeek]

As far as customers going somewhere else, that could very well explain the general decline in car count since the recession. We have a few more bays in town than we previously did. And I work on that everyday.

However, this thread was more about the last 5 weeks and this unprecedented dead April and early May. Something strange is going on. It's a general slowdown. It's the Walmart Tire and Lube who's bays are within 150 yards of where I am sitting. It's the NTB a half a mile down the street. The Valvoline quick lube and Midas in town. My buddy's shop I mentioned previously. I'm hearing it from the local NAPA store owner, my other parts sales people and my ATD contacts. The car dealerships that buy tires off me haven't been because they are slow. I was told the other day that the dealerships parts truck normally make 15-17 deliveries a morning made 2 that day. It's other business' like my significant other's carper/ flooring store. EVERYBODY IS DEAD.

Is it the cold spring here? Is it uncertainty due to the political climate? I wish I knew.

 

The election certainly is a factor.

 

We certainly have had to reinvent ourselves. I was expecting this situation.

 

The only reason we are holding steady is because we have given it a lot of brain power to figure out how to survive this downturn.

 

Several shops in our area have closed, a nearby competitor told his staff he lost $40K last year, the only reason he still has the doors open? He owns the real estate, and has been subsidizing the business by not paying his own rent.

 

Think about that carefully.

 

It's a whole confluence of factors, but all of them have the same root, it's the Fed's economic policy.

 

Remember, cash for clunkers? That set off the unprecedented demand for new car financing. Material engineering has allowed the manufacturers to make even better cars, less demand for repairs.

 

Instability overseas, means people are pouring money into U.S. real estate, that's how you can see some commercial buildings hold up in price while they go vacant, yet sell even higher while they have been empty not having collected any rent.

 

Savers are being hurt, bonds are so high you pay a premium to own them, in effect you are taking a hit by paying to lend your money. What are investors doing, buying rentals for the cash flow.

 

I could go on, but what's the point.

Edited May 4, 2016 by HarrytheCarGeek

[HarrytheCarGeek]

Here, these are some links:

http://www.wsj.com/articles/as-interest-benchmarks-go-negative-banks-may-have-to-pay-borrowers-1428939338

Tumbling Interest Rates in Europe Leave Some Banks Owing Money on Loans to Borrowers Subzero rates have put some lenders in an inconceivable position

 

 

The Central Bank War On Savers—–The Big Lie Beneath

 

http://davidstockmanscontracorner.com/the-central-bank-war-on-savers-the-big-lie-beneath/

 

 

 

 

That 70s Show – episode 1

http://bawerk.net/2015/08/05/that-70s-show-episode-1/

 

 

Commercial Credit Is the New Mortgage Credit Corporate debt products are the hot thing.

 

http://www.bloomberg.com/news/articles/2015-09-11/commercial-credit-is-the-new-mortgage-credit

Edited May 4, 2016 by HarrytheCarGeek

[HarrytheCarGeek]

I've had my best year ever so far, were talking a 100% increase over last years sales at this point. This last month has been a little slower, but I'm not worried yet. I'm taking on as much work as I can by myself, my biggest issue is finding help.

 

Why are you having trouble finding help? Is it salary or qualification issues?

[mspecperformance]

This is definitely very alarming. I have heard a down turn in April from almost everyone. You guys, my parts suppliers, even my marketing manager from Kukui have mentioned a slow down.

 

We haven't seen that yet, we are still on an upward trend.

[Shopcat]

Tyrguy, Most shops eventually hit a income plateau. I was just wondering what your per vehicle average has been thru the years. High car count in not necessarily a recipe for success. I've worked with shops that have a low per vehicle average, and tons of car count. It is far better to have 1 $400.00 car on any given day than 5 $80.00 cars. Lower car count can work for you, if you take the steps to increase per vehicle average. Fewer cars with a higher average is preferred. All that has to be done is use solid systems and procedures to maximize every opportunity.

[CMillet86]

 

Why are you having trouble finding help? Is it salary or qualification issues?

Finding someone to even apply. Qualifications is also an issue. Called the local tech schools about students or past students, they won't even call me back. I'm willing to pay if they can get stuff done, but so far that's an issue. Last guy I tried couldn't do valve cover gaskets on a jeep in less time then it took me to swap an engine in a 3.8 Pontiac.

[HarrytheCarGeek]

Finding someone to even apply. Qualifications is also an issue. Called the local tech schools about students or past students, they won't even call me back. I'm willing to pay if they can get stuff done, but so far that's an issue. Last guy I tried couldn't do valve cover gaskets on a jeep in less time then it took me to swap an engine in a 3.8 Pontiac.

 

Oh, man! I hear ya. We are all on the same boat. Look here, STS is desperately looking here in North Jersey: http://newjersey.craigslist.org/search/jjj?query=sts+mechanic

[tyrguy]

Internet problems today. Sorry for the double posts.

Edited May 4, 2016 by tyrguy

[tyrguy]

Internet problems today. Sorry for the double posts.

Edited May 4, 2016 by tyrguy

[tyrguy]

I realize that the absolute best situation would be for each tech to work on 1 car a day and bill 8 hours. That's 1 customer to write up, 1 car to rack, 1 car to test drive, 1 customer to take care of at checkout. Obviously that can't happen day in and day out but the idea is still sound. Work on less cars but bill the same hours. That's always been my thinking.

But getting back to this April thing. Car count this year to last. 2016/2015 January 209/207 February 185/199 March 226/217 So first quarter totals 2016 619cc vs 2015 623cc. Basically flat However April 2016 171cc to 2015 250cc. A 32% decrease. BTW, I only count cars my service techs touch, not tires only cars.

Anyway, I just got back from a meeting in Akron with a bunch of tire dealers and everyone was down last month. Many over 20% down. So I feel a little better.

Edited May 4, 2016 by tyrguy

[tyrguy]

double post

Edited May 4, 2016 by tyrguy

[mmotley]

This is definitely very alarming. I have heard a down turn in April from almost everyone. You guys, my parts suppliers, even my marketing manager from Kukui have mentioned a slow down.

 

We haven't seen that yet, we are still on an upward trend.

Same, same, same. Granted we just moved into a much nicer location, but everyone else is slow from what I hear. We just had another all time record month and I'm looking to hire my first SA. Haven't even had a chance to send out our mailers yet either since we're still under construction.

[Jeff]

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[HarrytheCarGeek]

Commercial bankruptcy filings totaled 3,482 in April, up 32 percent from the same month a year ago.

This marks the sixth month in a row for year-over-year increases in business bankruptcy filings.

http://www.bizjournals.com/bizjournals/washingtonbureau/2016/05/business-bankruptices-keep-climbing-and-other-news.html

[HarrytheCarGeek]

U.S. jobless claims rise; planned layoffs surge

 

https://www.yahoo.com/finance/news/u-jobless-claims-post-largest-123333712.html

[mmotley]

Just means more people will be holding on to their cars longer and fixing/repairing them instead of trading in for new cars. Great news for us all

[Jeff]

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[AJFA]

We did not get much of a winter here, winter kills cars so we were very slow as a result.

We are paying the bills with profit to spare but not as much as we have had in the past.

 

It is IMPOSSABLE to hire anyone let alone get an applicant worth our time. We are in a population of 30000 and there is not anyone looking to get in this business as we all know.

 

We just returned from the World Pac Texas training & one of the instructors said she had something like 110 applicants for a beginner tech job, I don't think I have had 110 applicants in 12 years total!!! We spend a few hundred dollars on an ad & get 2 applicants if we are lucky.

 

Thinking of putting in a car wash..............!

Dave

[frostytire]

We had the best month of our history in March. Going on three years in business. Can not explain this, however, the local grocery store that has been in business for over 15 years also had his best month ever in March as well. Can't explain it. Did absolutely no marketing since the first of January. April was about 3k lower than March, but still outstanding for this small two man Shop in the middle of nowhere.

[daves auto service]

Glad to hear it isn't just my area that is slow. I am a small shop with 2 techs and my wife running the front office. My gross sales have always been around $575,000. But the pass two years has been down hill. My sales for this year to date compared to last year is down $32,000 and compared to 2014 is down $42,000. We have been spending more money on marketing then ever. And from my research I have done, we are the only shop in town sending out newsletters with a coupon insert to our customers, one of two shops sending out reminder's ( not counting dealerships ), weekly posting on social media, and much more. It just seems like nobody wants to spend money on their car for any services, only on what needs to be done.

One of the biggest problem's that I think is causing this problem in my area is property and school taxes are out of control. When the average gross pay for most resident's is $575 to $650, then what they are left with after taxes are taken out and about $125 of that has to go towards their property and schools taxes, that doesn't leave them much for everything else. We have had customers tell us that car repairs / services is not as important as paying their electric, heat, food, car and health insurance, baby sitters, and so on. But they think we don't have the same issue's. Because some of our customers made the comment " But you don't have those worries because you own your own business". REALLY! Do they think when we unlock our doors in the morning, there is a box of money waiting for us? LOL

[tyrguy]

Update. For whatever the reason, someone turned the switch back on last Tuesday and we've got work coming out our ears now. I just can't explain why everyone was staying away for the last 4-5 weeks. I've had some long time customers come in and say "you mentioned some work I needed done a while back, I'd like to get it done now". So I've actually asked some of them, why this week? Why not last month? I had hoped to shed some light on what this collective consciousness was that was causing everybody to stay away. You know, maybe something like "I just haven't felt comfortable spending money with all the uncertainty with the economy and the political climate right now". Instead just a blank stare and the comment "I don't know, here's the keys". Whatever, hope it continues. I really believe it might just have been the weather.

Edited May 16, 2016 by tyrguy

[mspecperformance]

The collective nation might be in a small slump however there will always be folks that are looking for our services. We just have to find the magic sauce and find all these golden clients!

[HarrytheCarGeek]

The collective nation might be in a small slump however there will always be folks that are looking for our services. We just have to find the magic sauce and find all these golden clients!

 

But sometimes one's strategic setup does not let you take advantage of a golden opportunity. Which may mean one may have to change trade or business.

[mspecperformance]

 

But sometimes one's strategic setup does not let you take advantage of a golden opportunity. Which may mean one may have to change trade or business.

 

 

assuming you have an opportunity that you can take advantage of. Sometimes we have to realize we are in the wrong area or our business is not set up properly to actually do business.

[HarrytheCarGeek]

 

 

assuming you have an opportunity that you can take advantage of. Sometimes we have to realize we are in the wrong area or our business is not set up properly to actually do business.

 

You know, this is a excellent point!

 

There is this guy in my area that is selling his six shops, they are beautiful facilities, yet they are not making any money, except for one of them. If you go for service to any of the other five, the people running them are brusque and inattentive, try to have everything paid in cash and dock people an extra 3.5% if paying by credit card. The one that is making money, the guy basically runs it as a one hit and run shakedown station, the max repeat business is 3 times and that is only about 6% of the past three years customers. Needless to say, there is no business there to buy.

Edited May 17, 2016 by HarrytheCarGeek

[mspecperformance]

 

You know, this is a excellent point!

 

There is this guy in my area that is selling his six shops, they are beautiful facilities, yet they are not making any money, except for one of them. If you go for service to any of the other five, the people running them are brusque and inattentive, try to have everything paid in cash and dock people an extra 3.5% if paying by credit card. The one that is making money, the guy basically runs it as a one hit and run shakedown station, the max repeat business is 3 times and that is only about 6% of the past three years customers. Needless to say, there is no business there to buy.

 

 

Only buying the lease/building or equipment. Thats pretty much how I see almost all the shops around me when I am looking at them for purchase opportunities.

[alfredauto]

I must be an outlier on this one. January was our worse month in 6 years. I thought the phone was broken because it didn't ring. But the last 3 months were 20-30% above last years numbers which were good.

 

The country has not recovered from 2008, that's for sure. No jobs or job uncertainty means no tune ups for us. The good news is as the new guys go under due to inability to pay huge loans guys that have been around awhile get a bigger piece of the pie.

 

Tyrguy - if it makes you feel better our tire sales are garbage. I sold less tires in the last year than I did when I first opened. I blame it on Internet competition. And Walmart and the huge chains are competing with the internet making it so unless you are paying guys peanuts to do tires or your selling the cheapest shit available your prices are going to be higher.

[Handson]

someone was out bidding your google adwords for a little while. then they got too busy and turned it down snd you started winning bids.

[danker]

I've always been one of the busiest shops in my area with an increase in sales every year for 37 years. But this year my sales are down nearly 20% so far. ouch! I hired an A tech in Jan to replace me so i could take more time for myself . I dont think I can afford him with this crazy down turn! I dont see any light at the end of the tunnel either Better cars that dont break, everyone leasing,tight money?

[3PuttFever]

Do we remember when sales and cars were higher? Do we know why? Maybe. Business can be cyclical and there are bigger wheels turning the machine that we can possibly understand. As owners the best we can do is keep a positive outlook, faith in our systems and people, and keep treating our customers like the friends they are to us - even the not-so-nice ones! Things will get better for us if we're doing what's right, doing our best, and working honestly with our customers. I'm a big believer in that mantra. It may be naive but if I'm doing it right it will pay off. And if I'm going to fail at least I will know I never cheated anyone and did my best.

Edited May 25, 2016 by 3PuttFever

[cmc]

We are off for the last three months ourselves. I had one on one meetings with my techs this morning talking about our courtesy inspections and maximizing every ticket. My software tracks who wrote

what up. I do not want to sell anything that is not needed but I dam sure want to sell everything that we can see. My problem is that as a tech I was taught and did write everything up that I could. That

led me into having my own shop. Everyone is not an A level tech. I do my best to attracted them but it is tough out there. So I just grind it out with my guys and try to stay on top of it. When my car count is up and my write ups are down something is wrong.