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Some preliminary data from the New Jersey market.


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Consumer reports has an excellent report at the link, it points out how much wealth is lost by depreciation, but the debt has to be fully paid and serviced.

 

 

http://www.consumerreports.org/cro/2012/12/what-that-car-really-costs-to-own/index.htm

covo_cost_over_time_chart.png

 

Our cost of ownership Ratings comprise six main factors:

Depreciation is the largest cost factor by far. On average, it accounts for about 48 percent of total ownership costs over five years. Depreciation is a vehicle's loss in value over a defined period. To calculate it, we start with the price of a typically equipped model and factor in the discounts offered off the manufacturer's suggested retail price on some models. The average model depreciates about 65 percent over five years. Some vehicles depreciate faster than others because of oversupply, limited appeal, or rebates on similar new models. When we don't have depreciation data for a new model, we use estimates based on comparable vehicles.

Fuel costs can really add up, especially for SUVs. For example, you could pay more than $15,000 to fill up a Jeep Liberty over five years, while a similar-sized but more-efficient RAV4 V6 could save you $4,000 during that time. To calculate fuel costs, we assume the vehicles are driven 12,000 miles a year, the average reported by respondents to our annual survey. To that we apply the national average price of $4.00 a gallon for regular gas For models that require premium or diesel fuel, we use these costs: $4.20 a gallon for premium, and $4.30 for diesel. On average, fuel is the second-largest cost of vehicle ownership, at 24 percent over five years.

Interest is tied directly to vehicle price, and accounts for about 11 percent of five-year ownership costs. We calculate it based on a five-year loan, with a 15 percent down payment, because that is how many people buy cars. We use the average interest rate of 6.0 percent .

Insurance costs vary depending on many factors, including your age, location, and driving record. And they can dramatically boost the ownership costs of models that otherwise would seem affordable. For example, if you're looking for a fast car on a budget, steer clear of sports cars such as the Subaru Impreza WRX STi. Insurance can run three times as much as the fun and agile but cheaper to own Mini Cooper S. Overall, insurance makes up about 10 percent of total ownership costs over five years. Costs are derived from data from the Highway Loss Data Institute.

Maintenance and repair costs make up 4 percent of ownership costs over five years on average, according to data from Consumer Reports subscribers who responded to the online version of our Annual Car Reliability Survey.

They gave us their estimated costs for the past 12 months-excluding tires-and their responses provided data almost 300 models on vehicles up to eight years old. We used estimates based on similar models when data was unavailable. The majority of the costs are covered by the factory warranty during the first few years. But for some vehicles it can still add up. On average, we found that the Porsche Cayenne SUV is the most expensive vehicle to own for maintenance and repairs, costing more than $4,000 over the first five years. But the Toyota Land Cruiser is also luxurious and very capable off-road and costs just over half that.

Sales tax costs owners about as much as maintenance and repair does. We use the national average of 5.0 percent.

Carrying costs vs. operating costs

Costs can be divided into carrying costs (those tied to the vehicle purchase) and operating costs associated with ongoing driving expenses. Operating costs include fuel, insurance, and maintenance and repair costs. Depreciation, interest, and tax are carrying costs.

Carrying costs diminish significantly over time, while operating costs rise slightly, primarily due to increasing maintenance and repair costs. Still, on average, operating costs are less than carrying costs until a vehicle is about five years old.

Still, we found that some cars are expensive to drive, even though they're affordable to park in your garage. Some small cars, for example, have low prices, but their high insurance costs make them relatively expensive to operate. The Toyota Prius is one of the least-expensive cars to own in our estimation, and most of its costs go into insurance, gas, and maintenance. But small cars are the exception.

On average, carrying costs outweighed operating costs by 20 percent over the first five years for the average model we examined. For example, carrying costs for the BMW 750 Li add up to almost $17,000 a year. But it is relatively inexpensive to drive at just over $4,500 a year.

Even so, operating costs for some vehicles can be surprisingly high. The Cadillac Escalade, for example, costs about $5,300 a year on average for fuel, insurance, and maintenance and repair for the first 5 years.

 

carrying_costs_2012.png

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YourDrivingCosts2015.jpg

 

Here is AAA latest numbers, as you can see maintenance is listed at $766.50 per year per car. Check your shops numbers and see what is your average ticket per customer's car. If you have 1000 cars listed and your gross revenue for the year is less than $766,500 you need to be raising your prices!

 

If you do work for GEICO, check the report and reconsider doubling your labor rates.

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Okay, someone asked how can we justify a doubling of prices. Our answer is simple, Geicos tell you that you can have a 25% mark up. $100 + 25% = $125.00 . This only give you a 20% margin $25 / $125 = 20% gross margin, not the way they compute it for you $25 / $100 = 25% gross margin. While on their business side their markup is over 56% for a gross margin of about 36%. They are making over 16% over what they are willing to give our industry 36% - 20% = 16%.

 

So, if you like working for peanuts, struggling to pay your people a fair wage, and working harder not smarter, keep doing what you are doing and don't raise your prices.

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Okay, one more thing, if you don't like the numbers, it's up to you to check them, that's why we made them public.

 

Keep this in mind, while you are working on your business or cars, these people are numbers people. Banks and finance companies work on the numbers, that how they know how to make money, the insurance industry works with risk so they also know the numbers as they work with them on a daily basis. Politicians know the numbers because they keep all the statistics to know how government policy is working.

 

I hope this shows you how the banking, finance, insurance, and public employee unions can afford lobbyist and all that advertising on TV and social media. While you are too poor to leave the shop to lobby on your own. Catch 22, really.

 

Raise your rates!

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YourDrivingCosts2015.jpg

 

Here is AAA latest numbers, as you can see maintenance is listed at $766.50 per year per car. Check your shops numbers and see what is your average ticket per customer's car. If you have 1000 cars listed and your gross revenue for the year is less than $766,500 you need to be raising your prices!

 

If you do work for GEICO, check the report and reconsider doubling your labor rates.

Well not really. If the yearly maintenance number per vehicle is $766.50 and you're seeing the vehicle twice a year, the average ticket should be $383.25. That's a more realistic number.

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Harry, we are finding out people do not understand the numbers. You can show them the numbers but for some reason it does not "click" in their head. We are in crisis, our industry is in crisis, heck many industries are in crisis, the only industries that are not in crisis are banking/finance, insurance, real estate, and health care.

 

We wanted people to speak up, but it seems that no one wants to speak up or admit they are struggling. You can be doing everything right, but your customers don't have the income to patronize your business, even when they like you and trust you, they are not able to afford your services because banking/finance, insurance, real estate, and health care are bleeding them dry.

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Harry, we are finding out people do not understand the numbers.

 

Oh, they do understand the numbers, except they understand them as not having enough money to pay their bills at the end of the months after their employees have been paid.

 

Then, there is the I am too proud to ask for help, I am a big man type of mentality. Thank you for doing a thankless job.

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  • Have you checked out Joe's Latest Blog?

         0 comments
      It always amazes me when I hear about a technician who quits one repair shop to go work at another shop for less money. I know you have heard of this too, and you’ve probably asked yourself, “Can this be true? And Why?” The answer rests within the culture of the company. More specifically, the boss, manager, or a toxic work environment literally pushed the technician out the door.
      While money and benefits tend to attract people to a company, it won’t keep them there. When a technician begins to look over the fence for greener grass, that is usually a sign that something is wrong within the workplace. It also means that his or her heart is probably already gone. If the issue is not resolved, no amount of money will keep that technician for the long term. The heart is always the first to leave. The last thing that leaves is the technician’s toolbox.
      Shop owners: Focus more on employee retention than acquisition. This is not to say that you should not be constantly recruiting. You should. What it does means is that once you hire someone, your job isn’t over, that’s when it begins. Get to know your technicians. Build strong relationships. Have frequent one-on-ones. Engage in meaningful conversation. Find what truly motivates your technicians. You may be surprised that while money is a motivator, it’s usually not the prime motivator.
      One last thing; the cost of technician turnover can be financially devastating. It also affects shop morale. Do all you can to create a workplace where technicians feel they are respected, recognized, and know that their work contributes to the overall success of the company. This will lead to improved morale and team spirit. Remember, when you see a technician’s toolbox rolling out of the bay on its way to another shop, the heart was most likely gone long before that.
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