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Auto shop owners are always looking for ways to improve production levels. They focus their attention on their technicians and require certain expectations of performance in billable labor hours. While technicians must know what is expected of them, they have a limited amount of control over production levels. When all factors are considered, the only thing a well-trained technician has control over is his or her actual efficiency.
As a review, technician efficiency is the amount of labor time it takes a technician to complete a job compared to the labor time being billed to the customer. Productivity is the time the technician is billing labor hours compared to the time the technician is physically at the shop. The reality is that a technician can be very efficient, but not productive if the technician has a lot of downtime waiting for parts, waiting too long between jobs, or poor workflow systems.
But let’s go deeper into what affects production in the typical auto repair shop. As a business coach, one of the biggest reasons for low shop production is not charging the correct labor time. Labor for extensive jobs is often not being billed accurately. Rust, seized bolts, and wrong published labor times are just a few reasons for lost labor dollars.
Another common problem is not understanding how to bill for jobs that require extensive diagnostic testing, and complicated procedures to arrive at the root cause for an onboard computer problem, electrical issue, or drivability issue. These jobs usually take time to analyze, using sophisticated tools, and by the shop’s top technician. Typically, these jobs are billed at a standard menu labor charge, instead of at a higher labor rate. This results in less billed labor hours than the actual labor time spent. The amount of lost labor hours here can cripple a shop’s overall profit.
Many shop owners do a great job at calculating their labor rate but may not understand what their true effective labor is, which is their labor sales divided by the total labor hours sold. In many cases, I have seen a shop that has a shop labor rate of over $150.00 per hour, but the actual effective labor rate is around $100. Not good.
Lastly, technician production can suffer when the service advisors are too busy or not motivated to build relationships with customers, which results in a low sales closing ratio. And let’s not forget that to be productive, a shop needs to have the right systems, the right tools and equipment, an extensive information system, and of course, great leadership.
The bottom line is this; many factors need to be considered when looking to increase production levels. While it does start with the technician, it doesn’t end there. Consider all the factors above when looking for ways to improve your shop’s labor production.
By Changing The Industry
Episode 139 - The Power of Effective Online Advertising With Mike Edge
In this podcast episode, Coach Chris Cotton from Auto Fix Auto Shop Coaching introduces "The Weekly Blitz," a podcast aimed at providing valuable knowledge and strategies for running a successful independent auto repair shop. He discusses the potential profitability of these shops when managed correctly but acknowledges that many struggle to make a profit. Coach Chris describes his ideal business and emphasizes the importance of creating a path for employees to earn upwards of $100,000 annually. He also discusses the potential for shops to increase revenue by expanding operations. The episode concludes with Coach Cotton expressing gratitude and inviting listeners to engage with the show.
The profitability of independent auto repair shops [00:01:07] Discussion on the profitability of independent auto repair shops and the potential for high net profit margins.
The ideal business for an independent auto repair shop [00:02:27] Description of the ideal business model for an independent auto repair shop, including sales volume, net profit margin, and owner's salary.
Factors affecting profit margins and barriers to success [00:05:35] Explanation of the importance of gross profit, labor and parts margins, fixed costs, and potential barriers to achieving desired profit margins.
The commitment to learning and growth [00:10:51] Gratitude for listeners' commitment to learning and growth, and the importance of making strategic decisions and continuous education.
Continued support and engagement [00:11:50] Encouragement to reach out with questions or topic suggestions, and the importance of listener input in shaping the show.
Wishing for continued success [00:11:50] Closing remarks emphasizing the importance of continuous improvement and wishing for the listeners' continued success in the auto repair industry.
The Weekly Blitz is brought to you by our friends over at Shop Marketing Pros. If you want to take your shop to the next level, you need great marketing. Shop Marketing Pros does top-tier marketing for top-tier shops.
Click here to learn more about Top Tier Marketing by Shop Marketing Pros and schedule a demo: https://shopmarketingpros.com/chris/
Check out their podcast here: https://autorepairmarketing.captivate.fm/
If you would like to join their private facebook group go here: https://www.facebook.com/groups/autorepairmarketingmastermind
Connect with Chris:
#autofixautoshopcoaching #autofixbeautofixing #autoshopprofits #autoshopprofit #autoshopprofitsfirst #autoshopleadership #autoshopmanagement #autorepairshopcoaching #autorepairshopconsulting #autorepairshoptraining #autorepairshop #autorepair #autoops #onlinebooking #serviceadvisor #serviceadvisorefficiency
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Scan Tool Webinar Live with Matt Fanslow, Keith Perkins, Tanner Brandt and Richard Falco - Diagnosing the Aftermarket A to ZBy carmcapriotto
Take a deep dive into the world of scan tools with Matt Fanslow, Keith Perkins, Tanner Brandt, and Richard Falco. Together they discuss choosing the right scan tool, maximizing scan tool usage, aftermarket vs. factory scan tools, the power of scan data, subscription fees, the future of diagnostics, AND MORE!
The best scan tool? (00:02:22) Discussion on the different types of scan tools and their suitability for specific tasks, such as graphing or coding. Factors to consider when choosing a scan tool (00:05:09) Consideration of the specific needs of the job, including the type of vehicle and the required functionalities, when selecting a scan tool. Increase in non-drivability issues (00:06:51) Discussion about the growing number of non-drivability issues in vehicles, such as electrical, electronic, and climate control problems. Underutilization of scan tools (00:08:23) The importance of utilizing the full potential of scan tools and highlights the lack of knowledge and usage among technicians. Importance of following service procedures (00:10:39) The discussion revolves around the consequences of not following service procedures, leading to shortages of parts and damage to vehicle components. The difference between aftermarket and factory scan tools (00:14:04) Explains the difference in network topology and module pinging between aftermarket and factory scan tools. Module topography and caution with aftermarket scan tools (00:15:26) Discusses the addition of module topography in some scan tools and warns against relying solely on aftermarket scan tools for network layout. Challenges with J 2534 Device vs. Factory OEM Interface (00:23:09) The difficulties of using a J 2534 device instead of the factory interface for vehicle diagnostics and repairs. Communication Challenges in the Automotive Industry (00:27:34) The complex communication networks and different teams involved in engineering and dealership software in car companies. Aftermarket tools for relative compression test (00:30:06) Exploration of aftermarket tools, specifically the E-Scan Elite by ATS, that can perform a relative compression test. Determining the number of modules in a car (00:32:17) Methods for figuring out the number of modules in a car, including using the VIN, RPO codes, and factory scan tools or service information. Throttle Position and Tuners (00:36:01) Discussion on using average throttle position to detect tuners in Chrysler vehicles. Deleted Engines and Missing AFM (00:36:57) Exploration of issues with deleted engines and missing AFM codes after reprogramming. Scan Data and Power Complaints (00:39:25) Using scan data and the ATG calculator to determine if a car has a power issue. The climbing subscription fees (00:43:19) Discussion on the possibility of group buys or legislation to address increasing subscription fees for tools. Nissan V2 repairs (00:45:40) Issues with repairing Nissan V2 vehicles, including the unavailability of certain parts and the need for extensive work. The problem with JLR devices (00:50:59) Discussion about the issues with JLR devices and the only devices that work for JLR diagnostics. Manufacturers locking out aftermarket tools (00:51:53) Clarification that no manufacturers are planning on locking out aftermarket tools, but security gateways may cause some functions to not work temporarily. Expert mode on VW Audi Snap-on Zeus (00:54:08) Advice on using expert mode on VW Audi Snap-on Zeus and the availability of interfaces and online scan tools for newer models. Problems caused by non-factory tooling (00:57:50) Discussion about the daily challenges of fixing BMWs due to problems caused by non-factory tooling. Remote programming and scam tool manufacturers (00:59:29) Exploration of the rise of remote programming services offered by scam tool manufacturers and the potential risks involved. Recovering modules and dealing with software numbers (01:02:11) Explanation of the process of recovering modules, including the use of factory as-built data and dealing with software numbers that have been tampered with. The use of Forscan for programming (01:04:45) Discussion on the use of Forscan for programming and how it can be helpful in manipulating as-built data. Missing as-built data (01:07:17) Discussion on missing as-built data and the possibility of it being a result of a file upload error. Finding and purchasing a Mercedes factory scan tool (01:11:52) Discussion on resources and process for acquiring a Mercedes factory scan tool, including the need for a separate credit card. Accessing service information and becoming a staff member (01:12:24) Exploration of resources for service information, including the importance of becoming a staff member and accessing knowledge articles on the CRM landing page. Ford light and vehicle security professional credentials (01:14:03) Discussion on the Ford light tool, its features, pricing, and the addition of PATS programming. Mention of vehicle security professional credentials and insurance requirements. The insurance agent issue (01:20:26) Explains the problem of using the wrong insurance agent when trying to get insurance for a mobile diagnostic business. Using scan tools for non-drivability issues (01:21:40) Discusses the importance of using scan tools to diagnose electrical, body, and comfort access problems in vehicles. Troubleshooting HVAC module issue (01:23:57) Describes a case study of a common problem with the AC compressor clutch and how to use scan data to determine if the HVAC module is the issue. The AC Compressor Code (01:27:00) Explains how clearing a code can temporarily fix the AC compressor, but the code will turn off the compressor again when it sets. Aftermarket Blower Motor Speed Controller (01:27:54) Warns against using aftermarket speed controllers for blower motors, as they can cause the AC to stop working. Using Data PIDs for Diagnosis (01:28:45) Discusses how data PIDs can be used to diagnose issues with starter request, ignition, and immobilizer systems. The importance of vehicle door configuration (01:34:16) Explains how vehicle door configuration data can indicate if someone has tampered with the doors or disabled certain features. The impact of affordable scan tools (01:35:12) Discusses how affordable scan tools can lead to inexperienced individuals causing problems by disabling features like TPMS. The shift in focus for scan tool companies (01:37:14) Explores how scan tool companies are prioritizing coding capabilities over graphing capabilities due to the increasing complexity of vehicle modules. The cable compatibility issue (01:41:52) Discussion about the USB cable compatibility for the VCI tool and the potential risks of using other cables. Possible future updates in scan tools (01:43:36) Suggestion to create a platform to list the known scan tool functions and the challenges of keeping up with updates.
Thanks to our Partner, NAPA AUTOTECH napaautotech.com
Email Matt: [email protected]
Diagnosing the Aftermarket A - Z YouTube Channel HERE
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Last episode, I talked about factors that play into calculating customer acquisition cost for your business. This week, I'll explore how you can figure out what an appropriate acquisition cost is for your shop. As usual, it's not a one-size-fits-all answer, but I’ll talk about a few factors that can help you decide:
• Advertising Spend as a Percentage of Sales: Many successful businesses allocate around 6% of their sales for advertising purposes, but does this apply to all shops?
• How much free demand does your shop have? From physical visibility to word-of-mouth, what kind of factors to consider when determining how much advertising you need to do.
• Understanding how customer retention and loyalty relate to customer acquisition cost, especially from the perspective of Average Repair Order (ARO)
Thanks to our partners, NAPA TRACS and Promotive
Visit NAPATRACS.com and GoPromotive.com
Paar Melis and Associates – Accountants Specializing in Automotive Repair
Visit us Online : www.paarmelis.com
Email Hunt: [email protected]
Get a copy of my Book : Download Here
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