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Tom’s Trends – Margin & Inflation [CC 104]


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  • Price increases (inflation) are currently running about 7% year to year with no signs of letting up and plenty of reasons why it could go higher.
  • So, what. What does that mean for shops? It will kill some shops and damage others, some seriously. 70s average 7%, peaked at 14% 1980
  • Like the frog in the pot of boiling water, it can go unnoticed when not monitored carefully.
  • Shop A is on top of it, making sure to stay ever or slightly ahead as there seems to be no let-up in sight.
  • Total GP for 2022 61%
  • Shop B is kinda sorta aware but not watching the numbers as they should.
  • Total GP for 2022 56%
  • Shop C is oblivious. Not into numbers - not watching the news.
  • Total GP for 2022 51%
  • These shops all do about $1M in sales
  • At the end of the year, shop A has $50,000 more than shop B and $100,000 more than shop C. Trailing the inflation curve can be damaging or deadly to any business.
  • Monitor GP daily on every RO. Your software should make that a quick and easy process. If not, it may be time to go software shopping.
  • When an RO is below your goal line (typically in the 60% area), why? Find the answer. Does something need adjusting?
  • In an inflationary environment, checking numbers weekly or monthly is not enough. Set time aside every day to check every RO.
  • Then at the end of the month, look over your expenses thoroughly. Make sure they are separated into many lines so you can quickly see changes in individual items.


Put all your key numbers on a three-month rolling average – that is called TRENDING. It can save you a lot of money.  

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Tom Ham, with the help of his wife Deb, is the creator and owner of Automotive Management Network a 12,000 plus member website dedicated to the exchange of vehicle service management information. Tom got his start in the auto service industry pumping gas in the late ’60s. Tom and his wife operate Auto Centric, an import specialty shop in Grand Rapids, MI. Tom and Deb have five children including two sons and a daughter who served in the Iraq War as U.S. Marines.  He writes extensively on industry topics.  Discover Tom’s previous episodes HERE.

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  • Have you checked out Joe's Latest Blog?

         5 comments
      I recently spoke with a friend of mine who owns a large general repair shop in the Midwest. His father founded the business in 1975. He was telling me that although he’s busy, he’s also very frustrated. When I probed him more about his frustrations, he said that it’s hard to find qualified technicians. My friend employs four technicians and is looking to hire two more. I then asked him, “How long does a technician last working for you.” He looked puzzled and replied, “I never really thought about that, but I can tell that except for one tech, most technicians don’t last working for me longer than a few years.”
      Judging from personal experience as a shop owner and from what I know about the auto repair industry, I can tell you that other than a few exceptions, the turnover rate for technicians in our industry is too high. This makes me think, do we have a technician shortage or a retention problem? Have we done the best we can over the decades to provide great pay plans, benefits packages, great work environments, and the right culture to ensure that the techs we have stay with us?
      Finding and hiring qualified automotive technicians is not a new phenomenon. This problem has been around for as long as I can remember. While we do need to attract people to our industry and provide the necessary training and mentorship, we also need to focus on retention. Having a revolving door and needing to hire techs every few years or so costs your company money. Big money! And that revolving door may be a sign of an even bigger issue: poor leadership, and poor employee management skills.
      Here’s one more thing to consider, for the most part, technicians don’t leave one job to start a new career, they leave one shop as a technician to become a technician at another shop. The reasons why they leave can be debated, but there is one fact that we cannot deny, people don’t quit the company they work for, they usually leave because of the boss or manager they work for.
      Put yourselves in the shoes of your employees. Do you have a workplace that communicates, “We appreciate you and want you to stay!”
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