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Is the General Auto Repair Shop Model Still Sustainable?

Joe Marconi
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Gerald Martin Rookie

Gerald Martin

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Posted

Great questions Joe.  In my opinion, the future is bright for independent repair shops that embrace emerging technologies and invest in training.  See you all at Vision 2024 in Kansas City!

However, I can see the possibility that we no longer expect that every tech has the knowledge or training for every job that comes through the shop, as may have been expected in the past.  There may be alignment and ADAS techs, diesel repair techs, driveability diag techs, etc.  Oh, and high tech immobilizer and key programming work that requires locksmith level training.  A certain amount of specialization is inevitable, isn't it?

Wouldn't it make sense to have a goal of having two technicians in the shop that have competency for services offered by the company?

Gerald

 

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Transmission Repair Experienced

Transmission Repair

Posted
Posted (edited)
3 hours ago, Joe Marconi said:

Gerald, I agree with your assessment. Specialization is the key, and we need to assess the strengths of our employees and provide training in those areas. A shop's business model will dictate the competencies needed to provide top-level service/repairs to their customer base. 

One more thing to add to this discussion; top pay or A-rated pay cannot be reserved for the "traditional" definition.  Please note that flat rate pay is not the norm in many states, such as New York. Rethinking pay scales is also inevitable. 

Looking forward to Vision 2024! 

 

I've been a transmission repair specialist for all of my 40-year career.  At first, it was because I loved the challenge of automatic transmissions.  As time went on, I learned I was truly blessed because I haphazardly learned that specialization was the key as well.  Lucky me.  I don't know of a tech that can meet the time for any G/R time the first time they do a job.  For that reason, I never went into G/R because there were too many 1-off and first-time repairs.

However, I was tempted to go into G/R when transmission repairs got slow.  I agree that specialization is the key, as well as the future, of G/R.  I predict the majority of the shops will do what they've always done when technology changes; they will adapt.  After all, didn't G/R originally adapt from the blacksmith shops to cars?  Below is a recent CNBC news video that puts forward an idea of what the automotive industry can expect over the next 11 years...

https://youtu.be/P-NF-7miGLo?t=418

Edited by Transmission Repair
Changed video link.
  • Like 1
Transmission Repair Experienced

Transmission Repair

Posted
Posted (edited)
On 12/5/2023 at 9:18 AM, Joe Marconi said:

Good points, and perspective! And thanks for the link!

 

Thank you, Joe.  The link starts playing about 7 minutes into the video for the sake of brevity.  Members can also start the video from the beginning if they are interested in viewing the whole video.

large.FutureofourIndustry.JPG.8e4696cd649d0e1cb91cb06cda1f70f5.JPG

Edited by Transmission Repair
Added graphic about our future.
  • Like 1
willydmax Apprentice

willydmax

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Posted

I completely agree with Gerald. You have to keep up with technology. I’m a general repair shop that started in 2014. I’ve been by myself until last summer I hired a kid part time. I think it depends quite a bit on your location. I’m in the Midwest in a small hick town and I have absolutely no issues being profitable or busy. I work on most makes but am not afraid of telling a customer that I’m not interested in working on their European car, older carbureted vehicle etc. I do a fair bit of transmission and engine replacements along with quite a lot of diesel repairs. If you’re straight forward, honest and have a caring attitude, most people will respect you for your boundaries and if they don’t then you don’t want to work for them anyway. I’m the only shop for miles around besides the dealer that can program/update most brands. The tooling costs a lot but most of my customers are very happy to not have to go to the dealer. I don’t have any customers with hybrids yet, even though I’ve taken some training on them. This year will be my 7th year going to Vision and it’s interesting how many of my classes are on management instead of technical. Vision is a huge highlight of the year and I wouldn’t miss it for anything. Just my $.02

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willydmax Apprentice

willydmax

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Posted

Some more thoughts, I love efficiency and the challenge of book time. I think if you’re reasonably competent and have great tools that book time can easily be beat. Most of the time I work by myself and keep close track of my time via my shop management system. I typically arrive around 7:30 and leave around 5:10 Monday through Friday. Most of the time I bill an average of 40 hours or more per week. You can train yourself to look at what needs taken apart and visualize what it takes for tools to make it happen. I’m allergic to turning anything out by hand and will spend money to make that happen with tools. A rolling tool cart should be sitting right beside you with the main items on or in it so you don’t waste time walking. Shop-Ware is what I use and it has helped me immensely to be more organized and efficient. 

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  • 5 months later...
Mark Adam Newbie

Mark Adam

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Posted

Yes, the general auto repair shop model is still sustainable, but it requires adaptation to modern trends and technologies. With the rise of electric and hybrid vehicles, shops must invest in training and equipment to handle these new systems. Additionally, the increasing complexity of automotive technology means that repair shops must stay updated with the latest diagnostic tools and software. By offering specialized services, maintaining high-quality customer service, and keeping pace with industry changes, general auto repair shops can remain viable and competitive in the evolving automotive landscape. Adaptability and continuous improvement are key to their sustainability.

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  • 2 months later...
Transmission Repair Experienced

Transmission Repair

Posted
Posted

A great post, Matthew, thank you.  (LONG POST WARNING)

In the earliest days of my career in the 1970s, I went from being an assistant manager at an auto parts store to being a general repair technician.  Due to my exposure to a transmission shop owner during my auto part store days, I grew to like transmissions a lot.  Although I made a decent living doing all the G/R stuff, it paled in comparison to the money I made taking on an automatic transmission repair.  


Somehow, I took to transmission repair like a duck takes to water.  I read A LOT about any transmission job I was about to take on.  Although my love of transmissions was what originally got me started on transmissions, it was the increased income that kept me there.  If I was the owner of a G/R repair shop today, that same line of thinking is still what I would do today.  First off, I would not change a thing with the way a shop does business today.  However, I would job cost every single R.O. for at least 1 year. 


After a year of job costing data, I would shift my non-specific marketing/advertising to only the most profitable type of jobs.  Even my signage on both the building and non-attached signage would only advertise my most profitable services.  Another variable to consider in addition to the profitability is the risk factor.  Let's face it, some jobs are inherently more risky than others.
I believe that the complexity of today's vehicles demands that kind of thinking for G/R shops to prosper today.  For the type of work that job costing shows little, if any profit, I refer that type of work out.  Whether those jobs are sublet, or direct referral, would be a choice each individual shop owner to make.


I once bought a list of DMV data from our state's DMV.  I was forced to learn (as in a crash course) about spreadsheets and spreadsheet report writing.  I made a lot of business decisions based on the data.  The biggest shocker was to learn that ALL of European makes combined only made up 5% of our state's DMV registrations.  Everytime a Euro job came in, it almost always ended up being a royal PITA.  So, based on that data, we quit taking in any and all Euro makes. However, I still had 95% of the market and none of the Euro headaches and risks.


In another shop specializing move before the internet, was by filtering for diesel engines.  I created a list of only vehicles with diesel engines based on the 8th character of the VIN.  We sent out mailers to only those diesels on the list for a loss-leader fluid and filter service.  We ended up with a lot of service jobs, of which 11% converted to major transmission work.

 
So, in a nutshell, I do believe the shop of today has to specialize in some shape, form, or fashion.  Otherwise, it's very hard to be profitable beyond the shop owner's paycheck.

pfseeley442 Explorer

pfseeley442

Posted
Posted

As a shop owner I understand the need for growth and keeping up with new technologies. My biggest struggle is getting employees that have the capabilities to meet these challenges. I am finding that techs seem to be staying put , the last one that I spoke with told me that he feels secure in his current job and did not want to take a chance right now in moving jobs with the current economy. I have a young crew that relies to much on me for diagnostic issues. I have been in looking for the right employee but have been unable to fill to void. 

So that makes me put the brakes on incorporating new tech here and adding services such as EV work. I really want to invest in these areas, but afraid that there will be no ROI with out the right team in place. Maybe putting the cart before the horse will be the way to go.

  • 3 weeks later...
Zoya Shah Newbie

Zoya Shah

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Posted

After a year of job costing data, I would shift my non-specific marketing/advertising to only the most profitable type of jobs.  Even my signage on both the building and non-attached signage would only advertise my most profitable services.  Another variable to consider in addition to the profitability is the risk factor.  Let's face it, some jobs are inherently more risky than others.
 

pfseeley442 Explorer

pfseeley442

Posted
Posted

I have to tell you this last year has been tough, never in my life did I think that I would have to pay a state inspector so much. never mind technicians. I have been thinking about this topic and we may have to specialize just to stay in business. The lack of skilled help avaliable is unnerving. I think the days of a technician being able to do it all are coming to a close. I had a technician working for me for six years, I had a shop owner steal him away by talking to him through one of his freinds, he promised him the world. My pointt to saying that is that is whet we have become.  We will need to find technicians with the skill sets we need to perform work that is profitable and may be very specialized. The problem occurs when you are lacking in work for that tech and only have work that they cannot do.  so proffits will drop. Small shops will end up with the biggest challenges in this area. No easy answers, no easy solutions. 

  • Like 1
Transmission Repair Experienced

Transmission Repair

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Posted
On 9/3/2024 at 10:57 PM, Zoya Shah said:

After a year of job costing data, I would shift my non-specific marketing/advertising to only the most profitable type of jobs.  Even my signage on both the building and non-attached signage would only advertise my most profitable services.  Another variable to consider in addition to the profitability is the risk factor.  Let's face it, some jobs are inherently more risky than others.
 

Zoya, you describe our automatic transmission repair shop business perfectly.  I bought a list of all registered vehicles in our state (Utah) from the DMV and was shocked by the fact that ALL European vehicles COMBINED made up only 6% of the vehicle population.  Our shop was located in a more affluent area that had 8% Euros.  Nationally, the number is less than 10%.  I reasoned to myself and realized that if I specialized in only non-European vehicles, we would still have 92% of the market.  You speak of risk, and the Euros were riskier, too.

At first, I couldn't believe the low European vehicle population; I was in disbelief.  I felt that I SEE more than that on the road.  It was only then I began to pay attention when I was on the road and this is what I learned:  When we see a Euro vehicle on the road, we naturally take notice.  When we see any other non-Euro vehicle, it's just merely traffic, and we don't notice other than the traffic factor.

Speaking of specializing, there's a local shop near us that started out specializing in front end, brake, and suspension work.  They eventually morphed into doing mainly 4X4 trucks and Jeeps.  You can check them out at https://layton-ut.fatbobsgarage.com/.  So, in my opinion, in today's environment of high-tech and changing trends, specialization is a must if a shop is to remain profitable.  You know the adage, "Jack of all trades, and a master of none."

 

Transmission Repair Experienced

Transmission Repair

Posted
Posted (edited)
1 hour ago, Joe Marconi said:

There are so many issues with our industry, and you point out some of the more severe. The auto aftermarket needs a reset. Shops need to do all they can to get more younger people to enter our industry, we need to provide the best training available, great pay with benefits. And most of all, create a culture where people (including the boss) is respected. This takes money.  Too many shops don't understand this, and undervalue what they do.

To think we can hire "THE PEFRECT TECH" is no longer a reality for most. 

Another thing, techs today are always looking over the fence for greener grass. is it for money only?  Or do have have bigger issues? 

I don't have any easy solution, and you bring up great points. Perhaps is starts with these conversations. 

 

Great points, Joe.  I think a bigger problem is due to shop owners being afraid to charge what it costs to be profitable.  There's plenty of articles stating one facet of inflation: vehicle repair costs.  I'd rather have a shop that's not that busy, but profitable, than a shop that is busy, busy, busy, but not very profitable. 

The "profit" of a shop IS NOT the owner's salary.  The profit of a shop is after ALL COSTS AND EXPENSES, including what the owner gets paid.  I believe the fear of charging more is the biggest detriment to shop profitability than any other threat.  This is especially true for shops that charge/bill flat rate.  Flat rate was developed over 100 years ago and penalizes technicians for a shop's inability to market/advertise effectively, aka not busy.  IMHO, flat rate no longer applies to today's technology, market conditions, or risks.

Most repairs today involve a certain amount of research, reading, and studying; especially for first-time repairs.  Has a TSB been issued?  There's no flat rate time for that, let alone getting paid for it, but that's the reality of our industry today.

Another profit-eater few think about is supply chain issues that tie up a bay or lift.  Being a transmission shop, removing the front suspension and/or frame would really cripple our shop's production.  My answer to that was to buy 10 engine hangers and 10 car dollies as shown below.  It really upped our production and profitability even when supply chain issues befell us.  I've posted this video before, but it bears repeating.   0:48   https://youtu.be/XhcSqfBsjJ8

 

Edited by Transmission Repair
Added video link.
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    • Joe Marconi
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      The Technician Shortage Is Our Fault, And It's Time We Own It
      Nearly every day, I hear shop owners complain: "There's a technician shortage. We can't find qualified people. There's no one out there." If that's true, then who's to blame?
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      I have heard all the arguments and pros and cons of flat-rate pay, and I am not going to judge any pay plan. Let the facts speak for themselves. True flat rate has changed in most areas around the country and has evolved into a pay plan that gives technicians some pay guarantee.
      Many shop owners have learned that team morale, along with the opportunity to earn income, is important to technicians and to the company's long-term success. But let me ask you: how many technicians have left or been pushed out over the years because of the old flat-rate pay system?
      Another issue is the workplace environment. I remember being grateful to be hired as a young technician at a local repair shop. While very thankful, the work environment was not ideal. The shop owner kept the bay doors open year-round (I am from New York) unless it rained or snowed. He felt that if the bay doors were closed, customers might think we were closed for business. We had no heat and no hot water. Many of the jobs were done outside, year-round,  in all types of weather. The starting pay was minimum wage, with no benefits, sick days, or vacation pay. 
      Now, again, I need to point out that I was truly grateful for the opportunity this shop owner gave me. I learned a lot working there, and the experience was pivotal in my career. But looking back, I wonder how many people were discouraged by these working conditions?
      While the physical demands of the repair workplace are daunting, perhaps even more critical is the culture. Too many of my generation shop owners preached the mindset of "my way or the highway." We were the business owners, after all. We started our companies, took all the risks, and provided jobs. Why shouldn't we be the ones to set the ground rules our way?   
      Many of us found over the years that the "my way or the highway" mentality was a sure way to isolate employees and make them more likely to look over the fence for greener grass. In other words, it led many technicians to seek employment elsewhere, where they felt they could be appreciated and recognized for their hard work. The issue, however, was that there wasn't much green grass around. Disappointment after disappointment, bouncing from repair to repair shop, eventually led to despair. So, I ask you: were workplace conditions a contributing factor in today's technician shortage?
      Another factor that we are all well aware of is the complexity of the modern automobile. When I started, the work was mostly physical, and you were required to master essentially three vehicle models: General Motors, Ford, and Chrysler. Let's fast-forward to today. The evolution of automotive technology, along with the extensive training and tools required, has outpaced the typical technician's pay compensation, with no clear career path. Again, leading to frustration and insecurity about the future.
      Here is the bottom line: people don't leave their job; they leave their experience. We must do a better job. 
      The News Isn't all Bad; Your Next Steps to Fix the Technician Shortage
      To fix the technician shortage, it will take a combined effort from everyone in the automotive industry, particularly automotive shop owners. Shop owners are in the perfect position to make the greatest impact, not only on their businesses but also on the future automotive workforce.
      First, shop owners must become better leaders and understand that their ultimate success is directly dependent on the people they assemble around them. Any shop owner who mistakenly believes they can build an empire solely on their abilities is destined for serious disappointment. Business owners who think like this will eventually plateau. Without the collective contributions from a team of qualified people, your business will stall; it will not continue to grow.
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      Next, shop owners must become more financially knowledgeable. Knowing your numbers and what you need to achieve for a strong bottom-line profit is essential to paying technicians the money they need and deserve. Profit will also allow you to compete with other trade industries by providing a benefits package that has real take-home value and security.
      When it comes to culture, this is where the rubber hits the road. People crave recognition, praise, and a sense of purpose. Despite what you hear, people are not just money-motivated. Once people feel secure in their financial situation, retaining and motivating technicians can only be achieved by connecting with them on an emotional level. You cannot show enough appreciation. Give out praise for a job well done as if your business depended on it, because it does.
      As technicians age, we need to have a place for them. Expecting a 58-year-old to perform like a 35-year-old is unrealistic. We need to be more focused on career pathing. Provide training, skill development, and coaching to develop leaders and mentors within our older workforce. While their bodies may have slowed, the knowledge they have gained is priceless. 
      Our future is dependent on young people entering our industry. We need to give more young people opportunities. Every shop owner across the country should consider hiring an apprentice, then build an apprentice training plan and career path for them. If every shop did this, we could solve the technician shortage within five years. Get involved with the trade schools and high schools in your area. Look into the NAPA Apprenticeship Program. Don't sit on your hands with this one. Do it today.
      Lastly, don't get left behind. Commit to ongoing training for all your employees. Keep up to date with tools and equipment tailored to your business model. Don't try to be all things to all people and all vehicles. Identify your core profile customer and the vehicles they drive, and become an expert on those vehicles and the services you offer.

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