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Do you guys perform Fleet work? Do you work on Sprinters? How profitable?


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Some of you may know my shop is a German Car specialty shop. We Service BMW, Mercedes, Audi/VW, Mini (no Porsche not sure if I want to invest in that).

 

We do ZERO fleet work. My general outlook on fleet work is that I would be competing against a ton of bottom dollar shops out there and there are just too many people out there that do not understand what quality work is. With that being said I am thinking about how to rearrange a few things in my shop and also add a 6th lift for productivity and efficiency purposes. If and when I do I was thinking why not add a lift capable of working on Sprinters. It is after all sort of a Mercedes LOL and from what I am told I should be able to charge a decent rate for labor and the parts are expensive. If I can attract a few accounts that may see value in a German Car shop servicing their German work vans/trucks I may be able to add some significant dollars.

 

I'd like to get some input on what I should expect with this also specifically if anyone works on a lot of Sprinters. What payment terms do you set with fleet accounts? Your price on labor and parts comparatively to your normal rate? How fast do they expect turn over?

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Sprinter service can be profitable in the fleet format. Sprinters have pattern failures that become profitable after the learning curve. The multi function switch xrac mentioned is typical. Sprinters also need rack and pinions, oil coolers, turbo resonators, and light bulbs and tail light assemblies to name a few items. The key is to get paid for all the little things you do, and use the right parts vendor. The shop I work with uses Johnson Industries, they speak fluent Sprinter and they usually have a good amount of stock. The advantage of fleet service is the steady work, and getting efficient at typical repairs. Be prepared because other independent Sprinter owners will flock to you as well once the word gets out.

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I think that labor charges, parts mark up and warranty depend on quite a few variables. I would crunch some numbers to get to the answer. Consider the following :

 

How much potential repair volume is there, like number of Sprinters and miles driven in a particular time frame.

 

Parts mark up and labor charges depends on what is typical retail in your area, what this fleet may be used to paying, and most important, what you need to keep this deal profitable for your shop.

 

Warranty for fleets should be 90 days or so. Fleet vehicles are typically driven like they were just stolen.

 

Do your homework, decide what you are willing to do and keep it profitable for your shop. Put your proposal in writing and have a meeting with the principals.

 

I can also tell you that labor guides are skinny on the Sprinter, So charge accordingly. Its hard to beat the clock on these.

 

What ever happens, do not undercut yourself and your shop. Stick to your needed numbers.

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We service sprinters and we are not a bottom feeder shop. We have an Autologic scan tool which takes care of all sprinter needs under the Mercedes Benz. Actually easy to work on and since no one else thinks they are.

 

Thanks for your post! We also have a Autologic unit dedicated strictly for Mercedes. From what I understand the factory MBZ tool actually no coverage for Sprinters.

 

 

 

 

Thanks bstewart. I've read those articles already as well as another one from shopownermag.com that were helpful. I want to go into this with my eyes wide open to make sure we are profitable and waste little time with getting it up and running when it comes time.

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The fleet customers we have had in the past were always looking for someone to do it cheaper and I understand that. We do a lot of government vehicles through GSA and they can be tough customers, but they pay by credit card and in our town, they have a LOT of vehicles, primarily late-model domestic. We don't see Sprinters. Wonder where they are going?

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Thanks bstewart. I've read those articles already as well as another one from shopownermag.com that were helpful. I want to go into this with my eyes wide open to make sure we are profitable and waste little time with getting it up and running when it comes time.

I agree those articles are very good, especially the checklist on this article:

http://www.ratchetandwrench.com/RatchetWrench/December-2013/Make-Fleet-Service-a-Valuable-Addition-to-Your-Shop/

 

As with everything, there is the benefit to the shop and the benefit to the customer.

And it has to be a win-win for both parties. Like all customers, they need someone

they can really trust to take care of their vehicles.

 

What the fleet customer needs is to have their vehicles running because when

a vehicle isn't running, they're not making money.

 

There are many aspects to beginning a successful relationship with a local business owner,

but one of the keys is to be clear about how you do business and how you're going to take

care of the customer's vehicles for them.

 

In other words...

Doing preventative maintenance is the key to helping that business owner keep that

vehicle on the road. In their mind, they make think it's all about fixing today's problem.

The bigger picture is: It's all about keeping the vehicle maintained so that you can

catch potential problems before they become major problems.

 

So, if you have a standard inspection process in place for your regular customers,

you're going to use the same process every time a fleet vehicle comes into the shop.

 

The customer needs to be able to understand and buy into that whole concept or

the program will fail.

 

From a shop's standpoint, fleet work can be a nice addition when priced properly, and

as long as the shop's workflow is organized to handle their special needs.

 

 

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I agree those articles are very good, especially the checklist on this article:

http://www.ratchetandwrench.com/RatchetWrench/December-2013/Make-Fleet-Service-a-Valuable-Addition-to-Your-Shop/

 

As with everything, there is the benefit to the shop and the benefit to the customer.

And it has to be a win-win for both parties. Like all customers, they need someone

they can really trust to take care of their vehicles.

 

What the fleet customer needs is to have their vehicles running because when

a vehicle isn't running, they're not making money.

 

There are many aspects to beginning a successful relationship with a local business owner,

but one of the keys is to be clear about how you do business and how you're going to take

care of the customer's vehicles for them.

 

In other words...

Doing preventative maintenance is the key to helping that business owner keep that

vehicle on the road. In their mind, they make think it's all about fixing today's problem.

The bigger picture is: It's all about keeping the vehicle maintained so that you can

catch potential problems before they become major problems.

 

So, if you have a standard inspection process in place for your regular customers,

you're going to use the same process every time a fleet vehicle comes into the shop.

 

The customer needs to be able to understand and buy into that whole concept or

the program will fail.

 

From a shop's standpoint, fleet work can be a nice addition when priced properly, and

as long as the shop's workflow is organized to handle their special needs.

 

 

I agree Elon that is sound advice. I was most certainly going to be instituting preventative maintenance measures and a specific inspection process tailored to my fleet clients. Other than sprinters I may be able to attract some luxury car rental/livery companies depending how they do business (do they spend money to maintain their vehicles). The largest advantage I see with Fleet work for me is having vehicles on schedule to ensure car count.

 

Elon when you mention "priced properly" what are some generally accepted practices? How much should be "discount" our labor in order to attract these accounts. I am not a fan of discounting and maybe that isn't the right word. I am guessing I may have to set a separate labor rate entirely for Sprinter work as it is a "truck" and my pricing is based off of passenger vehicles. How about parts? what kind of GP should i be looking at if my regular GP margine is >50%

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Pricing is a BIG subject and there is no ones-size-fits-all answer. Plus it's another case of

looking at things from the shop's standpoint - and the customer's standpoint.

From the shop's standpoint first...

Parts and labor pricing is situational and needs to based on a number of factors, such as:

  • How you want to position yourself in the marketplace
  • Your retail customer / commercial customer ratio
  • The vendors you use
  • How you're buying (Buying "right" is key to parts profits.)
  • What is the value you bring (that your competition doesn't have)
  • How well your sales people can communicate that value so that the customer
    knows beyond a shadow of a doubt they made the right choice
    to choose you for all their needs

There are more things that I believe need to be taken into consideration. For example...
using a blanket GP margin for all of your parts may seem like an easy fix... but
from a percentage standpoint, after market parts pricing is different than dealer or
distributor pricing.

 

From the customer's standpoint...

The internet has made it very easy for anyone to do some simple

research and determine what the "Suggested Retail Price" is for your parts.

"Suggested Retail Price" is a phrase your customers are very familiar with

and a comparison method (we have all been taught to use) when shopping..

So, using a blanket GP can put you in a situation where the consumer is going
to feel ripped off if/when they do any research and see they were charged way more
than the easily available, published prices for that same part.

What that means is: Parts have become somewhat of a commodity. You can

still make a profit on parts - it's just not where the real money is

The REAL profit opportunity is in your labor because let's face it...

that's the true value you bring to your customer. All of your training, your experience,

your trustworthiness, your tools, including technology, your parts and labor

warranties, etc, etc. The list is endless.

That's what the customer is willing to pay for and is what REALLY sets you apart from

everyone else in your town.

And to answer your direct question to me: Discounting your services is not the way
to build your business or increase your paycheck.

From my experience... having a business model based on providing killer service
at a fair price for all involved... is the only way to build a loyal customer base -

whether it's retail or fleet.

 

 




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From the customer's standpoint...

The internet has made it very easy for anyone to do some simple

research and determine what the "Suggested Retail Price" is for your parts.

 

"Suggested Retail Price" is a phrase your customers are very familiar with

and a comparison method (we have all been taught to use) when shopping..

So, using a blanket GP can put you in a situation where the consumer is going

to feel ripped off if/when they do any research and see they were charged way more

than the easily available, published prices for that same part.

 

What that means is: Parts have become somewhat of a commodity. You can

still make a profit on parts - it's just not where the real money is

 

The REAL profit opportunity is in your labor because let's face it...

that's the true value you bring to your customer. All of your training, your experience,

your trustworthiness, your tools, including technology, your parts and labor

warranties, etc, etc. The list is endless.

 

 

This is exactly what I was talking about in this thread:

http://www.autoshopowner.com/topic/9381-labor-margin-vs-parts-margin/

I believe this is where the future of the industry should be headed.

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although somewhat off topic, I dont work on any european cars outside of transmission replacements. They just arent worth the headache. Even the simpler seeming problems turn into a pain in the butt most of the time. And on top of it most of the european cars i see are one that were never maintained, they come in and have 15 codes in the system, and the customer wants to fix it as cheap as possible. I usually have the type of customers that buy the high end cars because they just want the emblem.... Champagne taste with beer pockets... I dont want to deal with them types...

Edited by insomniac
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although somewhat off topic, I dont work on any european cars outside of transmission replacements. They just arent worth the headache. Even the simpler seeming problems turn into a pain in the butt most of the time. And on top of it most of the european cars i see are one that were never maintained, they come in and have 15 codes in the system, and the customer wants to fix it as cheap as possible. I usually have the type of customers that buy the high end cars because they just want the emblem.... Champagne taste with beer pockets... I dont want to deal with them types...

 

I don't have a lot of those but the ones I do I hate. I seemed to attract them with alignments some how. At least that was when I priced them competitively with the hacks.

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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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