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By Joe Marconi in Joe's Blog13 commentsMost shop owners would agree that the independent auto repair industry has been too cheap for too long regarding its pricing and labor rates. However, can we keep raising our labor rates and prices until we achieve the profit we desire and need? Is it that simple?
The first step in achieving your required gross and net profit is understanding your numbers and establishing the correct labor and part margins. The next step is to find your business's inefficiencies that impact high production levels.
Here are a few things to consider. First, do you have the workflow processes in place that is conducive to high production? What about your shop layout? Do you have all the right tools and equipment? Do you have a continuous training program in place? Are technicians waiting to use a particular scanner or waiting to access information from the shop's workstation computer?
And lastly, are all the estimates written correctly? Is the labor correct for each job? Are you allowing extra time for rust, older vehicles, labor jobs with no parts included, and the fact that many published labor times are wrong? Let's not forget that perhaps the most significant labor loss is not charging enough labor time for testing, electrical work, and other complicated repairs.
Once you have determined the correct labor rate and pricing, review your entire operation. Then, tighten up on all those labor leaks and inefficiencies. Improving production and paying close attention to the labor on each job will add much-needed dollars to your bottom line.
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By carmcapriotto
On Record with Tom Ham from the Automotive Management Network. Tom discusses a recent survey from his website about the stress level at work, reasons why someone would reject a technician application, health insurance and more! These results may surprise you!
Tom Ham, Automotive Management Network. Tom’s previous episodes HERE. Show Notes:
AMNSHOP.com laborratetracker.com - lowest labor rate so far is $50 and highest is $297 Management Help Polls: 130 types Why techs avoid working at some shops- low pay, dark/lack of lighting, dirty, disorganized Job applicants for possible reasons they might be rejected: 70% driver license issues, 68% frequent job changes, 66% negative comments about past employers, 64% know it all, 60% questionable attitude, 60% excessive demands. 59% inconsistent information, 58% late for interview, 55% listens poorly, 53% sloppy appearance, 53$ incomplete application, 51% lack of manners Pay portion of health insurance- 35% pay nothing, 19% pay full health insurance. Stress level at your shop ranked 1 to 10, 10 is maximum stress level- 40% rank their stress level at 8+, 81% say their stress level is average or above average, only 19% say their stress level is ranked 4 or less. “What do we do here that is not as clear as it could be, a bit confusing?” Service advisor responsibilities (are these regular tasks of your service advisor)- estimating, collect vehicle information, parts ordering and returns, labor claims, operation/management, quality control, assist technicians, pickup/deliver customer or parts (porter). None of these should be the service advisor responsibilities! Consider hiring an estimator/parts person Service Advisor Overload [THA 305] Service Advisor Overload: Part 2 [THA 312]
Thanks to our Partner, Dorman Products. Dorman gives people greater freedom to fix vehicles by constantly developing new repair solutions that put owners and technicians first. Take the Dorman Virtual Tour at www.DormanProducts.com/Tour
Connect with the Podcast:
Aftermarket Radio Network
Subscribe on YouTube
Visit us on the Web
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Buy me a coffee
Important Books
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Click to go to the Podcast on Remarkable Results Radio
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By Joe Marconi
ICE Vehicles Will Long Dominate Aftermarket
"The media teems with reports of surging Electric Vehicle (EV) sales and how EVs will soon replace Internal Combustion Engine (ICE) Vehicles. However, an examination of EV sales reveals a different picture and underscores the unlikelihood that EVs will displace ICE vehicles in the aftermarket any time soon."
"The U.S. vehicle population has a much larger segment of older cars and light trucks than any other country with a VIO (vehicles in operation) of comparable size. Accordingly, it will take many years (even decades) for EVs to have a significant impact on ICE aftermarket sales in the U.S."
EV Sales in the U.S.
The U.S. pace of new Electric Vehicle sales is lagging behind many other major countries. Sales of all types of EVs in the U.S. topped 780 thousand in 2022, less than 6% of the 13.8 million total new vehicle market, which suffered its weakest performance in over ten years.
After peaking at 361 thousand in 2018, EV sales in the U.S. shifted into reverse, falling to 318 million by 2020. In 2021, EV sales rallied to 546 thousand and reached a record-high level last year.
Differentiating EVs
Not all EVs are the same. The different EV powerplant configurations vary in their potential for disrupting the aftermarket. There are three types of Electric Vehicles: Hybrid Electric Vehicles (HEV), Plug-In Hybrid Electric Vehicles (PHEV), and Battery Electric Vehicles (BEV).
HEVs and PHEVs are dual-powered, using an Internal Combustion Engine and Electric Motor, which work in cooperation. According, HEV and PHEV Electric Vehicles have a large portion of their miles powered by fossil fuel.
Focus on BEVs
In measuring the disruptive impact of Electric Vehicles on the aftermarket, it is best to focus on Battery Electric Vehicles (BEVs), separating them from the other types of Electric Vehicles (HEVs and PHEVs), which significantly rely on gas engines.
Annual BEV Volume
The EV light vehicle market in the U.S. differs from total EV sales when BEVs are separated. From 2018 through 2022, all Electric Vehicles sales topped 2.3 million.
BEVs represented 1.7 million EV sales from 2018 through 2022, just over 76% of the total. Accordingly, BEVs generated only 2.2% of new car and light truck volume in the U.S. during these five years.
BEV Small VIO Impact
Battery Electric Vehicles represent an even smaller portion of cars and light trucks on U.S. roads. Between 2018 and 2021, BEVs climbed from about 0.3% to just over 0.6% of the nation’s VIO.
Record-high BEV sales in 2022 did not push their VIO share past 0.8%, only about one-third of their 2022 new vehicle market share.
Aftermarket Vehicles
Lang Marketing has developed the concept of Aftermarket Vehicles: cars and light trucks at least four years old. These vehicles generate over 95% of total aftermarket product volume, not including Tires and Accessories.
In 2022, BEVs represented less than 0.3% of Aftermarket Vehicles in the U.S. This underscores the significant time lag between the new sales share of EVs and their aftermarket impact.
BEV Aftermarket Impact
So far, Battery Electric Vehicles have replaced only a minuscule number of ICE vehicles at least four years old. Lang Marketing estimates that BEVs eliminated only about 0.3% of ICE aftermarket volume last year.
Aftermarket Sales of BEVs
BEVs do not share many operating components with ICE cars and light trucks. Nevertheless, BEVs still require aftermarket products, primarily Tires, Accessories, Batteries, and Electrical Components.
BEV Impact on Aftermarket by 2030
Lang Marketing estimates that less than 5% of ICE vehicle product volume (not including Tires and certain Accessories) will be eliminated by BEVs during 2030 compared to what it would have been without BEVs on the road.
ICE vehicles will record substantial aftermarket growth between 2022 and 2030. In fact, the annual rate of ICE aftermarket product growth between 2022 and 2030 will greatly outpace the “loss” of ICE volume due to BEVs during these eight years.
Six Major Takeaways
1. New Electric Vehicle sales in the U.S. lag behind EV volume in foreign countries.
2. To accurately measure the aftermarket impact of Electric Vehicles in the U.S., it is necessary to focus on Battery Electric Vehicles (BEV), the only EVs without an Internal Combustion Engine.
3. The impact of EVs on the new car and light truck market in the U.S. is different when BEV vehicles are separated from total Electric Vehicle sales. Over the last five years, BEVs accounted for only 2.2% of the entire new car and light truck volume in the U.S.
4. BEVs climbed from 0.3% of total cars and light trucks on U.S. roads in 2018 to about 0.8% by 2022. So far, Battery Electric Vehicles have replaced only a minuscule share of ICE vehicles at least four years old (Aftermarket Vehicles).
5. Aftermarket Vehicles (cars and light trucks at least four years old) generate over 95% of total aftermarket product volume, other than Tires and Accessories. In 2022, BEVs represented less than 0.3% of Aftermarket Vehicles in the U.S.
6. Lang Marketing estimates that ICE product volume (not including Tires and certain Accessories) will be reduced by less than 5% during 2030 compared to what it would have been without BEVs on the road. The annual rate of ICE vehicle product growth between 2022 and 2030 will greatly outpace the “loss” of ICE volume caused by BEVs during these eight years.
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By carmcapriotto
Insights to the Vision Hi-Tech & Expo Class "Which Scan Tool Should I Buy?" Saturday, March 4th 8:45 am-11:45 am with Scott Shotton, Scot Manna, Tanner Brandt, Keith Perkins, and Sean Tipping.
Scott Shotton, The Driveability Guys. Scott’s previous episodes HERE. Tanner Brandt, Autodiag Clinic. Tanner's previous episodes HERE. Scot Manna, Trainer, ACDelco Technician of the Millennium. Scot's previous episodes HERE. Watch Full Video Episode HERE Show Notes:
"Which Tool Should I Buy?" Saturday March 4th 8:45am-11:45am with Scott Shotton, Scot Manna, Tanner Brandt, Keith Perkins and Sean Tipping Register Here For Vision 2023 Q&A- shop owners/managers included Shop owners may or may not know the functionality of scan tools Raffles
Thanks to our Partner, Dorman Products. Dorman gives people greater freedom to fix vehicles by constantly developing new repair solutions that put owners and technicians first. Take the Dorman Virtual Tour at www.DormanProducts.com/Tour
Connect with the Podcast:
Aftermarket Radio Network
Subscribe on YouTube
Visit us on the Web
Follow on Facebook
Become an Insider
Buy me a coffee
Important Books
Check out today's partner:
Click to go to the Podcast on Remarkable Results Radio
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By Joe Marconi
A friend of mine recently purchased a Tesla Model 3. I asked him, "Why?" He responded, "I don't have to buy gas, and the Tesla requires no maintenance or repairs."
Oh really? If this is the public perspective of the electric vehicle, they are in for a shock. Yes, a fully electric car does not require gasoline, but they are far from problem-free or maintenance-free.
EVs still have tires, steering systems, suspensions, a TON of electronics to repair and reprogram, a complex HVAC system, wheel bearings, differentials, brake systems, cabin filters, wiper blades, require wheel alignments, and on and on and on.
Do we need to educate the public? Your opinion?
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By Joe Marconi
Digital Vehicle Inspections (DVI) are becoming more and more common these days. I think this is a good thing.
What I am concerned about is how the the DVI report is being used. I am not a fan of sending the digital report to the customer to be used in place of the service advisor speaking and explaining the results of the report first. Would a doctor send the MRI, lab tests, and x-rays directly to the patient without the doctor first discussing the results? In fact, there are times when the doctor never shows the report results.
In my opinion, the DVI is a tool, and it's not meant to take the place of good old fashion person to person discussion, which is called customer service.
Agree? Disagree?
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