ScottSpec

On 4/11/2021 at 9:52 PM, PJBanta said:

I really don't see the need for a AI to handle my conversations.   Customers service is about building a relationship with the client.  I'm telling you no customer wants to talk to a machine.   They want human interaction.  Persoanally want to feel the customers voice and understand their needs.  But you be you.....BTW DVI are also a waste.....customers want a verbal explanation.  Yes we do share pictures.  We have been texting with Riptide for 6 years.  But texting has its own limitations.  Customers still your to explain verbally the cost and reason for the repair....all these other systems are for to masking weak selling technique.  In fairness they may work for a tire store or something like that.... but not a full service auto repair facility.

 

PJ,

Interesting analysis. I'm out of the business now, but I was just talking with the new owner of my old business. We were taking about some of these things, from Social Media to Digital Inspections, to texting. My experience, if you have a shop with a personal connection to the customer, it is almost always what comes out of your mouth, or your trusted employees mouth that matters the most. When we tried the DI's, sales did not change at all. Just took up more of my tech's and service managers time. I loved having the reports, but in the end it is about return on investment. For us it was a time investment as we had free access to several systems. Most of our customers liked seeing the employees pictures on the reports, more than the pictures of their car's broken parts. Don't get me wrong, I'm a big tech person. I created the first cloud based shop management program, and did a lot of ECM flashing. So I know the value of technology. 

I think AI is a bit of a joke, and hate when companies use it to try to communicate with me, so I would have never used it to care for my customers.

The reason the dealers are all going to the video inspections, and all these other selling tools, is because they still don't get why customers don't trust them, and they think these tools will help them overcome that.

I sold my shop after 31 years this past year. Here is a few of my experiences with selling used cars, and we never officially sold used cars, just one here and there, and they were usually older cars 10 - 15 years that were well cared for, in good condition . Usually in the $4-$10,000 range. The first challenge we ran into a lot, is that because we had a great reputation for high quality work, people expected the cars we sold to somehow magically be better than a new car. The other issue that came up a lot is that at some point these cars will have an issue, or issues. When they bring the car in for the issue, the first thing they will do is remind you that they just bought this car from you.  An unspoken expectation that you should take care of it for them. They also seem to come from this frame of reference that since you fix cars, it would be no big deal for you to take care of it for them. I had a guy buy a $3 or $4,000 car from me. It developed an oil leak a year later. He was very upset that I would not fix it for him. After all, as he told me, he just bought it a year ago. I had a customer buy one of my loaner cars. It was not for sale, but he came in one day essentially wanting to buy it. So I sold it to him for about $4,000 as is. Six months later the transmission failed. When he bought it, he knew the transmissions in this vehicle were problematic. Guess what he wanted me to do. Yes, put a transmission in it. It would have cost me more than he even paid for the vehicle. You should see how upset he was when I told him no.

Here is one more good one. One of my employees would buy and sell a car here and there. It was always a requirement of mine that when he sold a car, he made sure the customer knew he was buying it from him personally, not from the shop. Well, one of the ones he sold ended up needing about $4,000 worth of repairs over the next year. It was a $4,000 car, but it was in good condition when it was sold. A year after the customer purchased it, and had all the unforeseen expenses, he called me to tell me how dissatisfied he was, and that he thought I should be responsible somehow. He said he knows he bought it from my employee, but came up with this thing about being a conflict of interest or something, and as the shop owner I should take some responsibility for the problems he was having with the car.    

I know a shop near me that has a used car lot and seems to do ok with it. The last time I spoke with him, the biggest challenge he was having was getting cars to sell.

If you move forward with it, I hope it goes well for you. Oh, I just remembered something else. The owner of the shop that is across from my old shop has partnered with another guy, who used to own the shop next to his, to sell used cars. They have a lot somewhere away from the shop, so customers won't associate the shop with the used cars. I think I read a similar recommendation here on this forum at one time.

Scott

7 hours ago, CAR_AutoReports said:

We usually double the capacity from the start, of whatever the system came with.  Most NVR's have room for one more hard drive in the enclosure.

We try to get as close to 30 days as possible.  Working on backup solutions for 90 days, had some scenario's that warranted the use case.  Not a rush, but will be nice to figure that out as well.

I added a Hard Drive to mine as well. I wanted the max I could get, which is about 3 weeks with 2nd HD and constant recording. I too have thought about having it store to a PC to extend the history, but have not had a need to go back farther than 3 weeks yet.

I upgraded an older system a few years ago. I went with a system from Lorex https://www.lorextechnology.com/. I think my system was around $1500. I wanted the highest resolution cameras I could get and I would never go wireless. I wanted to be able to capture as much detail as possible, so we had the best chance of capturing tag numbers and possible damage to vehicles. The system has paid for itself many times over. First, there have been several hit and runs in our parking lot that the cameras have captured. This alone has saved me thousands of dollars. If a customer makes a claim, that damage was done while there car was with us, I can quickly look at the video to see if the damage was there when they dropped off. I trust my employees, and never put cameras in the shop with the old system. With the new system I did. I realized there were a lot more benefits to having them there. When the cars come in and out, you get a better look at any possible damage, and we have 6 loaner cars that are always being recorded. We have not had any issues, but if a car were to come back damaged, we would be able to quickly check to see if the damage was there before or not. Then there are a number of different scenarios where the cameras have been useful. Can't find a key, look at the video to see who drove the car last, and what they did after. A car sitting in the parking lot for days who's origin is unknown, just look at the video. The guys are always coming to me asking me to check the security cameras for these types of things.

I would never trust wireless cameras. I would do as we ask most of our customers to do, and focus on performance and quality over price, and make sure the Hard Drive is big enough to capture several weeks on continuous recording. Which is the mode that I recommend. If you run them on activation mode, you run the risk of missing something valuable.

Scott      

On 12/17/2019 at 10:08 PM, smittysgarae said:

Wanting some opinions. I have been having a problem the last couple years with customers approving repairs and when we get the job done and call them for them to come pick up and pay they either don’t have the money all of a sudden or say they will come get it and don’t. It may sit there for months, I had one sit for two years that owed 3000 dollars. Finally got my money! Just wondering what some of you guys do? Thought of charging storage after so many days? 

This has not been much of a problem for us over the last 30 years, but right now I have 3 cars sitting on my lot that have essentially been abandoned. One of the customers passed away unfortunately while the car was here. After about 9 months, I filed for mechanics liens. The first thing the lien companies do is send out a certified letter. Quite often, this alone will motivate people to come get their car. If they don't, the car becomes yours to do with as you please. 

I don't necessarily like doing this, but there has to be a limit to how long I will keep a car around. I make sure I have given them every opportunity to get the car, and use liens as the last option. 

Scott

It's been 20 years since I did mine. It was beautiful for several years. Slowly over time wear and tear do get to the paint. It was a 2 part epoxy I believe made by Devcon. I recommend staying away from the water base stuff. I did my waiting room with it a few years ago and it didn't last very long, and the clear coat bubbled up. 

Here is what I can tell you. If you do any welding or cutting with a torch, it will burn holes. It will chip if heavy things are dropped on it. If you drag things across it, it will scratch, and it will yellow, and stain over time. For some reason washer solvent causes it to dry up and crack. Mine is looking pretty rough now, but it was great for many years.

Scott

9 minutes ago, CAR_AutoReports said:

Scott,

We're more alike than each of us probably realizes.

Everything you wrote up there is close to what we do here.  No 401K at the moment and we are working on the health insurance initiatives... but very similar in everything else.  From being able to go on vacation and having them actually do more... to having them know they can make more money elsewhere and won't leave.

Team building is the most critical element for any business to survive.

Ricardo

Ricardo,

I believe you and I have exchanged a number of thoughts over a period of time, and I always thought our philosophies were similar. I hope I didn't come across as adversarial. 

Scott

2 hours ago, CAR_AutoReports said:

This is such a double edged sword.  I can definitely see it's value after some of the discussions we have here.

But I just don't see it as a fit for what we do here and how we do it. 

My guys give 100% nearly every day and changing the dynamic would change the culture we've worked so hard to build.

I also feel like there is incentive to oversell and see how much they "can get away with" in an effort to make money.  Which is the complete opposite of what we do here.  We explicitly don't sell and if you I catch you selling something someone doesn't need or worse yet, selling someone on undue fear... It's grounds for dismissal.

I got my guys to do exactly what I need them to, just by talking to them.  They are appreciative of the respect we all have for each other and the team approach to what we do.  It makes it challenging to find people to fit into our mold when hiring, but I don't know anyone who easily hires employees.

This may not make me the most popular here, but I get so tired of hearing shop owners complain that they can't find good techs, and that the industry is facing a tech shortage, or that the ones they hired turned out to be crooks selling unnecessary work, and then go on to talk about how all their techs are on commission, and if they don't work, they don't eat. Wow, that sounds so appealing. I can't understand why people aren't knocking down the door to take advantage of that opportunity, and why techs sell unnecessary work. This industry does not have a tech shortage, this industry has a technician pay structure, and technician pay shortage. If technicians started getting paid, and provided benefits that were inline with what they could earn with their skills in other industries, there would be many more reputable technicians. 

Now, my comment above is not to blame those shop owners, as we are all struggling with the high cost of providing automotive and trying to make a profit. I just want some honesty about the reality of the issue. It's an industry problem. Customers are only willing to pay so much, and there is almost always someone out there that is willing to do it cheaper. Yes, we can sell them on the value of our shop over the guy down the street, but that only goes so far. 

I pay all my employees a flat salary plus a commission on the gross sales of the shop. Yes, this can be painful during slow times, but my employees don't have to worry that they might not eat this week, or be able to pay their mortgages. It's amazing how much more productive and committed employees are when they are not living with that fear. I can go away for weeks at a time, and when I come back ,it is no different then when I left it. With the commission component, they also know that the more the shop produces as a whole, the bigger their paycheck is. This also encourages them to work as a team, and not fight over the "gravy" tickets. I currently have 4 employees. The first tech I hired 30 years ago is still here. The service manager I hired 20 years ago is still here. The technician I hired 11 years ago is still here, and I hired a young guy about a year and a half ago and I don't think he will be leaving anything soon. In fact, while I have fired a few techs, I don't recall ever having one quit. I also offer paid time off, a 401k, and pay portion of their health insurance. I used to cover the whole amount, but it got too expensive.

Now, you may be curious about how much they get paid. I don't want to give specifics, but I assure you that they can all make more money working some place else. I know for a fact one of them could be making twice as much as I pay him because a friend of mine is doing just that at a shop around the corner, and he works shorter hours. I understand that this pay structure may not work for a lot of shops out there, but it does illustrate my point that a more traditional employee pay structure, one that they don't have to worry about being able to eat or not, or have to sell unnecessary work to eat, does breed commitment, motivation, and teamwork.

Scott

2 hours ago, CAR_AutoReports said:

Scott,

 

You forgot the front half of that statement that starts with" In addition to express warranties, there are implied warranties. In Maryland, whenever you sell a part to a consumer – even a used one – there is an implied (unstated) warranty that it is fit for ordinary use and will last a reasonable length of time. "

So what exactly is an implied warranty and what is the reasonable length of time?  Seems like something that is designed to allow the court to use their own discretion to determine what is fair and what is not.  Which basically means... when it's up to courts to decide your fate.... you should always prepare to be on the losing end of each equation.

You're also citing state law, not federal law.  Which would vary greatly from state to state.

Based on the numerous attorneys we've had speak to us... we're basically told that anything you put on that vehicle is explicitly your responsibility.  Thus why we don't make it common practice to install customer parts.

It seems like that really vague law in Marylands books is designed to help customers pull frivolous claims against a shop.  So maybe you should reach out to your representatives and speak to them about the problems and loopholes left in that law.  Because what happens when you buy something from a junk yard that comes with a 90 day warranty and it blows up 180 days later.  Are you still forced to warranty it for longer than the warranty was granted to you?

A lot more questions left to ask than answered here.  In addition to that fact that if we can't replicate a problem, we've learned that it's likely not a sensor problem and we rarely replace sensors with intermittent issues we would even be less likely to replace them "at a customer request".  Even more so now after reading your post.

I would rather diagnose, document my diagnosis, get paid for what I did and let the customer that is trying to dictate their terms... do so elsewhere.

Also, I was clearly wrong in stating that the law can't tell you how long to warranty items.  Which is ok, now I've learned and now I have my own homework to do.

Ricardo

 

Ricardo,

The part I shared from that article was just to shed some light on the role law has on dictating warranties, and the fact that you can't just write a disclaimer on the invoice and think you have no liability. I'm sure if we dig through Maryland's consumer laws, we will find a more in depth explanation, that is if we don't fall asleep first.  An implied warranty is essentially what a consumer can reasonably expect (yes, pretty vague, and I'm sure is different for everyone). There is a pretty good description here: https://consumer.findlaw.com/consumer-transactions/what-is-an-implied-warranty-.html

With your regard to the what if on the junk yard motor, from what I have read, you just have to pass along the same warranty the provider of the part offers. So regardless of new, used, rebuilt, or other, you just have to extent the same to your customer. You can't use any disclaimer to change that. This of course is Maryland law, which is where I am located. My understanding is that the same would apply to a customer supplied part. So if you bought a used engine from a salvage yard with a 3 month warranty, you would have to provide the same 3 month warranty to the customer if they bought it themselves at the the same salvage yard.  

It sounds like you and I have come to the same conclusion though, and that is we are ultimately responsible for any work we do on a customer's car. If we use our supplied parts, or we use their supplied parts. And while the laws are a bit vague, as you say, I don't think that really matters much any more, because if there is a problem, it will always come back to the fact that you and I are the professionals. Customer's are allowed to be ignorant, but we aren't. It reminds me of NTSB airplane crash investigations. I don't fly anymore, but I used to. One of the guys I work with is also big into aviation and we used to fly together a lot. We joke around about this quite often, and that is the fact that the NTSB almost always sites pilot error when a small plane crashes. Wing falls off, "pilot error" engine grenades "pilot error"  bird strikes "pilot error". As I say it is pretty comical at times. My point is that it we will always shoulder the responsibility.

We very rarely install a part without doing the diagnostic work first. But when a customer has a stalling, not starting, or some other serious issue, and we cannot find the cause because we are unable to reproduce. then we don't object to trying something if the customer wants. That is as long as they fully understand that is essentially a guess, and a way to eliminate a possibility.

Scott

On 2/4/2019 at 7:55 AM, CAR_AutoReports said:

I have spoken to my insurance company, they have 0 rules and regulations about customers bringing in their own parts.  They did have plenty of regulations regarding me selling parts to the general public and not just my customers.

 

As for the attorney, I have not spoken to them yet but I have read some of the court documents surrounding the cases.  No one can force you to offer any type of warranty for anything.  No one can also force you to abide by one warranty for everything you do or sell.  There are plenty of companies that sell products that offer 30 days warranties and some that offer 2 year warranties.  Computer manufacturers and the companies that sell their parts come to mind.

 

The law states and has been tested in me taking responsibility for the work I did.  It does not and can not tell me how long I have to warranty anything. 

 

Do you install and warranty a used engine from the junk yard with the same warranty you sell and install and OEM engine in the crate from the dealer?  Different circumstances call for different rules.  This arena, is no different.  I also can refuse the right to touch anyone's vehicle, but I am using the approach to turn customers from parts buyers with little trust, to life long customers who trust they are getting a fair deal.

 

In short, it's not a habit to allow customers to bring their own parts.  But if someone who is showing a good attitude is trying to find a way to work with us... we will try to work with them and get them to stop buying their own parts.  We've seen this happen in the last year already.  But we never do this for first time customers.

Car,

You are correct that you can refuse service to anyone you choose, and warranty different types of parts for different periods of time, but you are incorrect about the law not being able to dictate how long you warranty something. See https://www.montgomerycountymd.gov/OCP/Resources/Files/Licensing_Forms/Auto_Repair_Shop Introductory Letter.pdf It specifically states "Maryland law does not allow implied warranties to be disclaimed or limited in any sale of goods or service to a consumer, so an invoice you give to a consumer should not contain language like “seller disclaims all warranties.”

Another example of the law dictating warranties, is the lemon law. https://www.peoples-law.org/marylands-lemon-law The law forces a manufacturer or dealer to purchase back a vehicle. In Maryland, they get one chance to fix a safety related problem before you are entitled to a refund, or replacement vehicle.  

We all take risks every day. It's part of being in business. The main point I want to get across is that every shop owner should make sure they fully understand the risks of installing a customer supplied part. I think a lot are under mistaken, or misunderstood beliefs. Just like you with regards to the law and warranties. Some believe their insurance will cover them. Mine will cover up to $2500 in liability. Some believe a disclaimer, or release of liability will protect them. This has been proven over and over to provide little to no protection. I actually just lost a court case earlier this year despite the customer signing a disclaimer. We didn't install their part, but we did replace a Cam Position sensor at their request. We stated on the invoice that we were unable to reproduce her symptoms, and that we replaced the sensor based on her request. Then when it didn't fix her problem, she decided we did an unnecessary repair. The judge sided with her as we are the professionals. Some believe that a customer will appreciate your installing their part, and would never try to hold you responsible. People's attitudes and approaches can change pretty quickly when things don't work out as expected.  

Scott

We don't see it a lot, but when we do, we keep it simple. We tell them that we cannot install customer supplied parts, that my insurance company will not allow it, and that would put my business licenses, as well as a number of my relationships with outside organizations that require insurance, at risk. It completely eliminates the steak and potatoes conversation, or it's variations like bringing your own needles or stitches to the hospital. It also eliminates the I have to make money conversation. None of those usually go very well. It shows you are open to discussing it, and the customer will see that as an opportunity to sway you their direction. When they can't, they will experience it as a failure. 

Joe, in your opening post, you stated: "I review all the benefits of me suppling the part, the warranty and the fact that if the part is wrong or defective or fails in the future, he will have no recourse and will have to pay to have done all again." You may want to check the laws in your area. There have been quite a few legal cases that have established that you are just as responsible and liable for a customer supplied part as you are for a part that you supplied. You may have to provide the same warranty on their part as you do on one you supply and sell. That's right, you may end up buying a new part out of your pocket, and providing the labor to install it. Even if a customer does not pursue legal actions, they almost always expect that you will "help" them out with the cost of replacing their part, after all, they "already paid you for the repair". 

For anyone who is still installing customer supplied parts, I suggest you check with your insurance agent to see if you have coverage should the customer supplied part fails. Don't waste your time having a customer sign a waiver. These will never hold up in court. This has been battle tested. The courts hold you to be the expert, not the customer. If you agreed to install it, you have given it your stamp of approval, and now it is your responsibility. 

There is a more complete article here: https://www.searchautoparts.com/cust-supplied-parts-liability-again

One interesting extract from that article is: "I know that in my home state of Maryland and many other states, there also is an issue of parts warranties not being transferrable. In Maryland, any installed part has to be given a minimum 4,000-mile/90-day warranty, and any repair facility would be on its own if a customer supplied part fails. Those implied warranties are very serious business, with all of the risk and liability that comes with them, including such little gems as responsibility for property damage or bodily injury. Install a customer supplied part at your own risk."  

Maryland also happens to be where my shop is.   

2 hours ago, CAR_AutoReports said:

We allow customers to bring their own oil, as long as it meets spec. If it doesn’t,  we tell them and offer the right oil or send them on their way. 

 

The legal way around customers buying their own parts is limiting your warranty and liability. Nothing in the law states that your warranty has to be the same for each and every service. So our adoption is, sure you can bring your own parts. But here are the parts you MUST buy the parts we indicate and your warranty is limited and your labor rate is inflated. 

 

That will help you weed through the shitty customers and convert the good ones from distrustful customers of the industry to good customers for you. 

 

I have a very recent example of a customer that I did this with and I occasionally give parts to at cost and make up for it on labor. He’s spent an enormous amount of money with us in the last 4 months and couldn’t be happier with the service we provide. 

I recommend you talk to you insurance company, and your lawyer. There is nothing you can do to limit your liability. You are just as liable for a customer's part, as you are for a part you purchased and installed. I think you might also find it difficult to offer different warranties for the same part. These are not just my opinions, they have been tested in court.  

Scott

24 minutes ago, Love The Biz said:

Wouldn't the customer just complain then about your labor rate?  Compare it to the dealer per say?

Yes, customers will always find something to complain about, and the approach I am thinking about is not without its risks. In fact, what you just asked was the first thing my service manager said to me when we discussed it. We have been moving away from having a posted "labor rate" for a while. We have a "labor rate" that we use to calculate the labor for a given job, but we always present the the total labor for each job to the customer. This makes it a bit more difficult to make an easy comparison. I also find it much easier to address higher labor, then trying to get a customer to understand that my business model requires me to double the price of a part. Labor charges are very subjective, while parts prices are objective. Each of our shops is unique, no one else can offer exactly the same service, and the customer has no idea what it cost to produce the labor. You can easily differentiate yourself, and therefore justify a different labor rate.  When a customer tells you he/she found the same OEM part online, for 1/2 the cost, there is nothing you can do to differentiate the part you are selling, from the part found online. You are now in a position where all you can do is try to get them to understand that you have to mark parts up to stay in business. A lot of customers do understand this, but each one has a different idea about what constitutes a reasonable markup, and what is excessive, leaving them feeling ripped off.

Whenever I discuss this idea, I feel the need to add my disclaimer. While I do continue to like the possibilities of conducting my business this way, I still have not tried it in my shop. So, I do also have some serious reservations about it.

Scott

For about 20 years, I would get those money cards, and put $20's in some and $100's in others. I would give the mailman, UPS driver, FedEx driver, Parts drivers, etc. the $20's. The $100's would go the the main parts guys we ordered from. There was always a lot of appreciation. For me, the Auto Repair business had been less and less profitable over the last decade. I had to cut this practice from the budget as well as Christmas bonuses, a yearly company event, and a number of other expenses. I agree, if you can afford it, these gestures go along way toward building loyalty.

Scott

Newport5, 

I know your question was meant for someone else, but I thought I would throw in my comments. I think selling and advising are 2 very subjective terms. We are all always selling customers on ideas and beliefs. We sell customers everyday on why they should chose our shop over others, why they should trust us, the value of quality parts, and maybe why are prices are higher than the shop next door. We sell these ideas by the appearance of our shops, the certificates on our walls, our websites, our online presence, and our words. 

I think quite often when we think of "selling" automotive service and repairs, we think about the shop or dealership that is selling work needed or not to maintain their numbers. Quite often using "scare tactics" or bait and switch. In my shop we do thorough evaluations on just about every car that comes in. We report the findings, the recommendations, and the cost for those. We answer any questions the customer may have, take them into the shop so they can see what we are talking about if needed, then we ask them what they would like to do. I tell them our job is to give them the best assessment of their vehicle, and there job is to decide what they would like to do. 

I think this would be labeled "advising", but make no mistake about it, this is still selling. I'm not evaluating, estimating, educating, and advising so they can take the car somewhere else to have it serviced. I think the word "selling" has 2 very different meanings. When you sell a customer a service or repair that benefits them by extending the life of their vehicle, gets them back on the road, or corrects a safety issue, "selling" is a good thing. When you sell 10 fluid flushes everyday to meet a quota, brake rotors when only pads are needed to boost your average RO, or tell someone the car is unsafe to drive so they have to have work done at your shop, "selling" becomes ugly.

Scott    

31 minutes ago, CAR_AutoReports said:

There's  A LOT to take in there.  I'm going to leave you with some food for thought.  I opened a new private window and searched for "auto repair rockville maryland"... the results don't list you on the front page.  See attached file 2018-12-06_12-04-03.png

I then did a search for "auto repair linden nj" which is where I am located.  Our shop is the 3 listing.  See attached file 2018-12-06_12-04-54.png

Personally speaking, you're doing amazing things at your shop with the way you handle the technology, don't stop.  You're spending all of your marketing and advertising budget on the wrong form of advertising.  I've never done a mailer in my life, I've built this business on SEO and word of mouth.  I bet we can turn your business into a machine diverting your budget.

Ricardo,

Try Volvo Repair Rockville, BMW Repair Rockville, Audi Repair Rockville, MINI Repair Rockville, or VW Repair Rockville. We'll come up on the first page for all of them. These are the vehicles we want in our shop. Having said that, I stopped chasing SEO a year ago. I found no measurable benefit to our business being on the first page. The direct mail has been most effective advertising for us, which is why I have committed such a large portion of our advertising budget to it. Before we started 3 years ago, I thought direct mail was dead. In the those 3 years, direct mail has generated $250,000 in sales. I guess it shows what works for some doesn't necessarily work for others,

Scott    

1 hour ago, CAR_AutoReports said:

Sent you an email Scott, in an effort to keep this thread on topic.

Sales are dropping because we don't have the marketing teams that larger facilities have to keep getting customers in the door.  Dealers and larger facilities (think 10 employees plus), have a much larger machine that can absorb an employee for marketing, community outreach and advertising.  With that, they've been able to take business away from the smaller players, creating a vacuum that forces a dangerous cycle where smaller players are forced to adapt or close.

 

In order to keep getting business in the door, EVERY business must have the following:

1. Strong web presence
2. Strong social presence
3. Community support
4. Advertising

That's just not in the cards for a lot of the smaller guys who work on cars themselves. The guys in between are working 80 hours a week trying to crack these codes to keep business moving... or they are paying $1,000+ a month for companies that do it for them.  I opt for the 80 hour weeks, but the lessons I've learned are slowly starting to pay off.

The next generation of auto technicians, will be computer technicians... that work on computers with wheels.  I've actually noticed manufacturers are now making parts with predictable time frames for failure, this isn't an accident.  They want to make sure they can survive as well.

Ricardo,

I'm experiencing something a little different. Maybe it is because of my location or our size. We are just outside of Washington DC which is a fairly affluent area, and our sales were $830,000 last year. So newer cars may be populating our area at a earlier and faster rate. We have a strong web presence. Other shops are always calling me to find out how we are ranking so well. You wont find a single bad review of our shop. We have 6 showing reviews, and 26 hidden on Yelp, and they are all 5 star. We have 32 reviews on Google, 30 of them are 5 star. the other 2 are for another shop. We purchased their customer base, and Google merged the reviews. We have 33 reviews on RepairPal. 28 are 5 star. The other 5, are 4 or 4.5 star, and those were because we weren't in a convenient location for them, or we were not able to reproduce a problem, and were only able to offer them a possible solution.  We spend $30-35,000 a year on direct mail, and for those to be effective, we have to offer an incentive that really hurts profitability the first time they come in. We email service reminders, follow up for reviews, and text with customers. The county I am in is the 4th richest in the country, with a population of over 1,000,000. I have a program where I will donate 10% of the invoice to a PTA when they directed a customer to us. I sent out emails for several years to all the PTA's I could find the addresses for. That yielded me 2 customers. A few years ago we spent $10,500 on a large billboard on a major road near our shop. It brought in 1 customer. We are RepairPal certified which sends us a few cars a month. We tried all the usual suspects like Groupon, Living Social, and a few I'm sure I'm forgetting. We even had a customer reward program for a few years. That was an expensive lesson.

We have made a lot of changes to adapt to the changing landscape. We were a Volvo Specialist for the first 20 years. In 2010 it was clear that was no longer going to work. We started adding more and more makes. Now we will service any 4 wheel passenger vehicle. We added State Inspections, Tag and Title Service, and I even got my Notary. We added 6 Free Loaner cars. We started manufacturing some special tools, and through eBay we are selling them all over the world. We do software downloads for many of shops in the area, as well as diagnostic work when they are stuck. We provide a rebuilding service for the READ units on the Volvo, Jaguar, and Land Rovers. I did one for a guy in Africa a few weeks ago.      

In April of 2017 we bought the customer base of a European Specialist when he went bankrupt after years of declining sales. He was doing well over a million dollars a year for many years just a decade earlier. It increased our revenue about 15% for 2017, but we have been flat this year so far. It scares me to think about if we had not gotten that customer base. 

I'm pretty convinced that more, and or better advertising is not going to grow or even save my business.

More and more I am experiencing the opposite of what Old and Tired is, and that probably has more to do with my dissatisfaction of this business than anything else. Customer's used to respect and value what we do. Now it is a commodity. I have labeled it the Amazon effect. They want immediate service, the best price, and if they are not happy with what they got, they want a refund. 

You are correct, the next generation of technicians will have to have computer and IT skills. Fortunately for me I have them, and it's why I will probably be out of here, and in the IT field in the next few years if my new product does not work out as I hope. The question will be, will individuals with those skills, go to work in the Auto Repair industry, or go to a Tech firm with guaranteed salaries, no requirement to invest thousands of dollars a year in tools, vacations, sick leave, 401k's, stock options, and room for growth. 

Maybe it's me. Maybe I am just old, tired, and after 30 years of this, ready for a change.

Scott      

2 minutes ago, CAR_AutoReports said:

Hey Scott,

Have sent you a message for us to have a conversation offline.  

Would love to hear more about what you have done in the past.

Our product is www.completeautoreports.com

I don't think we as an industry can go away that fast, there's simply too many cars to be serviced.  What I see happening is that the tech shortage will have to lead to a price increase and the technology gap will push many people to get educated or look for a new job.

Ricardo,

I don't think the industry will go away overnight. but if your sales drop a few % every year, which is what I am hearing from most of the shop owners I talk with, how long will it be before you are no longer profitable? 

I also replied to your private message.

Scott

38 minutes ago, CAR_AutoReports said:

There's nothing unpatriotic about making things better at your business and not having to hire a fancy accountant to help you keep more of your money.

 

I'd say this has been a great conversation with good insight for us to really think about the direction of our businesses.

I have 20 years left of this, 10 if I'm lucky.  Change, is my only way to survive. 

I have been trying to think of how to separate myself from the pack since about year 3 on my own. By year 6 I started the software company to compliment my ideas about customer engagement and transparency, by year 7 I started to adapt my selling to advising.  By year 8, I questioned everything....  But now, I see things pretty clearly and I think I left most of the rocky road behind me.  Or I hope so anyway.

Ricardo,

Looking for ways to get out of this business, I created some shop management software about 5 years ago. It was the first web based system created. It never really caught on, so I closed it off to new users. There are still about 50 of us using it. I've put my business up for sale a few times with the plan of getting into IT. I've done some consulting, and I can make more money at home with a computer than I can with my shop, probably twice as much; without all the headaches. The shop does allow me more freedom though. I was committed to selling it at the end of last year, then I invented a new consumer product that has the potential to make me more money than my shop ever has. So I'm now using the business structure and assets to develop and market the product. If you are interested in see the product, you can check it out at https://www.tubeanew.com    

I hate sounding pessimistic, but the truth is that the automotive repair business is dying. It has been for many years. More reliable cars, longer service intervals, and cars by subscription. Most of the "gravy" work is going away, being replaced with more advanced diagnostic work, and repairs that require us to purchase subscriptions to download software every time a module is replaced. Quite often you have to update your own computer with the manufacture's latest software to do those downloads adding another hour or so to the job. You keep your fingers crossed that the download doesn't fail leaving you with a bricked module, and when their system doesn't work correctly, tech support is quite often lacking. I did a X3 a couple weeks ago using a pass through. After 5 days it was at 50% complete. Once I switched to the BMW ICOM, it was much faster, about 4 hours. However, even after that the system wanted a release code for the new rack that was installed. Even though it was BMW's system asking for the code, BMW support had no idea how to provide one, and said the system should have done it automatically. So it ended up having to go to the dealer for the code.  

We've had a couple of Tesla's in the shop recently. More and more cars will be EV's and HV's. In 2 years all Volvo's will be, and they are 60% of our business. EV's and HV's will never need brakes. The steering racks will never leak. EV's will never need oil changes, transmission flushes, power steering flushes, air filters, spark plugs etc. There will be no more engine, transmission, differential or fuel system repairs.       

What is your software product?   

Scott

1 minute ago, CAR_AutoReports said:

This must be the 30 year club. 

 

Family started the business in April 1989, I took over alone in April 2008. 

My official start was May 1, 1989, but we started doing work in April.

1 minute ago, Old and Tired said:

I was just curious. I didn't mean it to sound like I thought you were naive. It's been 30 years for me too and I cant see such a dramatic change at this point but that doesnt mean you dont have a genius idea. 

I'm curious about how long you guys have been in business?

I've thought about making the change many times. It sounds good on paper, but obviously I have not been able to convince myself to try it yet. It would be a radical change, but I am thinking more and more seriously about it. While it would eliminate some of the discussion with the customers about parts costs/markups, the more beneficial part to me is to be able to predict my costs and charge accordingly. I would not have to hope to sell a lot of parts.

Scott

1 hour ago, Old and Tired said:

I'm curious about how long you guys have been in business?

Since 1989. It will be 30 years in May. Why do you ask?

Scott

1 hour ago, CAR_AutoReports said:

Scott, 

 

You just said it all right there.  You can sell parts at cost and raise your labor rate $55 an hour to make the same money you do, with 0 headaches of worrying about part margin.  Now imagine when you translate that to the consumer who will never have to look up a parts price and is paying you a fair rate for your work.  The customer has a good feeling about you and how he's been treated. 

Personally, that's priceless.

Thank you for doing the calculations and bringing that exact number to the table.  That helps show that it's not that hard and arguably, can be a much easier sell when you tell customers... I don't mark up parts.  You pay for the service we provide and the quality / care with which we treat your vehicle.

Appreciate the conversation!

 

Ricardo

Ricardo,

I feel a little unpatriotic when I say this, but that number would actually increase our profit by about $13,000 because that amount would no longer be going to sales tax. I could even just start paying sales tax on everything I buy and stop having to collect and report it myself. Interesting conversation. 

Scott

4 hours ago, CAR_AutoReports said:

Scott, 

Please call me  Ricardo, as I'm likely the one posting on this account.  I've been giving this some thought for a while now and I think I finally have a solution that I'm going to slowly implement.  So there's one caveat, I use our software to track real time and hold my guys accountable to use the timer system on jobs.  It's been an adjustment period, but all I had to do was show them one job where we would have lost a lot of money without it, and they saw the light.

So our plan is to gradually raise the labor rate, next month we are going up just over 10%.  We plan on adjusting accordingly throughout the year.  So we are picking a baseline to start from based on expenses and projected decline in parts revenue.  Higher labor is an easier sell when you have a good relationship with your customers and you can tell them, your parts are reasonably priced and show them if need be the comparison.  An example would be, my best selling avenue at the shop for tires is showing people... look, here's the price on TireRack, this is what I can do for you today.  When we do that, their defenses are usually immediately disarmed, because we showed them they are getting a fair deal.

With parts, the same logic is going to be applied.  The second I am questioned on a price, I can show them what it costs online and say... "It's just a bit more, and we get it locally and it's fully warrantied by us now." Going on the tested theory that no one will cry at 30% mark up & value your service by showing them, you're getting a really fair deal.  After all, this is all about perception.  If you charge $200 for a service and $100 is parts and $100 is labor, and the guy down the street charges $200 and $150 for parts and $50 for labor... the price isn't different.  How it's billed is.  But the perception that you provide when people pay for the quality you provide, is what turns customer defense off.  Because now they go home and check the part and they see, ok, he didn't really gouge me.  They can't go verify labor, because the guy on the other side of town might have a cheaper labor rate, but who knows if his quality is any good.

It's really a delicate balance that we are testing and figuring out as we go along.

In addition, we are still exploring how to implement a "Membership" like strategy, where we become a member service that looks out for it's members with a pledge like, parts plus 25% and a set labor rate.  Although this will have to be more thought out and will have to go through some trial runs with current customers.  I'm thinking membership would be something along the lines of a fee that includes 2 basic services for your vehicle for a year and because you signed on, you now get the perks of fair parts pricing and stable labor pricing.

But please don't hesitate to share your thoughts on this plan or your own thoughts.

Ricardo

Ricardo,

If we stopped worrying about parts margins, this business would be much easier to evaluate, predict, and make a profit. The current model, which most of us are still using, me included really leaves a lot to chance in this business. I could sit down in a few minutes and calculate how much each bay cost me, how much each tech cost me, and how many hours at what rate I need to charge to make sure I am profitable. While we use a standard markup, it is very difficult to know what dollar amount I am going to sell in parts. Think about this for a moment. You have an A tech that spends 6 hours removing a dash to replace a $80 blend door motor which also requires calibration with a scan tool that cost him a few thousand dollars, or as I like to say $200 a month. Next to him, you have a B tech who spends 6 hours replacing 6 sets of brake pads. The B tech generated the same amount of labor, but ~$400 more in parts, and probably makes half of what you paid the A tech. Is your business really doing better because you made sure you made your $40 on the blend door motor. If you sold the parts at cost, assuming you had a 50% margin, you would only need to raise your labor rate $20 to come out ahead. I just ran some numbers from last out of curiosity. If I raised my labor rate $55 and stopped marking up parts, I would be ahead of the game.   

We all talk about how important it is to charge for diagnostic time, and it is. However, it's the most cost intensive work we do, and since there are no parts sales to go along with it, it's also the lowest sales generator per hour.

Scott

6 hours ago, CAR_AutoReports said:

I can't speak for everyone, but I can tell you I am not ashamed to make a profit.  This is business and the way to survive is to adapt.  If you can name one industry that has not adapted to consumer behavior and survived, I would be very happy to hear about it.  Consumers have long treated this industry as if we are all thieves.  Before the internet, they had no recourse.  With the internet, they can put you out of business in 30 days time, if not sooner.

 

The medium here for discussion is how we all thrive in an environment that is turning every industry upside down, not just this one.  Part of that comes with providing a streamline experience where people pay for your experience and not your parts.  If we, as a group, adapted the mentality of my labor is where I make money, and not my parts... there would be less ability for the consumer to create havoc in our environment.  As long as we sell parts for multiples of what we are paying for them, while our consumers can research prices on their own... is as long as we'll have the mentality that's made this industry the last one to transform and shake the horrid reputation we have with the general public.

 

If you buy anything at a national chain, from the groceries in your house, to the device you are likely typing this on... you are a consumer.  Put yourself in their shoes and realize we provide the worst experience known to man.  There are no trades left where parts have such an influence on business, like this trade.  If you work on fleets, ask their owners how their business is going and what challenges they are facing.  Most of the fleets we service, make less than 20% on parts and all of their meaningful revenue is generated by labor.  Why?  Because the consumer can go to Home Depot and buy everything for the same price they can.  The consumer just can't install it, they realized that... adapted to it and are now seeing the benefit of not worrying about how much money to make on parts and focus on labor costs and managing them.

CAR,

What are your suggestions? I have long considered just selling parts at my cost and adjusting my labor, or some other fee to compensate. I've suggested it here on AutoShopOwner before. It would reduce work load, eliminate a more and more harmful data point for customers to judge our pricing, and eliminate the need to explain to customer's why we need a margin on parts. As if customers really care about why we charge a markup at all. As shop owners we continually search for the best price on everything. From parts, supplies, tools, rent, insurance, etc.. We shop on Amazon, eBay, AliExpress, etc., but we get frustrated with customers when they do the same thing. If there is anyone here that pays supplier B more money for parts than supplier A because supplier B needs to make a higher margin to pay his bills, I would love to hear from them. 

Having said all that, I have just not been able to get myself to do it. It's a radical change and we would need to make sure we have a labor formula that works.

Scott