bstewart

That would destroy morale at your shop IMO.

Hold the techs responsible with reprimand in private, give them first a verbal write-up and let them know that if it happens a few more times they would be formally written up then possibly terminated.

There are consequences to your actions, even if it is a mistake, but hitting your techs with deductions to their pay should not be one of them.

Damages like this are a cost of doing business unfortunately. Things will sometimes get damaged. Check with your accountant, there might be a tax loss provision you could claim on something like this as well.

On 10/18/2018 at 10:38 AM, CAR_AutoReports said:

We've had life long customers start to request to buy their own parts online, at an alarming rate.

They will come in and get a quote, leave... call back in a month when they want to do the service.  When they call, they indicate that they would like to bring their parts in and only pay for labor.  It puts everyone in a really difficult position.

In addition, we are also having fleet accounts price shop online and complain about our prices.  In many instances, we have had to show customers our purchase receipts to assure them, we are not "overcharging".

I personally, have been making noise about this for over 5 years and everyone generally brushes me off as an anomaly.  Yet, here we are... all becoming anomalies.  Our vision for parts in this industry is a little scary initially, but overall we think the outcome will just lead to much higher labor rates and parts at a 15% above cost model.  Welcome to the Costco model for Auto Repair.

I've talked about this multiple times in the past on this forum.

I come from the heavy duty industry at a dealership, and this is the industry standard. Shop rates are in the $130-150 range, and most shops make 0-10% on parts. Dealer shop rates are $160-180.

The HD industry is a bit different than automotive, there is less aftermarket available, and OEM parts are generally priced somewhat competitive with the aftermarket anyways (in many cases cheaper), so there is not a huge amount to be gained by shopping around. It's a bit of a running joke among us that so many customers still think the dealer is "too expensive" when in reality the OEM part is much higher quality, but still on par or less money than the aftermarket.

Because many HD customers have fleets rather than single trucks, they generally buy a lot from the dealership, and they get volume discounts, while repair shops buy less from dealerships and get weaker discounts and in many cases pay retail prices. This is why many repair shops don't/can't markup their parts. A common markup is 1% on parts to cover administrative costs of ordering the parts. Even bigger shops that get volume discounts still only do a 10% markup in many cases. 20% markup on parts in the HD industry is pretty much unheard of.

Yes, part of the situation is that HD parts cost a lot more than automotive parts, but at the same time, HD repair shops have realized that what you are truly charging for is your EXPERTISE to fix problems, not selling parts. This is reflected in the higher labour rates.

Congrats indeed.

Care to share with us some numbers? Revenue & profit last year, sale amount, valuation multipliers etc?

Are you affiliated in any way with Soapboxx? This post, while slightly informative, feels like you're plugging your own business.

7 hours ago, Wheelingauto said:

I'm confident we don't define productivity the same. As KPI referred to productivity as I understand it is time available for a tech (at shop for 8 hours) vs time actually doing work (think piss breaks). This figure cannot be over 100% it is an impossibility.

 

tyrguy said it correctly, Productivity = Hours billed / Hours worked. Yes it's possible to bill 9 hours for an 8 hour day for 112.5% productivity, if you're billing by the job, not by the hour, and then your techs beat the job time.

7 hours ago, tyrguy said:

Lastly, although I agree with charging a full and proper rate for diagnostics, the "rate" has nothing to do with the productivity number. It's just the fact that you charging the "time" that affects productivity.

You are correct, however some shops bill it differently. Instead of 1.5-2 times the shop rate for diagnostics, some shops cut the time instead. Bill 1 hr "normal shop rate" for diagnostics and the tech gets .5-.7 hr to diagnose in that time block, which causes the shop to sell more time than the tech works. But in general, you are 100% correct.

I'm confident that Alfred is referring to productivity, not efficiency. There's lots of posts on here that define the two and how they differ.

Industry benchmarks nowadays are over 100% shop productivity and 125-150% efficiency per tech for top tier, well managed shops.

How can you have over 100% productivity? It starts with a well laid out shop and proper tooling, billing for things "by the job" not by the hour, having "set-it-and-forget-it" equipment that works in the background while the tech temporarily moves on to another job, and charging a "full and proper" rate for all your diagnostics, which should be 1.5-2.0 times your regular shop rate, not to mention a minimum diagnostic charge at least .5 hr.

Difficult? Yes. But impossible to do consistently? Absolutely not, shops around the country are doing it right now on a regular basis. Productivity = profits.

Sounds like you've got a fantastic operation going for you! Your operation is something most shop owners can only dream about, great job!

And those are great questions to ask, and those same questions should be revisited on probably a yearly basis.

More people = more headaches usually, with conflicting ideas & personalities etc. On the other hand, you always should strive to be better, maybe not bigger but better in general.

Smaller shops are always more efficient. I've read in numerous places that the most efficient shop setup is 2 techs, 1 advisor, 1 shop owner, followed closely by 3 techs, 1-2 advisors, 1 owner.

Owning 2 small shops with 3-5 employees each will be more efficient than owning 1 large shop with the same number of people combined (6-10 employees).

EDIT: Shoot for 20% net profit based on sales. That should always be your goal to meet and beat. The best shops make up to 35% net profit as a percentage of sales. Most shops make under 10%, and many make 0-3%.

On 2/6/2017 at 4:27 AM, alfredauto said:

We call the same company for all our tows and pay them on time no matter what. In return they give me a discount. The cost to the customer is the same. It's a win/win/win for everyone.

In the end everything you do for your customers needs to be billed. Even charities take a cut.

This is a smart way to do business, negotiate a volume discount with vendor, charge customer the "normal retail" price, pocket the difference, or even give the customer a small discount and pocket most of the difference.

Vendors love volume, and it's worth it to them to give discounts to keep you coming back, not to mention they give premium service and other perks to larger accounts.

It's also very true about charities and non-profits. Their people still need to get paid just like anyone else, they just don't get the remove profits from the business at the end of the year.

Visual test, voltage, test strip, specific gravity, refractometer are all good coolant tests. Each one will tell different things about the coolant. Used together you can get a whole picture of the coolant's remaining life.

http://www.sancarlosradiator.com/VoltageDrop/testing_for_electrolysis.htm

Here's a good article on testing coolant voltage, it's super quick & easy, and can be useful. Coolant's pH should be above 7 for sure, but as high as 10 is fine.

If the pH drops below 7 and becomes acidic, that's when your coolant turns into an electrolyte, your engine becomes a battery and generates it's own voltage between a random anode and cathode (bad).

This is not a scam, I contacted the owner and it is a legit offer.

However, the business owner is not offering the business for a reasonable amount, nor are the numbers listed in this thread correct and up to date. The owner is banking on a large amount of goodwill and future returns in his valuation, not past and current performance of the business, nor a realistic ROI.

I won't go into specifics at this time, but if anyone wants my opinion on this, they can contact me.

GM has been doing this forever with the AC Delco line.

Just thinking out loud here, but you could use it as a benefit, get "OEM parts" at better prices for your non-Ford customers.

I'd also be interested in this.

I sent you a PM yesterday, hope to hear from you soon.

Do you have a copy of that spreadsheet to share? I'd like a copy please.

EDIT: Nevermind, I just found the article where this was posted. I was under the assumption that it was your spreadsheet.

sorry or bringing up an old topic but I have a question. im confused with the matrix. If the part was 5 dollars and I divided that by .3 it would be $16.66. How is that 70% of 5 ? Or am I looking at this wrong ?

When you take $5 and divide it by 0.3 to get $16.66, you're saying that the "profit margin" is 70% of the total amount of $16.66, while the "cost" is the other 30%.

16.66 - 5 = 11.66 profit dollars

11.66 / 16.66 = 70% profit margin

In other words, when you talk about "margins" you're referring to an amount based from the final selling price.

When you talk about "markups", you're referring to an amount based from the cost. (To reach 70% profit margin, you need have a cost markup of 3.33 times, ex. $5 x 3.33 = $16.65)

I don't have any real world examples to give you, especially not that will apply to your situation however:

I've read (and common sense would dictate) that one of the better pay plans seems to be

Hourly base (living wage or close to it) + large team bonus + small personal bonus

This gives your employees stability through bad times, incentive to work as a team (very important), and also incentive to better themselves.

The team bonus can be based off productivity, hours billed, margins etc, while the personal bonus could be based on getting training, personal efficiency, etc.

Then you can make the personal bonus contingent on having zero comebacks, and a 90+% customer satisfaction rating.

Glad to see you're raising your rates as well, not sure how people live off $10-15/hour being a primary breadwinner.

More shock headlines, designed to sell newspapers IMO.

Funny how the "source" even says it's nothing compared to how bad 2008 was, but the headline implies it's the end of the world.

Give me a break.

Labor rate from $115 to $150 car count down 1/3 revenue up 6%.

 

Going on the third month that we raised our rates. Our best customers have stayed, trouble nickle and dime customers seem to have disappeared. ARO from 380 to 628.

Did you offset the labour rate increase with a reduction in your parts margins at all?

What was the reason with such a large increase all at once? Even some of your good customers might be turned off by the big jump.

I always suggest to use an up-to-date internet security suite like Nortons and have browser protection enabled. It should warn you and sniff these things out.

http://www.cbc.ca/news/technology/antivirus-software-1.3668746

Unfortunately, this is pretty much false in this day and age.

There are a vast number of articles everywhere about security software giving you a false sense of security.

Technology, specifically malware linked to organized crime, changes way too fast for security software to keep up.

While I'm not saying security software is 100% useless, it's definitely outlived most of it's usefulness. (not to mention it's a drain on your wallet for something that doesn't work well)

Your best bet is to keep regular backups, keep your operating system, browser and software patched and up-to-date, and USE COMMON SENSE!

Don't EVER open a .zip or .exe file in an email! Don't open any email attachment unless you are expecting them!

Don't get lulled into a false sense of security!

Problems with parts can be solved by only buying the most expensive aftermarket or oem. ALL store brand wheel bearings are garbage, trust me we put in at least 4 bearings a day every day and every part store cheap unit is the same junk as found on Amazon for $29.99 just marked up twice. Go with Timken and torque them and they last a couple years. SKF and Dorman are reboxed garbage now as far as I can tell.

From what I've found/read about sealed hub wheel bearings is that most, if not all non-OEM brands are woefully under-greased from the factory.

The offshore brands are even worse, having a bare minimum of low-quality grease, which causes the quick failures that are common with low-priced sealed hubs.

This causes bearing noise and premature failure, all for the manufacturer to save a few cents worth of grease per unit.

The solution is to pop out/unthread the ABS sensor and pump a bunch of synthetic bearing grease in there.

Don't fill it right full though, make sure there's room for thermal expansion of the grease.

Here's a thread describing this problem and solution perfectly:

http://www.silveradosierra.com/how-to-articles/how-to-pack-your-sealed-hubs-t18734.html

I believe you're referring to parts cost being 18% of total sales? I've read that 20% is perfectly acceptable, but if you're striving for 18% you could:

1. Keep using high quality parts and

2. Increase your total sales in other ways that don't involve selling more parts such as: higher general labour rate/increased parts margins/more high tech work at increased labour rates etc

Edit: 3. Negotiate a better part cost discount from your current supplier or find a new supplier that gives you better prices.

 

Not saying I disagree, but I just opened an automotive repair shop that is spray foam insulated, brand new bright epoxy coated floors, crazy bright lighting, air conditioned to 75 degrees, and specialize in high end Asian vehicles so the techs see the same cars over and over again and has very little learning curve. I mark up my labor guide 21% (except for maintenance), I pay for their first ASE test (regardless of if the pass or fail), give a $200 bonus if they pass, a guaranteed raise if they pass, provide diagnostic scan tools, provide uniforms and cleaning services, 5 paid holidays a year, paid training, paid sick time, multiple production incentives, and both techs working for me got paid what they were asking for on their applications. They get parts for their cars at cost, have an employee break room with a refrigerator and microwave, free sodas and coffee, provide work gloves, donuts/breakfast for our Wednesday morning meeting, and both have brought family up here to show off where they work. That being said, the applications that I see coming across my desk are pathetic. I've advertised on craigslist, told all my vendors I'm looking for another tech soon, and I'm getting ready to fund a raffle on the Snap-on tool truck for technician contact info. I've even offered a $1,000 finders fee if one of my vendors bring me a good tech. Still, the turn out is meh.

Like I said, I was speaking in generalizations and definitely NOT singling anyone out.

I'm sure there are many great shop owners in the US, just like in every other country out there.

Lots of the guys on this forum are especially great guys, because we are all trying to better ourselves as shop owners and as people.

I'm guessing the weak turnout you're seeing is just a symptom of the real problem, which as stated by mspec is poor industry marketing image and a weak training and support system for cultivating talent.

All I was saying is that I've even seen threads in here about paying entry level techs barely over $10/hour and top techs in the $25-28 range.

If this profession is going to stack up against other trades and not be looked down upon, the pay better be on par for starters, especially since automotive requires such a high tool investment.

PS. I'd love to see your shop sometime, it sounds like a dream!

You have described the difference between America and the rest of the world as it pertains to worker training. America is Capitalistic for the poor, and Socialistic for the rich, which is why you can make a very large fortune if you know how to exploit it.

One reason we are struggling in the USA is the the Finance industry hit the automotive industry right in the gut after the 2008 finance collapse. They had the Govt. pass the Cash for Clunkers bill, which withdrew the majority of demand for auto repair from the market, and turned into an auto finance bonanza.

Auto shop owners are struggling to drive traffic into their stores, there is a lot of pent up demand in cars that are being neglected because the majority of the people's cash is being diverted into servicing their rent/mortgage and health insurance premiums.

This keeps owners from paying higher wages, and attracting great talent into the industry.

I don't disagree with you about the cash for clunkers deal that went down (we heard all about it up here).

I don't want to turn this into a political discussion either, but don't think that socialism is your holy grail.

We're much more socialistic in Canada and we've got our share of major problems too.

For example, we just passed our annual "tax freedom day" on June 6, whereas you guys had yours on April 24, a month and a half earlier.

Canada's total tax rate for the whole country is 43%, but for the US it's a much more reasonable 31%.

I can only imagine what I'd do if I had an extra 12% of my gross income to spend each year.

Two things I've noticed a lot on this forum: (just an observation from an outsider, so I'm speaking in generalizations)

1. A lot of shop owners complain about not being able to find good workers and

2. A lot of shop owners want to pay these same good workers a pittance (compared to other trades).

You can't have your cake and eat it too.

If an electrician/plumber/pipefitter etc makes $30-35+ an hour, why would any good worker ever want to become an auto technician when they know they will top out at $25-28/hour?

I'm from Canada, and our automotive technician program is different then yours, but I believe that one of your bigger problems in general is low wages.

Up here, apprentices do a 4 year program of 10 months on-the-job training then 2 months in school to become a journeyman technician.

The apprentice minimum pay scale is based on a percentage of the journeyman rate at their shop and scales up each year. (1st year 55%, 2nd 70%, 3rd 80%, 4th 90%)

Our system works well for us, and produces a good quality of technician, and I believe in general, techs in Canada are paid on par with other trades.

You guys have students that come out of tech schools (UTI etc) with little to no hands on training.

Apprentices are expected to do ASE training (sometimes on their own dime, no less) to get the certification.

Maybe after 3 or 4 years of this, they get enough certs to be a decent high-end B tech (equivalent of a journeyman).

There's still nothing saying that they have to be paid well by this point.

4 or 5 more years and they become an A level master tech, finally they might get paid similar to what other trades have been making for years.

Not trying to be rude or a jerk, but this is just how I see it.

You would want X% growth over last June. This eliminates seasonal changes that show up month to month.