Tom Ham AutoMN.info

Tom, could you go into more detail with real numbers about that plan?

Joe:

Sorry to take so long to reply. The plans I am referring to pay the tech a basic wage for the hours they are at work, and then pay a progressive incentive based on production. The lows of flat rate are higher, and the highs of flat rate are lower. But, the system is still significantly tied to incentive enough to make good production critical to excellent pay. Similar systems can be created for advisors and parts managers.

Hope this helps,

More and more shops are adopting the flat rate pay model. Is this the future?

 

I don't like flat rate pay.

 

I have long paid my techs an hourly rate plus bonus based on performance. I feel this gets my techs motivated with security. Many think my plan creates a dead-beat attitude. I don't think so. My system rewards those who excel and are willing to work hard.

 

Am I wrong? What plan do you have for your techs?

A number of shops are having good success with a pay system that is about half hourly and about half flat rate....kind of the best of both worlds and fair to all parties.

What do you guys think about this Cash for clunkers Law?

 

Some articles to read about it:

 

http://www.google.com/hostednews/afp/artic...SbAMcv4EqdBQjiw

 

http://www.carnewsreport.org/

 

In a nutshell, if you are not familiar with this:

 

Under the House bill, car owners could get a voucher worth $3,500 if they traded in a vehicle getting 18 miles per gallon or less for one getting at least 22 miles per gallon. The value of the voucher would grow to $4,500 if the mileage of the new car is 10 mpg higher than the old vehicle. The miles per gallon figures are listed on the window sticker. Owners of sport utility vehicles, pickup trucks or minivans that get 18 mpg or less could receive a voucher for $3,500 if their new truck or SUV is at least 2 mpg higher than their old vehicle. The voucher would increase to $4,500 if the mileage of the new truck or SUV is at least 5 mpg higher than the older vehicle. Consumers could also receive vouchers for leased vehicles.

What a great way to take money ($1B) from taxpayers, including shop owners and techs, to give to consumers to purchase new cars so they visit us less often.

Basically, one of the dumber ideas (there are so many lately) they have come up with in Washington.

Cooper-Standard Automotive Inc. was flagged today by Standard and Poor's as yet another Tier 1 auto supplier facing a potential Chapter 11 filing.

 

View the full article

I'd guess that the majority of suppliers are now at risk. We could see quite a wave of filings in the next few months as the full impact of the GM and Chrysler filings comes to light.

It's also pretty simple to add text to all of your marketing that states: "We will price price match all dealer specials and estimates".

In prior conversation about dealer price slashing, it sounds like everyone is on board in keeping up with dealer specials in order to keep the customers from going there. We came up with what we hope is a good solution and we'll keep you posted as to how it goes.

 

We send out a newsletter to all of our existing customer base every month. In the newsletter there are always two coupons in it with two specials for that month. Rather than looking on the internet and trying to keep up with all the dealer specials going on, one of our coupons will simply be a "Dealership coupon meet or beat-athon" with a picture of a fish trying to lure in a shark (tried to add a little humor to it). This way any dealership coupon the customers gets in the mail or internet they now know that they can bring it in to us and we will honor it.

 

We figured this would be the easiest way to keep up with the dealerships trying to take away our business with all their price slashing deals.

 

We'll run it for a couple of month and again we'll keep you posted as to how it turns out.

It's also pretty simple to add text to all of your marketing that states: "We will price match all dealer specials and estimates".

New cars are not selling and people are keeping their cars longer. People will eventually need cars for themselves and/or children. They may not be in a position to purchase new. You have a distinct advantage, since your customers already trust you. Offering them a used car may be another way to add a few bucks to your bottom line.

Certainly a possibility. Used car prices have gone way up around here...as much as double on the very low end cars.

Anyone out there have loaner cars? I am in NJ and insurance is high here. My agent sounds like nobody wants to insure loaners but I know of shops in other parts of the country that seem to do well with them. Any feedback on this subject would be appreciated. If you can refer me to insurance companies that would be good for this that would be good.

 

Gary

Most of the more successful shops that I know of use both loaners and rentals.

For insurance, we use:

http://www.hastingsmutual.com/

Make this year the year to look to add more services to your sales arsenal and increase your marketing strategies. Be innovative.

 

Here are few suggestions, let’s hear from other shop owners and add to this list:

• Create a lube bay and offer while you wait service.
  
• Purchase flush machines
  
• Start doing detailing work
  
• Consider buying an alignment machine
  
• Sell a few used cars
  
• Offer a late night for service work
  
• Carefully consider opening Saturdays
  
• Solicit to other shops and body shops for work they don’t perform.
  

Let’s add to this list and make 2009 an banner year!

Several good ideas there. However, a lot of shops fall into the trap of trying to do too many different things and being all things to all people. The focused specialists appear to be doing the best right now (as they always seem to do).

I like to know what works for you?

 

Advertising I have tried.

 

Word of mouth

Valpak

Newspaper

Radio

Craigslist.

 

From the number Valpak got more customers in the door. However I stop using them cause of the cost. Word of mouth is right behind Valpak.

 

I want to know what works for you.

I know you have advertise. I not asking if i have too.

 

TIA

One big one is what you do with your shop and property and parking lot to cause people to stop in or call. Drive around your area, looking at other auto service shops and other businesses of almost any kind and note why certain ones stand out. Colors, lighting, signs, vehicles, flags, landscaping, etc. can attract a lot of customers.

You certainly have some valid points, however low average RO and low labor rates are still a massive problem in many shops that I see. We should certainly adjust to the market, but I believe that increasing average RO should remain as a primary goal in almost every shop.

I have a question in regards to how your service advisor should be paid. Our Service Advisor currently is being paid a flat weekly salary. I'm thinking of changing it to performance based in order to put a little more motivation into his sales. Any advise out there on how other shops are paying their Advisors and how is it working for you.

We use and recommend systems where both techs and advisors are paid about half hourly/salary and about half incentive of some type.

...then this might be just the thing you were looking for.

It's a slightly unique story told a number of years ago by Frank Paretti...one of the best story tellers ever. It's a family story...perfectly safe for all ages. When you can get things quiet for about 20 minutes, click on the link in the middle of the page that says: "Listen to the entire program".

http://www.programsnow.org/specials/frankeperetti/

(Some parts of the audio with music are a bit rough, but the story telling comes through just fine.)

Please let me know if you liked it!

Merry Christmas!

So gas prices are down, really down. Why have we not bounced back economically? Well, it's bigger than gas prices at this point. Bailouts, government interventions, and what else?

 

Where do you think this is all going and how will it affect your bussiness?

Many are predicting $1 a gallon by spring. However, I doubt that free gas would cause a significant increase in service business right now. The consumer has really been frightened and that fear is not about to subside anytime soon.

Yet, cheap gas means one less thing against shops for the time being and should help shops do a bit better overall in the short term. A huge dam of car repair is building...at some point it will leak, if not, break. As shops and dealer close, those remaining will be a better position.

Soms say that if we don't bail out GM, Ford and Chrysler, the economy will suffer because of all the jobs and comapnies that are directly tied to the auto industry. Others say to let them die. They did it to themselves.

 

What are your thoughts? Bail Out or let them Die Out????

Should they be bailed out?

No.

Will they be bailed out?

Yes.

What we are seeing now is a show put on for the public to portray those in power as being very concerned and conservative with our money. However, the deal is done. The Dems will not allow the unions and their other buddies in Detroit to suffer. Once Obama takes power, the money is coming...likely with much more to follow.

If the fed is determined to waste billions, it may as well be in my state!

http://www.cnbc.com/id/27925978

I'm this affect the mall stores....but what effect does it have on auto repair?

People say Obama has leadership quailities that can ignite the ecomomy. Is this a factor in our recovery? Or are we too far down the slippery slope?

I think he can affect things, so he is a factor to a point.

But, no one can fix the mess due to its depth and size. It will need to crash first, then it can be rebuilt. The window for fixing it has long since passed.

Will the election of President Obama have a positive or negative affect on business?

I don't think he knows...nor does anyone else.

In a way it's an unfair question since the mess is massive and unfixable. It took decades to create it and it can't be put together now. It has to crash, and it will (what we have seen so far is not the big crash...instead this is just the pre game show).

The question is really how bad and how soon. Will it be bad or horribly bad? Odds are that he will make it far worse by repeating the same policies, just at a more intense level, that have taken us to where we are.

Massive spending, borrowing and printing of money at a rate never seen before. The dollar will eventually crash and extreme inflation will follow.

Shops will be increasing prices frequently, possibly daily. This is going to be a wild ride.

Another factor will be if the government includes a package for the auto makers to re-tool, as they are saying now. They're going to try and stimulate new car sales.

Regardless of what happens there, I do not expect car sales to be restored to 2006-2007 levels for at least ten years...maybe much longer.

There may be some brief increases tied to some stimulus in the short term, but nothing sustained.

I don't want to get too political but I am curious. How will the election affect your business? Or, will it have an affect on your business? Will the country be better off after the election?

While the election is over, I really don't think it would have made a massive difference for our businesses either way. Very few, including most in power in DC really comprehend how big the mess is becoming and is going to get.

Also, the approaches are almost 100% incorrect and will only serve to make the situation much worse. The issue is too much spending and to much debt.

All the plans are to increase spending and increase debt. It does not require a calculus degree to do the math on the this. A 2nd grader can see that this won't work.

Bottom line...look out because there is a huge wave out there destined to swamp the boat.

We have not had let anyone go yet, but we have cut down on hours and eliminated OT. This will be a test for all of us. Although it's hard, I think now is the time to maintain your advertising and find new ways to market your business. Let's maintain our business and customer base and be ready for when the economy does turns around. If we don't do this we may be chasing the market instead of cashing in when times are good again.

New ways to market at LOW cost is a big key.

Also, we should make our shops very adjustable so we can make changes quickly as required. Contingency plans should be in place now.

Unfortunately, it seems to me that we still in the pre-game show phase. The game has yet to begin and when it does it won't be pretty.

A quick downturn with an upswing soon would be nice, however the fed is working to prevent that due to their ignorance and arrogance. When things dropped in 1929 it took over 20 years to recover. But today the fundamentals of the economy are far worse than they were back then.

The US may be about to change significantly from the one we grew up in.

With car counts down we need to take a look at new ways to stimulate work. Now is the time to welcome walk-ins. Bring the customer in. Try to accomdate the customer on their terms. I know it will be tough, but these are tough times.

 

Agree? Disagree?

Here in Michigan we started this quite some time ago. Free quick check of issues on the spot is one method. We are attempting to be the most accomodating shop they visit (while maintaining a decent GP). It works. This, however, is only one step. Required adjustments for survival are likely to become far more drastic. Open mindedness will go a long way in surviving what is coming to this industry.

I have to believe that there are more than a few shop owners who read that story and wonder why they have been left out. I communicate with quite a few shops from coast to coast and there are precious few who are as busy as described. Our shop did have a decent September compared to 2007 (+28%), however October has softened (-22%).

I have never heard from so many shops who have reduced their staff or are preparing to do so. I have never seen so many shops with drastically reduced sales, mainly in the last 2-3 weeks.

I do believe some shops will do very well in the sinking economy, but that will likely take some time to materialize. How these shops operate will be significantly different than in the past.

We are working to get our October back up and I believe that we can.

I also suspect that more than a few shops are sinking fast and are unlikely to be able to recover.

Tom, I have a problem with this. GP does not always equate to profit dollars. And just because the shop down the block charges $45.00 for an alignment does not mean I need to be in his ballpark. He may not have done the math and arrived at his price because he assumes this should be the price.

 

Getting back to GP. When brake rotors were $50.00 two years and we charged $100.00, we made $50.00.

 

When brake rotors came down to $25.00 and we charged $50.00, we made $25.00 LESS money.

 

But the GP stayed the same. My bills are paid with Dollars not GP.

 

Personally, I focus on each job.

 

You thoughts???

I agree that other shops often do not do the math. It's also true that once a shop gets a too high priced reputation it can be deadly. The math does not matter....perception is reality for customers. We learned that lesson many years ago after following the advice of management trainers who preached raising prices to solve every solution in a shop. Ten years later we still have the reputation and will likely have it forever to some extent unless we move to another area.

As far as rotors or similar parts go, a shop can offer two levels (both which are decent name brand stuff). The lower cost rotor is a perfect example of where the GP can be adjusted to compensate for the low price alignment.

If you use a graduated matrix of some kind then I assume you are not using the same GP on both of the rotors in your example.

I agree that bills are paid with dollars, not GP...but attaining proper GP targets puts enough dollars in the check book.

I recently read a survey in a trade magazine showing the average national price on 4-wheel alignments. The survey contained mostly tire shops. What I surprised (and disappointed) to see was how low priced some shops charged for the average 4-wheel alignment. In some cases as low as $49.99. Don’t we give enough away? We all know that an alignment system with a rack can cost upwards of $50,000.

 

It’s funny, with bodywork, the insurance companies will either pay us a menu price or give us the time from a recognized published labor guide, which for some cars exceed 1.5 hours. Even at a labor rate of $70.00, a labor time of 1.5 is $105.00. Is the alignment service just another commodity doomed to be priced low such as the common oil change?

Step one: We bought our JB 3D camera system on Ebay for under $7K.

Step two: We bought our Hunter rack and jacks on Ebay for just over $1K.

(these deals are about to get even better)

Step three: We offer levels (align menu) with 3 options...good, better, best.

Alignments are similar to oil changes in that they are one of a dozen or so items that have a fairly well known common price. I believe a shop should survey local shops for alignment prices and make sure they are in the ball park.

The bottom line is total GP. Adjust prices of everything as needed to hit the GP targets. Like or not, this is how business is done today and how successful businesses do well.

So, don't focus on the price or GP of individual services...instead focus on the end of the month bottom line.