CAR_AutoReports

It's also worth noting that dealers in my area are @ $125 for Japanese $155+ for German and $100+ for domestic. In most circumstances we are at least 25% cheaper than the dealer. That gap needs to be closer to 10% if you offer dealer like amenities such as a clean waiting room, loaner cars and pick up/drop off service. Which we do. To maintain those services and grow (hopefully), we need a stable labor rate to allow the flexibility to hire without regret. Standardizing the parts prices is a two fold incentive. It eliminates a point of contention at the counter and it provides a selling point. "Our promise to you is to always be fair in pricing of our parts in the age of Amazon. Our parts margins are constrained to help ensure that you receive value with each service here at XXXXXXXX." We are also working on a larger initiative with the entire model, a combination of a membership model with baked in prices for regular service, no frills pricing with dealer level service on maintenance.

I am contemplating something more along these lines for price standardization. In conjunction with that, a modest increase in labor price and an adjustment to our advertising campaigns. All in an effort to completely eliminate the focus on parts pricing and focus on containing labor and getting paid to reflect the labor needed to do the job in an industry short on staff and high on demand.

Overbid and explain the overbid and how experience shows we will encounter hardships that are not our fault and will still need to be addressed. We are in the business of doing it once, not twice. With that comes someone who doesn't rush through your job to "just get it done". That takes time and a team. When I see something major is about to happen to cause a drastic change in price, everything stops and I call the customer immediately.

Just had this discussion yesterday at the shop, the exact same retaliation was given on all sides. It's pretty funny actually. In short, we're still contemplating it, but maybe altering it. Maybe have a more reasonable tier of markup. Like 100% for $25 and under, 75% for up to $50, 50% up to 75% and 20-25% from $100 and up. With a rate drop at let's say $500+ to 18.5%. And instead of full frontal with the larger labor rate, a more modest bump to make the change less noticeable. So if we were at $95, maybe $115 (domestic) to $125 (foreign), which is still cheaper than local Toyota dealer in this area. But I'm also talking about billing actual time or book time, whichever is greater as often as humanly possible. Precision labor billing is the key we think, with some room for the nightmares we all encounter from time to time.

Hi lakesidetire. I'm going to send you a message about it. Thanks for your interest.

So advising is a lot like being a friend, or at least how we've adopted the principle. I sit down with people and ask them really hard questions. How long are you planning on keeping the car? How much money have you spent on this car since you've owned it? If it hasn't been serviced with us. Are you looking for short term solutions or long term solutions? Based on the answers I get from each customer, I will then put together a package for the services they need that fits their budget. This has lead to some insanely creative estimate building. Each customer budget and their plan for their vehicle will help determine that quality of parts I use and where I order them from. What we've noticed is that this approach completely disarms every single person that we sit with. Their approach is no longer, "Why is this so expensive?" it flips to "Thank you so much for taking the time out to help me see this clearly.". We have a running joke at the shop, roughly 1 out of 3 times we tell a customer to not fix a car... they actually will. We also find that when taking that approach most customers will develop a plan to come in every few months and get each line item addressed, exactly as we discussed it. Just some food for thought, we are encountering all of the same problems as a shop as have been outlined all over this thread about "fighting" to get customers in the door and keeping them in the door. But using this approach, we have more of them returning and with positive attitudes about how we handle things here. Which in turn has positive effects when it comes to referrals. In short, we don't sell anything. People pay us for a service and we take it seriously. Using our auto software we educate and inform our customers, using our people skills we teach them how to make better decisions. The combination has lead to a great shop attitude overall, better customer relationships and a reputation that starts to break the mold that society has given this industry for generations.

Ok that makes a lot more sense. Direct mailers definitely work, but it's chasing the wrong customer personally speaking anyway. You're getting a customer that comes in because you are offering a price point they want. I'm sure I can get mailers here and they would be effective, but the $1,000 a month are better off spent trying to build a brand through online portals and advertising. I don't even look at mail at home unless it's from an attorney, utilities or an insurance provider. If you want to reach me, I have to be able to search for you. Speaking of search... you do rank up for those keywords you mentioned... problem is... not many people are using them but you. At least according to this.

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.

A lot of that comes with how we treat people... if you have that happening... you're doing something right.

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: Strong web presence Strong social presence Community support 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.

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.

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.

This must be the 30 year club. Family started the business in April 1989, I took over alone in April 2008.

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

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

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.

Hi Tyno, we will reach out to you shortly. Thanks for your interest.

Appreciate the compliment Mike. I am sending you a message now.

Here's a new way to look this trend. Imagine you're the customer and you walk into a computer store to get your computer fixed. The store clerk tells you that you need a new motherboard and the cost of the motherboard is $500 and the labor is $200. Now you go home and find the EXACT same motherboard available for sale @ $200 retail and shipped to your house within 2 days. You're a little upset aren't you? You feel like you've been taken advantage of. Because that's the feeling we get when we're the consumer. Is this fair? Not in the least. Everyone but the manufacturer and the guy selling it to you for $200, is having a really hard time dealing with this. But the manufacturer doesn't care, because he sells his product and the guy at online terminal doesn't care, you helped him keep the lights on. But the poor soul at the retail outlet is going to get his ear chewed off because he "ripped you off". Meanwhile he probably paid $325 for the same part because got it locally. Here's the way to eliminate that angst and customer anxiety. You walk into a computer store to get your computer fixed. The store clerk tells you that you need a new motherboard and the cost of the motherboard is $250, the labor is $400. Now you think the labor is a little high, so you call around and get similar labor quotes. Maybe you can find someone to do it for $350, maybe you get quotes for $450. But ultimately, the price of labor will reflect the facility, employees, and level of service you want to pay for. The internet (Especially Amazon) has completely ruined the price matrix on parts but what it will never do, is ruin local labor and skills prices. Why do you think Costco is so successful? Their entire model presents significant value to the end consumer, our model does not. We would better serve ourselves by standardizing pricing on parts like @bstewart mentions the HD industry does. Because then we don't rely on parts prices to make up the gaps, there are no gaps. Each facility prices according to overhead and service and the consumer experience becomes very streamline. Happy customers mean returning customers and referring customers.

Sounds like our shop... Are you hiding in the closet somewhere??

The real problem is your haggler is comparing apples to oranges. He talks about how much of a professional he is in comparison to you, and then uses the most ridiculous job to do it with. Cleanings. Cleanings for the automotive industry is the equivalent to getting your car washed and vacuumed, not even a detail wash and vacuum. To truly compare apples to apples, he should compare when someone comes in and says their tooth hurts. Then, diagnosing has to be done. Albeit, light in most circumstances. Xrays have to be done. Patient has to go in the chair and physically get inspected. Sometimes it's not easily visible on the Xray or in the visual inspection and he has to actually do something else. A professional in this field has to start with the basics each and every time. Interview the customer about the problem. Perform all the basic checks on the vehicle. Then perform basic checks based on the symptom. Then check for codes stored. Evaluate all of the above. Formulate a test plan. Execute said test plan. Mind you.... we haven't even started testing yet and at least 30 minutes have gone by, our non disposable scan tool was used, along with years of experience.

As the auto industry moves on into the modern age, repair centers all around the country are experiencing pressure with the tech world and our world colliding. We are all trailing nationwide franchises and dealerships that have endless resources working at their disposal. For most smaller auto repair businesses there isn’t enough time, money, or energy to attempt to constantly and actively secure the new business. We’re mostly worried about attempting to maintain the existing business we have, which has newer cars and increasing demands. Most of our time is now spent adjusting to the learning curve of advanced vehicle systems. However, that’s just a shop problem. The front office of your shop has its own issues to contend with that didn’t exist 15 years ago. Make no mistake about it, our industry is in the middle of a revolution and with 3D printing knocking at the door… the amount of balls to juggle are going to be considerable and it's all just getting started. Today’s auto repair businesses need to worry about the following: Location – Securing a proper location and the authorization to conduct business there over the long term ensures survival. Tools – Without the proper tools, we just can’t work on today’s vehicles. Training – Without the proper training, we put ourselves and our customers at high risk. Employee Engagement – Keeping your employees as interested in your success as you are is critical to the elements that keep people returning and employees from leaving. Employee Advancement – Providing an environment where employees know they can grow with your business, whether financially or moving up within the organization, is the key to keeping and securing talent. Marketing – This is the most complicated element in today’s world. It involves a mix of a strong web presence, good advertising ethics, social media profile, and following up with customers. Advertising – Can be expensive and very confusing. The best method to start is to get your feet wet with small budgets that keep your name in front of your potential customers, constantly. Software – Without good software, it is difficult to run any business. Good software is and always has been subjective. Our experiences indicate that good software saves you time and builds trust with your customers. Most importantly, it should work for you and not against you. This article originally published in CAR's News Section View full article

Could not agree more! In addition, most shops may not know that they are actually personally liable for installing those parts! There is precedent where the court will rule in favor of the customer and not the shop. The logic of the court is, "You are the professional, you installed it... you take responsibility." Even if the customer signs away their rights on the invoice... We are strongly considering the Costco model at our shop. Just trying to figure out the right way to make it work and not upset our already existing base.

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.