Customer's buying their own parts

[ScottSpec]

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

[Guest]

4 minutes ago, ScottSpec said:

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

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

[ScottSpec]

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

[Guest]

14 minutes ago, ScottSpec said:

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

Scott

14 minutes ago, ScottSpec said:

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

Scott

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. 

1 hour ago, ScottSpec said:

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

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

[ScottSpec]

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

[ScottSpec]

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.

[rpllib]

I too appreciate the conversation. My numbers are a little different for how much I would have to increase my effective labor rate to achieve the same gross profit dollars from the work performed year to date. I suspect most shops will have some degree of variance based on sales mix and focus. I used the following formula

 

Parts gross profit dollars generated for the year/ divided by/labor hours billed for the same time period. I would then add that number to my current effective labor rate to find my new effective labor rate goal, if i was going to use this straight up approach. My numbers would require a $70 increase in effective labor rate, give or take. This would involve doubling my "door rate". I would likely have to split my three profit centers (oil, tires and service) and come with something different for each. Still not all that hard. 

 

I used before tax numbers, so the tax savings to the consumer would be $22,000 ($3.14 per work order on average) in my case and we would still owe $24,000 on parts at cost. We are a "tax on parts"only state. 

 

I suspect the more likely formula for us is more like the fleet discussion earlier is this thread, where we would have a low flat parts margin of 15% or so. This would reduce our required effective labor rate increase to closer to $60. Still pretty easy to manage and 15% margin can easily be applied to everything we sell including tires and dealer parts. How simple would that be, 1 matrix table for all. 

 

The modern consumer is more and more like a fleet manager. They have easy access to lower cost parts and supplies(of the same quality, if they chose), just like fleet managers have had for years. 

 

There will still be challenges for early adopters. Some current jobs with low parts gross profit dollars associated will increase significantly. National fleet and extended warranty companies will require some education. We will be need to be very good "educators" for sure.

 

We will have been in business 38 years May 1

 

Thanks for the conversation.

 

Randy Lucyk

Midas Kalkaska

[ScottSpec]

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

[ScottSpec]

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

[Guest]

12 minutes ago, ScottSpec said:

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

I hate to sound optimistic haha but they've been predicting the end of the independent shop since the invention of H.E.I. Every step of the way shops have figured out a way to repair things and adapt. I dont miss the unprofessional mechanics and I dont miss grease up to my shoulders at the end if the day. Maybe there will be less volume but maybe the average ticket will make up for it. I've noticed alot more respect from people as time goes by and with respect comes the willingness to pay for what we do. 

 

[ScottSpec]

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      

 

[ScottSpec]

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    

[newport5]

What a great series of insightful posts. SO forward looking!

Maybe a bit off topic … but …

Can you please elaborate on: “by year 7 I started to adapt my selling to advising.” I never liked the idea of “selling” the customer (on value and safety) re a recommended repair or maintenance item. It either needs it or it doesn’t. I take the “advising” one step further. I TELL them what they need – what they need now, what they need in the future and “advise” them on things they could do now or in a month or 2 or more.

Nobody likes to be sold.  And they don’t want to make more decisions in their lives.  If you give them 2 or 3 reasons to encourage them to say yes to 5 items, that’s 10 to 15 things to think about. I believe the trusted service advisor/friend practically makes that decision for them.

[ScottSpec]

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    

[newport5]

I neglected to mention my most hated term, upselling. That should be banned from ANY auto repair use – ever!  It sounds as if all the shop cares about is a better ARO, not a better repair or better customer relationship

You said:

“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.”

I’ve seen the same thing! I believe it’s because we/you are so darn honest. And you are looking after their budget, while still making a profit for you

You said:

“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.”

And positive effects for the shop because there is no fear of calling the customer about their additional work, because you are taking care of them, not selling them. And they’re your “friends.”

What you said here is beautiful !!!

“In short, we don't sell anything.  People pay us for a service and we take it seriously.  Using our 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.”

Re relationships, you are now dealing with friends, not customers. And they know you have to make a profit – they have to make a profit for the company they work for.

[Love The Biz]

On 12/5/2018 at 8:05 PM, ScottSpec said:

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

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

[rpllib]

Today, I came across the following screencast that I made earlier this year for my staff and my suppliers.

It seems like it fits into this conversation somewhere. Click on link to view

https://1drv.ms/u/s!Ap7ibKYluQae7VhVMw958evEYhzW

Randy

[ScottSpec]

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

[Love The Biz]

That seems somewhat like how the parts matrix should be, or pretty close to how I already do it, but off a bit.  So if you bill actual time, versus book time, how then can you give an Estimate before the repair?  If you have a Mechanic who don't routinely make book time, or perhaps run into a snag, removing a part, you already quoted the job?   Nothing worse than calling those folks back for more money.   And even worse, if they arrive and your bill is higher than your estimate.   I have never really had an issue , explaining mark up on parts.   I tell them I could never get parts that inexpensive as they are online.    I know that Repair Pal, is not our friend.  Folks are looking that up, immediately after sending them the DVI.    Also now with Napa's Estimator as well.  But folks understand I am covering that part, for whatever amount of time, I advertise.   

[Love The Biz]

This is matrix I have been using for years. 

[Top Dog]

I got around this problem by opening a parts store. I found I was misssing a segment of my local market of the DIY guys. So now they buy parts from my store and occasionally come to my shop to have them installed. Some people understand it is the same business others think they are saving a buck. What I do is tell them I will take 10% off the labor if they buy the part from my store and have my shop install it. The store drives traffic to the shop.

I did this because I am located in a rural city so it works for me. I am not sure this would work in a larger city.

[CAautogroup]

What about oil changes? Do you guys allow customers to bring their own oil & filter and just charge labor?

 

We have noticed a demand in this, however, most customers are bringing the incorrect weight of oil (calls for 020 , supplies 530). How would you handle this? Document, decline service...? 

[Guest]

1 hour ago, CAautogroup said:

What about oil changes? Do you guys allow customers to bring their own oil & filter and just charge labor?

 

We have noticed a demand in this, however, most customers are bringing the incorrect weight of oil (calls for 020 , supplies 530). How would you handle this? Document, decline service...? 

I would let them bring oil and a filter as long as its correct. I had a problem once where a customer asked for something cheap. We did what he wanted trying to please him. When it all went bad the lawyers said it doesnt matter that the customer asked for it. We are the professionals and should have saved him from himself. 

[ScottSpec]

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

[samgoto96]

 We have been trying to give our customers the best local price on parts possible. We changed stuff up the first of the year a little bit but here is our basic price matrix; 200% on $0 - $5, 150% $5 - $10, 140% $10 - $100, 130% $100 - $750, 125% $750 to $2,500, and 120% on anything over $2,500. Our shops labor rate is $94.78 an hour.

 If someone is paying with cash thay get a 7.5% cash discount, and a 2.5% discount for paying with a check, the discounts are applied on both parts and labor.

 This has allowed us to stay competitive on pricing with the parts stores and all of our OEM parts are cheaper than they can go to the dealership and buy them for.

I will also note here that we are a small diesel repair and performance shop, primarily working on light and medium duty diesel pickups, we also have tax on parts and labor here in Wisconsin.

 We are currently trying to find the best shop software to meet our needs and are having a hard time finding software that does this. It seems like everyone either has great invoicing options and not very good parts ordering options or vice versa. We would also like a Time clock and vehicle inspections Incorporated in the software we decide on.

[dfrisby]

We recently had a customer ask us about installing his hood release cable that he already bought online. I was still a bit irritated by a customer that bought tires online to save $23 from our price and then ask for us to install them, which we did. I almost told the hood release cable guy no. Turns out the reason he found out about the problem with the hood release cable was because his check engine light came on. Between the catalytic Convertor and the timing chain tensioners and other issues we found on the vehicle that he had us repair, the invoice was just over $3,500. Changed my attitude about customer supplied parts for now anyways.

[TheTrustedMechanic]

@dfrisby You can always find a reason to install customer supplied parts and examples of how it works out.  But in the end, it is nothing but a problem. 

What if this customer, after you installed the hood release cable and then quoted the other work, he asked to buy those parts and have you install them too?  Where does it end?  When I first opened I thought I would win customers by agreeing to install their parts the first time.  I can't remember the only customer who converted from parts supplied to parts buyer. 

With that said, I will install certain parts for certain customers, such as the one who wanted a back-up camera and monitor that was a gift from a family member or the fellow with the 1960 Thunderbird that needs a wiper switch that he has already purchased.  But the person who calls up and asks, "How much to install tie rod ends?  I already bought the parts." is a BIG no!

[ScottSpec]

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

 

[dfrisby]

@TheTrustedMechanic I agree. This was a customer that I've done work on stuff before. In this case, I supplied all the rest of the parts. If he would have suggested buying his own after we did the diagnostics, it would have been a big NO. In this particular case, I think he was going to attempt his own repair but couldn't figure out how to open the hood. It's a case by case basis, and for a customer we've never done work for before, it would be a NO.  Also I see very little liability in a hood release cable. Especially since his was actually an OEM part. 

[TheTrustedMechanic]

@dfrisby I agree 100%.  In your situation, with this customer, I probably would have done exactly the same.

[dfrisby]

We are up 26% year to date in gross sales, which is great after 3 years being fairly flat. The number on my books I find surprising is we are up 81% Net Income. We eliminated a salary service writer that wasn't pulling his weight. My wife filled in part time there, and I put in a few more hours keeping up with the work orders. and after a year we replaced that service writer with one that is on hourly plus a commission. I'll never have an employee on salary again, and there will always be at least a portion of their pay based on our sales. Amazing the difference a pay structure with incentives does for employees.

 

[samgoto96]

2 hours ago, dfrisby said:

We are up 26% year to date in gross sales, which is great after 3 years being fairly flat. The number on my books I find surprising is we are up 81% Net Income. We eliminated a salary service writer that wasn't pulling his weight. My wife filled in part time there, and I put in a few more hours keeping up with the work orders. and after a year we replaced that service writer with one that is on hourly plus a commission. I'll never have an employee on salary again, and there will always be at least a portion of their pay based on our sales. Amazing the difference a pay structure with incentives does for employees.

 

 Our employees have all been on a flat hourly rate. How do you deal with the techs on hourly plus incentive? I am interested in hearing opinions on this topic. I always thought that the base hourly rate with incentive somehow worked in would always increase workflow / productivity. The only issue that I see is how do you deal with warranty work?

[dfrisby]

23 minutes ago, samgoto96 said:

 Our employees have all been on a flat hourly rate. How do you deal with the techs on hourly plus incentive? I am interested in hearing opinions on this topic. I always thought that the base hourly rate with incentive somehow worked in would always increase workflow / productivity. The only issue that I see is how do you deal with warranty work?

My techs are flat rate. My Service Writer is hourly plus a commission. With Warranty work, it depends on the situation. If it's something that returns because of a tech, then that tech ends up doing the warranty work without time added. If it's a parts failure, I end up paying the tech twice to do the work.  If I have a different tech do the job for some reason.... then I pay them the hours whether it's a parts failure, or a tech failure.  Not getting paid to do the job a second time is the motivation part of doing it right the first time. If there is any question of blame, my tech get's paid. Using this method has kept my techs accountable for their quality of work at the same time as paying flat rate keeps them accountable for their efficiency.  I tried once going to a straight hourly pay structure and found quickly that a tech would rather make $28 an hour sweeping the floor and polishing the wrenches than fixing cars quickly and efficiently.  Billable hours dropped almost immediately and without me micro managing their time, I just couldn't get the production needed to stay in business.  I also tried an hourly with a smaller commission, and still found that a couple of the techs that could survive on just the hourly would be here 40 hours a week and only book 12 to 16 hours.  Went back to straight flat rate, and my shop might not be the cleanest in town, and the techs tools might not be blindingly shiny when their drawers are opened, but the production that keeps the shop profitable and open is there. 

[ScottSpec]

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

   

 

 

[ScottSpec]

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

 

 

  

  

[ScottSpec]

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

 

 

[dfrisby]

I worked as a tech on flat rate. I worked as a tech on hourly. And I worked as a tech on salary. For me, I always preferred flat rate.  On hourly, as soon as I hit 40 my employer wanted me out of there. In order to earn more I would have to find another job. Of course I am a work-a-holic and see 80 hour weeks as a part time job. On Salary, it would have been fair pay for a 40 hour week, but my employers were never satisfied with me only putting in 40 hours. It was 60, 70 and sometimes 84 hours a week. On Flat Rate, if I wanted or needed to earn more, my employer was thrilled if I worked around the clock.  Currently I have a mechanic that's been with me 3 years tell me he would Never go back to hourly. He comes in at 8:30 when we open, and is usually out of here by 3:30 or 4 every day.  He busts his butt the entire time he's here, but at 7 hours, he really is done. Even if he stayed another hour, it would NOT be a productive hour. I work with that and hold no grudges because he's flat rate. Of course I also pay significantly higher than even dealers per hour for my techs. I don't have health insurance, 401k's or paid vacation.  I'd love to provide all that, but then I'd have to cut his pay. He doesn't want that.  I think just as every shop owner has different needs and reasons to operate however they do, every tech has different preferences. Recently I had to let a tech go. He only worked for me a little over a month. He'd get 2 days in good in the week. Show up 3 hours late 2 days a week and hardly get anything done while he was here those days. Then complain about his paycheck on payday.  If I have a tech short on hours for a week (usually from a job running over the weekend), I often pull hours from the following week so he still has a livable wage.  After doing that week after week and having overpaid this particular tech close to 50 hours in a month and a half, we had to have a separation of ways.  He'll never make it in the flat rate world and that's ok. I'd never make it paying him straight hourly or salary with performance like that.

[DUFRESNES]

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