Transmission Repair

They make QuickBooks look cheap, don't they?

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Never advertise without tracking numbers. That's the only way to measure your advertising effectiveness. https://www.convirza.com/

Specializing depends wholy on your market and business location. We were a transmission-only shop. Big Ticket City. However, our location enabled that thinking. We were down the road (1.5 miles) from a huge 12-new car dealership group Auto Mall. No matter the brand, people would go into the dealership only to hear from a dipshit service writer a return call that they needed a transmission for $XXX,X.00. The car still drives and all 4 wheels are on the ground. The service writer hears "let me think about it" or "let me talk to my husband" or some variation thereof... and the customer starts to call around. We're the closest transmission shop around, so they call us next. The rest is history. We've paid thousands, over the years, to our towing company to tow vehicles out of new car dealerships near us. Bottom line: service advisors can't sell big tickets. End of report.

I used QB 100% and didn't have an SMS because it was way cheaper. It took a lot of hours to figure out how to design estimates, invoices, reports & more, but after I got a grip on QB, it was all downhill from there. I ran QB in parallel with our SMS for 2 years just to get the hang of QB. It took me almost 2 years of learning (part-time.) The learning curve is atrocious but pays off in the long run. At least I'm not married to some mega-buck SMS program for ungodly monthly payments that never end. Screw that. We were paying (2015) around $700/yr. for annual updates, including payroll files. That's less than $60/mo.!!! BTW, QB did all of our payroll, too. No matter what you pay, just figure it in with the cost of doing business.

There are multiple reasons for the seemingly high productivity. We would do the same repairs day in and day out. A technician can't help to get more proficient over time. Unlike G/R, we didn't do very many 1-off repairs. I trained my counterperson or manager to spot difficult jobs and 1-off repairs. It was a collective mindset of everybody in the front office. The most 1-off repairs we would get were the HD/High-Performance jobs in a chipped vehicle. Some novice would chip their truck/car and the first thing it affects is the transmission because it can't handle the extra power. Those types of jobs took much more time and had a high probability of us seeing the vehicle again under our warranty. I would increase billed hours by 2 or 3 times to cover the extra time and risk involved. A "nearby competitor" on jobs like those was ATS in Colorado. They sold a lot of units that would occasionally come into our shop. Their prices didn't include installation or fluid. Check out this unit for a Dodge Ram diesel: ATS 68RFE Diesel Another, but less apparent reason was our production contest. We had a shop meeting during the lunch hour every Tuesday where we supply lunch. During that time, I would write hourly labor totals on the whiteboard for each employee. Although they were paid by the clock hour, we kept a total of billed hours for each employee. There was no "prize" for winning other than the prestige the winner would enjoy for the week. Lastly, we had a very well-equipped shop. The three high-performance pieces of shop equipment we had were 1. Nustar car pusher. 2. Ten FWD car dollies. 3. Ten FWD engine hangers. Other small things increase productivity, but their impact was too small to mention.

I have to add about our labor times. In a transmission shop environment, it was really unusual for somebody not to beat the billed hours time. That goes for both the build time and the R&R time. As an example, if a technician works 40 clock hours, the billed hours usually ran somewhere in the range of between 50 to 60 hours. That's between 120% and 150% efficiency. Technician efficiency was not something I worried about and rarely checked. New recruits were the only technicians who couldn't do better than billed hours. The biggest problem I encountered with technicians was attitude-related. One bad apple can turn into a cancer. That happened to me once with two new hires. Perhaps I'll post the letter I wrote to one of them sometime.

You're right, 60% gross profit is what we're after, and 20% net profit. We didn't have a problem paying taxes because we included it in our overhead expenses to keep from spending it on something else. Nothing produces stress like unknowingly spending tax money on something else. We were $125/hr. on labor (2015, highest in our market area of SLC, UT) and 100% markup on transmission-related parts. Very few general repair parts could we do 100% markup. Lucky for me, my wife is an accountant and business partner. One year she "rat-holed" $125K unbeknownst to me. Another year, the state of Utah put us on monthly (not quarterly) sales tax payments because we went over the $15K quarterly threshold limit. We were experiencing explosive growth at the time. We were a very small (3K sq.ft.) shop with only 4 lifts, but we produced the most work of any transmission shop around. ($1.2M/yr.) This was mainly due to the fact we didn't do general repair like the other transmission shops did. We stuck to the big ticket repairs like transmissions, transfer cases, and differentials. Minor work to us was transmission service jobs and most leaks. The other variable was the high traffic count of our location. We were right on I-15 with a daily traffic count of 235K/day. Our front property line was only 90 feet from I-15. We didn't have a big problem with production and efficiency mainly because I was a tool and equipment junkie. One year I bought a valve reaming station for valve bodies. Everybody was concerned it would slow down shop production. Some really griped and complained loudly because it was a lot of extra work and didn't understand why I wouldn't buy valve bodies. Three months later, everybody had warmed up to the idea. Yet nobody complained when we installed an overhead ATF reel with a 50-foot hose or started buying ATF by the 330-gallon plastic totes. I paid everybody hourly so that they would have a steady income they could depend on. Everybody liked it that way, especially the employee's wives. (Happy wife, happy life.) I've since retired but occasionally miss the shop. I thought I'd never make enough to fully retire. Speaking of retirement, I'm like Joe in that I never made enough to retire with the sale of just the business ($330K). I only semi-retired. It was only after the sale of the shop's real estate ($2.3M) did I make enough to fully retire on. I first learned this from Joe and he's absolutely correct, at least that's my experience.

I find it amazing that nobody specifically mentions a P&L statement. For our shop, we would look at the Profit & Loss statement to not only know our profit margin but to also calculate labor charges and markup on parts. We are a transmission shop that has only 4 numbers to tell us if our labor & parts are priced correctly. For us, it works like this... 20% of sales should be parts, 20% of sales should be labor, and 40% of sales should be overhead, leaving 20% of sales as profit. If any one of those 4 numbers is off, we either need to adjust our pricing, look at the number of warranty claims, or shop efficiency/productivity. Those 4 numbers tell me everything I need to know about our prices and profit margin. To me, it's not as complex as some shop owners make it out to be. If anything is below target, we adjust our prices accordingly, start looking at shop efficiency, or look for underpriced estimates. It's only as hard as 4 numbers and being able to rationally diagnose problems that affect our numbers. Just look at your P&L statement.

For most shops, the shuttle driver position is underrated. Nothing else could be further from the truth. The shuttle driver needs to know and feel he/she is an integral part of the shop operation. The shuttle driver’s job is to both make the customer feel comfortable and to glean information and snafus about our business operation. The pluses, and the minuses, if you will. Don't make it sound "forced" or like "you're just doing your job." Use regular conversational English. At no point should the customer feel like he/her is being pumped for information. That would destroy the value of any information we do collect. All of these talents can be taught in-house. However, training time for this training should be set aside, more than just general conversation. To reiterate, make the shuttle driver feel he/she has an important part in the operation of the shop/business. That is key.

The author of the article is Editor Chris Jones. He did not provide a link to the survey. I'm guessing that's an internal document for Ratchet and Wrench magazine. All I have is a link to the article. https://www.ratchetandwrench.com/articles/13071-numbers-preferred-social-media-platforms

I bet he and his brother-in-law aren't on the best of terms anymore. His brother-in-law thought we were overcharging. (If they want too much for a pinion seal, I wonder if they didn't do the same on the transmission?) So much for the do-it-yourself pinion seal job.

No apology needed, Victor. I have an "overcharging" story for you that might smooth things over. I had a customer with some bad luck. His wife's transmission went out and 2 months later, the transmission in his Dodge truck took a dump. In less than 90 days, he had over $6K in unexpected transmission repairs. His truck also had a pinion seal leaking in the rear diff. I called the customer to get the additional authorization for $300 and he declined. His brother-in-law said he could fix the pinion seal leak for $50 bucks. So, we did just the transmission and noted on the repair order that the pinion seal was leaking and we wouldn't be responsible for low fluid damage to the rear diff. He paid the bill and left. Two weeks later he calls to get his truck towed in. Our manager took the call and had no idea we had worked on the truck before. As it turns out, his pinion nut had come loose and slung the rear driveline out of the vehicle. The damage was extensive. So much for the "brother-in-law pinion seal job." Take a peek...

You need to go back through this conversation and read ALL of what I said. Just as an example, I said: "Rethink your business model. If you are in or near a big city on the coast, you may not want to eliminate Euros. They seem to be over 10% in those locations. However, we did not turn Euros completely away. We are a transmission repair facility and many specialized tools we buy are for a 1 or 2-time use only. We have to pass those costs on and is why we price European units so high when compared to domestic transmissions. Because of that, we did few European vehicles. And without exception, they were always a hassle." I agree we need to improve the image of our industry. However, I don't believe pricing needs to be in the discussion. In my opinion, the vast majority of automotive shops UNDERCHARGE, not overcharge. Nobody is holding a customer hostage when giving pricing information. It's always a negotiation. Watch a few episodes of TV's Pawn Stars and you'll start to get where I'm coming from.

Great webinar!

A different topic but, here's a local diesel shop in my area that was made to be "the example heard around the world." UPHE Sues Diesel Brothers

In 40 years in automotive, I've never had, nor know anyone, who has had an OSHA inspection. I've heard they do happen. Or... perhaps I and my shop owner friends are just lucky.

We're a transmission repair shop and slow Februarys were expected. We still did the normal volume of major rebuilds, but the minor stuff, or elective stuff, would go away in February. It was highly unusual if it didn't. We would get very few leaks, noises, vibrations, and transmission services. I've tried for years to make sense of it and find a cause. This is the only thing that made sense to me. People are straining to pay their credit card bills for Christmas in January. I just figured that would make most people more austere in February and they would curtail spending on things they absolutely didn't have to have. I don't know if this is really true or not, but it's the only thing I could come up with that made any sense to me. February was a short month to boot and I always expected a slowdown.

While I do like EVs very much, they aren't going to "take over the market" any time soon. Total volume of aftermarket parts and service on EVs will remain at less than 10% until at least 2030. Most repair parts for EVs will stay in the realm of the OEMs. However, most maintenance-related parts and fluids will be available from the aftermarket. Many shop owner/technicians rush out to get the "latest and greatest" in tools and equipment. I also believe that many of those same shops will rush out prematurely to procure EV and ADAS service equipment before the aftermarket can justify the cost of such equipment. To me, the aftermarket demand would have to be 15% or more to justify such an investment. Ideally, a cost/benefit analysis would be in order. I remember the industry's transition from carburetors to fuel injection and the length of time it took, 15 to 20 years. The transition to EVs will take a similar path. In our local (SLC, UT) area there is a shop that specialized in nothing but carburetors named Carbmasters. As carburetors faded away, they had to shift their business model to general repair, yet kept the name of Carbmasters. If you think about it, any major shift in major automotive technologies takes about 15 to 20 years for adoption or transition. EVs will be the same. In closing, you can conduct a survey of your existing customers and ask them how soon (if ever) do they plan to eventually get an EV. The results of that survey will help with the cost/benefit analysis and the information from your customers is free.

I never was good at predictions. I have a saying, "Forecasters were created to make fortune-tellers look good." So be it. I did, however, run into a couple of 2023 prediction articles in Motors. Take a read... https://www.motor.com/2023/02/looking-back-on-2022-and-ahead-to-2023/ https://www.motor.com/2023/01/what-does-2023-look-like-for-the-automotive-industry/

I wholeheartedly agree that the service advisor would speed up the process and build value by doing those tasks. It also help to build a better relationship and rapport with the customer. Great idea I can't improve on. Enough said.

This wasn't really a problem in our shop because of the low volume of vehicles that came through our shop. Yes, our service advisors had the same whirlwind of tasks, but with only averaging 25 tickets a week, it was not overwhelming. Conversely, general repair shops will write 25 or more tickets a day. I can easily see how all the tasks could be overwhelming. I would however, still help out the service advisor in a background capacity. What I mean by that is that I would help doing tasks that didn't involve speaking to the customer. We had a rule in our shop that "Whoever first talks to the customer, stays with the customer." meaning the customer never ever talks to more than one person unless it was a complaint of some kind. I would help mainly road testing and diagnosis. I also, from time to time, I would be helping out writing estimates and ordering parts. I would occasionally do those tasks to set an example for my service advisor in a "monkey-see, monkey-do" atmosphere. In closing, I do agree that if a service advisor is overloaded, it will certainly hurt sales.

This is a great survey taken from shop owners by Ratchet and Wrench magazine. Amazingly, 17% of shops surveyed don't harness the power of social media. By a large margin, shops prefer Facebook.