Joe Marconi

Back in the 1990s, some shop owner's feared that fuel injection, 100 mile spark plugs, the elimination of the Distributor cap, rotor and extended fluid services would be our demise. But, that didn't happen. 

Now I hear many in our industry state that "There is no needed work on an electric vehicle, they are problem free." 

My opinion, let's not fall into thinking that the EV car will run forever of even for years without needed service.  The EV still has tires, suspension, brakes, and a whole new area of opportunities. It will be different, but there will be a need for the Automotive Technicians and for repair shops.

Your thoughts? 

On 1/24/2022 at 4:19 PM, Rich Young said:

Hello everyone! Essex Maryland here. Currently $109 and going to $114 on Feb1.  Still probably too low, but we are incrementally moving northward. 

I think to increase labor rates incrementally is a solid strategy. It gives time for your employees to get adjusted, and won't make a big immediate impact on your customers.  The main thing is to do the math, and charge accordingly. 

4 hours ago, xrac said:

The experts now say Masks don’t work unless they are properly fitted N95s. People wear cloth masked forgetting at the start that Fauci said we didn’t wear masks to protect ourselves but to protect others. The masks do not protect us.

For a while Indiana had a mandate from the governor for people to wear masks and practice social distancing. As far as I am concerned we are not the mask police and we don’t make issue whether people did or didn’t. Maybe I am wrong but that is the way I feel and I just throw that in.

Anyways we had a long time customer sitting in our customer area waiting for his car when a young lady with a very cocky you owe me attitude walked in the door without a mask on. The older customer proceeds to ask her where her mask was. She proceeded to tell him she didn’t have one and wasn’t going to wear one and that it was none of his business.

He told her the governor required it and it was the law. Then all hell broke loose. She proceeded to cuss the older guy out and to call him every name in the book. It almost got to the point of fisticuffs.

At that point my service manager intervened and told the young girl with her language and attitude he wasn’t going to work on her car that day. If we were to work on it in the future someone else in the family would need to bring it back. He also called the girl’s mother and told her that we would not work on the vehicle if the daughter brought the car back in.

The girl had the attitude that everyone should kowtow to her, she was the boss and we owed her. That she would just bulldoze her way over everyone. Now this individual wasn’t being as rude to staff as to a fellow customer but I think it is close enough to count.

Oh Boy!  There are some things that transcend business, and that human decency.   Why can't people just respect each other?  I tip my hat to your service manager. It's not about the mask at this point, it's about respect for others.  Let's get back to values, morals and ethics. Please. 

I think we know more now about this virus, and ways to deal with it. One thing is for sure, the lessons with regard to the economy and incentives not to work, will be looked out for years to come.

I too believe that it is a choice, not to be mandated.  Especially now. I am all for safety, but not to a point where common sense no longer exists.

In order to grow your business and maximize your selling price, you will need to remove yourself from the day to day operations. That does not mean you need to be an absentee owner, that's your choice. What I am referring to is this; if you are too invloved with the daily operations, you are too deep in the trenches.  You will not be able to work on all the things you need to in order to grow a more profitable business, and anyone looking to buy your business will have resistance. Why? No one wants to buy your job. 

Empower others to perform all the duties of running your company. Have clearly defined processes and procedures. You, the owner, will monitor and hold others accountable.  Trust me, by removing yourself from the day to day, you will find out that you will still be invloved in your business, but will have a more profitable business with a lot less stress too. And one that will be more attractive to a potential buyer. 

Stayed tuned for more posts on Exit Strategies. 

On 1/23/2022 at 12:45 PM, Jerrys Auto Center said:

Happy new year all!

Browsed through this almost 4 year old thread and very happy to see rates trending in the correct direction.

Located in a working middle class in Long Island, NY…

1/1/22 raised labor rate from $137 to $153. 

Nice to see! $153.00.  And I agree with you, it is great to se that rates are trending in the right direction. Long over due.  

3 hours ago, risingsunmotors said:

We are in College Park Md, labor rate is 126.63 and will go up 4.00 per hour each quarter as we did last year

Many shops have adopted that same strategy; small raises throughout the year. It's a great way to keep pace without a huge impact. 

11 hours ago, Thewizardsauto said:

Hi I own an auto repair shop in Arkansas. We do a lot of work for used car lots. I am just curious if anyone else does this as well what’s the average labor for them. Good and bad experiences? I have a total of 5 car lots we rotate on fixing for the week and it’s a never ending cycle of cars. Some lots beat us up on price while others do not any one have tips from experience?

From my experience, used car companies want to do minimal repairs and want deep discounts. Too many short cuts are taken.  I stopped working for most because I did not want to compromise the quality of my work. 

4 hours ago, Robert Williams said:

We just raised our rate January 3rd. Our former rate was $129. As of December 12th, current US inflation rate is 6.8%. Just to maintain past profitability, we needed to raise our rate by a minimum of 6.8%. Add to that rising costs from suppliers, the need for new equipment for diagnosis and repair of new vehicle technologies, and the ever growing cost of hiring, training, and retaining techs. So $129.00 x 1.068= $137.77 to cover inflation. The additional cost increases are a little more difficult to quantify, so we rounded up to $141.00 for the moment. We'll revisit this in six months once we have some historical data on which to base our decision.

Wow, you  did the math! Nice, great job! 

15 hours ago, Hands On said:

I always add at least an extra day to big jobs, often bill at a higher rate. I also include options, for example used engine, I will have an extra optional job called re seal. 6 hours to re do all gaskets on the used engine. This way the client understands if he declines that job, we are not going to cover his oil leak 6 months from now. If they walk because the price is too high I am pleased as punch. If they decide to move forward I am still profitable that week.

You bring up good points. All too often, if not all the time, the labor guides a  not even close when it comes to big jobs. 

This is a great topic, and one that every shop owner must understand.

We do not work for the insurance companies, we did not sell the policy to the customer, and we will not undermine our work and submit to the insurance company sub-standard policies. 

Let's be totally transparent with our customers, and let them know upfront what to expect. And that most likely THIER insurance policy will probably not pay for the entire repair. 

Let's all stick together when it comes to insurance companies. 

It is amazing to see that so many shop owners are increasing their labor rates,. Long time overdue. 

One thing I want to bring out: When it comes to the customer, we need to focus on value, not price.  We need to bring the attention to what we are doing in terms of value the customer receives. 

In my experience, whenever a customer questioned the labor price or price on parts, it was due to either it was the wrong customer, or I did not do a good enough job a conveying the value for what I was doing. 

One last thing, in the sales presentation, promote the benefits, warranty, and value.  Price is the last thing the customer hears. And don't break up parts and labor, one total price. 

3 hours ago, Rich Young said:

Thank you for the feedback. I am from outside the industry and purchased an existing repair shop in March of 2021. I have upgraded the Mitchell package to include the CRM and texting feature, however still feel it is lacking. One of my goals for 2022 is to upgrade our technology to something that has better reporting, includes DVIR's and can help with efficiency and shop flow. 

Best of luck to you, there is great opportunity in the Auto Repair business today.  Perform your due diligence and take your time.  Make the best choice for you.  Happy Holidays!

Do you have an insurance broker? 

There is no system that has all the features that all your needs, however, there are newer companies that are making an effort to bring newer technology to the modern repair shop. My advise is to create a list of all the companies and then ask for a demo, and see if you can actually use the system hands on. This is a big step for many shops that have been in business for a while. 

3 hours ago, CTC said:

Easiest thing to do is use a multiplier & see if there is any blowback, example—each hour multiply by 1.25. Try for month or so, then go to that. Then you can give your guys cost of living raise. Don’t go slowly broke, it’s pointless, sell or quit prior to. Make business decisions based on needs not on what community says. We are ultimately like the coroner, no one comes to see you because they are having a good day!  Stop worrying about the internet, they aren’t growing mechanics/technicians on trees. These schemes are short lived, it’s someone trying to make a quick buck. At the end of the day, be a business owner, know what it takes, get some training if needed! There are some free resources available, all you have to do is READ! 
 

We all are concerned with the future but, all we can control is today, tomorrow will be enough trouble on its own without anyone worrying about it.  

Wise words. 

16 hours ago, JerryK said:

We are in the Dallas area... Our labor rate is currently $175 for domestic, $195 for European and $245 for pre-1971. We expect to raise rates again in January 2022.

This is great to see.  One point I want to make; we are seeing more multi-tier labor rates with shops across the country. For many aftermarket independents, they do a variety of different makes and models and skill levels. As you can see in this post, EURO and pre-1971 cars command a different labor rate.  

Shop owners, you need to look at your business model, do the math and ensure that your labor is in line with what YOU NEED to earn a profit. 

Amazing posts! Let's keep this going! 

1 hour ago, alfredauto said:

2 topics here I'd like to touch on. 1st up is technician shortage. It is real. It doesn't matter what you offer for pay if the guy doesn't want to work or loves his boss he's not working for you. Every shop is hiring. I don't know of any that aren't. 

2nd is shop labor rates. I'm in the poorest county in the state and my rate is over $100/hr. Being the nice guy wearing out my body and equipment for next to nothing is not an option. Basic business I add up all my expenses and divide by working hours and came up with a number. Add for the bad word profit and depreciation and I can't understand how anyone is under $100/hr in today's world and staying in business unless they are under insured, running into the ground. or independent wealthy. 

Great points, great post!  I agree with you.  Let's hope more and more shop owners change their mindset. 

Let's all keep in mind that the average age of car in the US is 12.8 years old. And the majority of cars being built today are traditional internal combustion engine cars, so we will have plenty of work well into the 2030s and beyond.

The shift to EVs and more hybrids will happen, so prepare and train.  But, the world is not going to shift overnight. 

1 hour ago, Hands On said:

Another thing you could suggest to your friend, if he is really hesitant on bumping the hourly rate, many RO systems have a built in labor hour adjustment. I have mine set to 10%, so if a job bills one hour in the guide, the RO system writes it as 1.1 automatically.  I have no problem justifying this as all my guys are instructed to take extra time to make sure everything is done 110%.

Fear of raising prices and labor rates are real.  This is a great suggestion.  For those that hesitate, go up slow, a few bucks at a time, each month.  Test the waters. You will find that no one will notice.

Here is a real life story.  A good friend of mine on New York was fearful of raising his labor rate because of push back from his manager and service advisors. They said that in these times we would lose customers.  I suggested he raise his labor rate $4.00, but not tell anyone. They didn't notice the increase!   Point here, it's a mindset. 

First, let me state that you need to treat every customer as if they are royalty. However, your existing customers have a relationship with you. They trust you and return to you for a number of reasons.

The key to growing a business is to get NEW customers to return.  Survey after survey shows that customer retention greatly improves with each vehicle visit. So, you need to give your new customers a compelling reason to return.  Plus, you need a marketing plan that reaches out to your customers to keep your business top of mind. 

What marketing strategies to you have that makes a great impression on new customers and makes them wanting to return?  

I really do believe all this conversation on this topic shows the importance. Hiring qualified people, and charging what we need and deserve are two hot issues today.  Now, more than ever in my 45 year career have I seen such a issue have more relevance. 

Lets keep this up, work together, think together and share together, and I know we will raise the bar. 

22 hours ago, John Shanderuk said:

I'm charging $169.00 and keeping $17 an hour just for myself on the entirety of the labor hours of all techs when I do payroll, that's how I am paying myself. So if there are 200 billed hours I get paid $3,400. So figure out how much YOU want to get paid and go from there kind of backwards thinking but I got tired of being pooch screwed. Got tired of insestual labor rates (to want to look to those within your industry as your sole source of inspiration and best practices for building your business). I work hard for my money, I'm actually going to work now for awhile (Saturday) so I should get paid. Mike drop...

Sorry about the rant!

$169.00. Proud of you. You have obviously done the math and willing to charge what YOU need to make a living, invest in your future and pay your employees the wages they deserve too. I tip my hat to you too. 

Let us all have the will and courage to charge what we need to, and not worry about those that are not willing. YOU will be profitable and in business, the others will not. 

Expenses are going up all around us.  To be honest, it's a matter of survival. However, for too long too many shops have merely survived.  It's time we thrive.