opsrex

The issue i had was with the OP opining that playing ball with the insurance company was somehow compromising one's integrity. My opinion is that it does not. Our customer is also their customer except they also have a legally binding contract with our shared customer. Since you do in fact use LKQ parts, obviously your integrity is not compromised when you do. Neither is mine. If we are talking about whether something is a smart business decision for the warranty company, that is another question. Usually the price difference on something like a used versus reman rack is so negligible, that it doesn't make good business sense to ship out a used one. But if the car in question is an exotic it might be a good decision. If it's a Taurus, probably not so much. But whatever the case, it's their call and my integrity is not compromised either way. Would I install a used window regulator? I recently had a warranty company scouring the country for a seat motor for a Mits Diamanté because the dealer wanted $1500 for one. If they had found a used one would I have installed it? In a New York minute. As far as quality of used parts, I agree. I would much rather use a new part than a used part. I would rather take name brand medication than generic, but my insurance plan calls for generic when available. If the terms of the VSC call for a LKQ, then as long as I am inspecting the part before installation, and installing it correctly, then my integrity remains uncompromised. You evidently feel the same way or you would not be installing used struts and have LKQ on speed dial.

I'm sure that I am alone in this, but I disagree with you on this. What most of us call an extended warranty is not a warranty; it is a Vehicle Service Contract and they are very specific in their terms. Every VSC I have seen specifies that they have the right to use a part of a Like, Kind, and Quality. This means that the donor vehicle should not be older than, or have more miles than the vehicle receiving the part. One of the biggest suppliers of used parts (having purchased Keystone) is even called LKQ and is publically traded. I am sure you can understand why they specify the right to use an LKQ part. If an engine goes out on a six year old vehicle with 75,000 miles on it, do you expect them to put in a new engine? Drop $5K on a Jasper reman? In order for them to do that, the price of the VSC would be priced so astronomically that no one would buy one. How much would your car insurance cost if replacement value equaled the price of a brand new car? How much would your health insurance cost if the insurance company had to pay whatever the doctor wanted to charge, rather than negotiated prices? As someone who advertises that I accept "Extended Warranties", I am OK with them supplying their parts. It does not "compromise my integrity". I am not the one insisting on using a used part, and I am not the one paying for the repairs. My job is to make sure that the supplied part is in good working order. If I install it and it does not work properly, I call the insurance company, have them send another one, and rebill them for the labor and power steeing fluid. Remember, the customer is the one who entered into an agreement with the insurance company. It is their obligation to have read and understood the terms of the contract. But they don't. They hear "bumper to bumper" from Plaid Coat Charlie at the car lot, and that's all they hear. Take personal responsibility for signing a contract without first reading it? Surely, you jest! Anytime an insurance company wants to supply an LKQ part, I always explain the options to a customer. In the case of a rack and pinion, I will tell the customer that their VSC will assist with $---.-- for the part, or they will supply a used one off of a vehicle with less miles than theirs, or I can install a new or remanufactured one if they would like to pay the difference. Very seldom have I had a customer choose to pay the difference. In almost every case they choose to have the used, LKQ part installed. I know what to expect from the insurance companies and I treat it like a game. If a customer tells me they have an extended warranty, when I blink, you hear an old timey cash register sound. I read their contract, and then go over the car "bumper to bumper" looking for things that the VSC will cover. Oil pan gasket leaking and the VSC has seal and gasket coverage? I will charge for the gasket, the RTV, the oil, labor and diagnostic time. Rack and pinion leaking and they want to supply the rack? No problem. Labor, PS fluid, and a half hour diag, thank you very much. I always tell the customer that the insurance companies job is to make sure that they spend as little on car repairs as possible and that my job is to make sure that they spend as much on car repairs as possible so that the customer gets the full value of what they spent on their VSC. The insurance companies are constantly sending inspectors out, but I stand behind every repair that we call in and we have a very low decline rate. That is how I make my customers happy and don't compromise my integrity.

I became a franchisee right before the economy collapsed in 2008, so I've never known any of the good times. I took over a franchise that had been horribly mismanaged for years. The previous franchise had managed to give both the shop and Midas a bad name. He had alienated the customer base because he had refused the recognize the changing demographics (shift from caucasion to African American with much lower disposable income). I've never known the good times that I've heard so much about. So, to answer the question, my margin target is 80%. Some things will swing it down. I will sell you tires if you insist, but there is a Costco down the road and they are welcome to the tire business. We don't hit 80% every month but we come close.

What are your margin targets? I look for 80% before mechanic labor and 65% after mechanic labor is factored in. To achieve the 80% before labor, I teach my writers one very important rule: When Ticket Total equals Cost of Goods times five, then Gross Profit will always equal eighty percent. (TTL=COGS*5,GP=80%). This is an immutable law of math. If a part cost $10 and you charge $20 for the part and $30 for the labor, then your gross profit is 80%. If the part cost $10 and you charge $0 for the part and $50 labor, the gross profit is still 80%. Yes, I know, you can't always apply this formula. If you go by a labor guide (we use Mitchell) the labor is what it is and you cannot ethically alter it without solid grounds. It also becomes a problem when you have an expensive part such as an alternator. If an alternator costs $150, you can't very well charge $750 for parts and labor and expect to stay in business. But what I teach my writers is that you can take the rule and use it as a guideline and then look at add-ons. In the case of the $150 alternator, I would expect to sell the part for $250-300 and usually about 1.5 hours labor. So if I sell the part for $250 and my labor is $150 (1.5*$100/hour), this is a total ticket of $400 which gives me a gross profit of 62%. This is well down from what my target it. If that is the case, they need to thoroughly inspect the vechicle and see if there are other services that they can legitimately recommend without raising the COGS. An alignment and balance ($125) has no COG but will bring my GP up 9 points to 71%. Still down from where I want to be, but it is much easier to make up the nine margin points between 71 and 80, than the 18 margin points between 62 and 80. I don't spend much time worrying about what the parts markup is, but I obsess over my margin. As a franchisee who has to give 10% back to the mothership, margin targets are hugely important to me. A $72K month at 65% (after mechanic labor at 15% is added in) is $46800 in gross profit. The same month at 60% is $43200; $3600 that could go right into my pocket. For doing the same amount of work. Anyway, my two cents. phl

I dropped RO Writer in favor of VAST shortly after buying a Midas franchise. I've had my ups and downs with VAST, but all in all, I am happy with it. It works well with Quickbooks, has a great inventory tracking function, and it is highly customizable (easy to put together packages). I have VAST integrated with Activant for catalog lookup and their OpenWeb program lets me order online from CarQuest, Pronto, USAutoforce, Worldpack, and AutoZone (last resort) without leaving the estimate screen. It works well, but I have hundreds of hours over the last 3 year tweaking it so that it does what I want it do. phl