How's Your Business?

A Picture of the Service and Repair Industry

2008 'How's your Business?' Survey Results

Business Profile || Owner Profile || Staff Profile || Sales ||
Customer Profile || Marketing and Advertising

An Analysis of the Mechanical Sector
by Robbie Addison

A popular word in 2008 was change. People were restless and businesses were struggling. A slowing economy, rising energy prices, and the Wall Street roller coaster made the majority of people want to hold on to their wallets.

The independent mechanical service business was not immune to these trying times. Rising fuel prices alone had a huge impact on consumers and businesses across the country. Fewer people were able to buy new cars and many dealerships were forced to close.

Even though vehicles are built better and break down less often, successful independent mechanical service businesses did not view this negatively. They adjusted their businesses to sell maintenance to offset the lower number of repairs. In addition, more shops made the decision to charge for diagnostic service instead of offering it for free.

These shops realize that people are keeping their vehicles longer and will be more willing to make the investment to keep their vehicle safe and dependable. In addition, consumers are realizing that by choosing not to invest in routine maintenance, they may increase repair costs later. Although the car count may be down, the average service or repair ticket remained the same or higher.

The upside to dealerships closing is that it provides the marketplace with more qualified technicians. But these technicians come with certain expectations. They want the training, tools and information needed to do their job correctly. They also want to be compensated accordingly and work in a clean work environment. These items must be delivered to attract and retain the technicians needed to service and repair today's vehicles.

To stay competitive both now and in the future, independent mechanical service businesses will need to focus on training (see related sidebar, "Complex Cars Demand Well-Trained Technicians"). There will be more flex fuel, biodiesel, hybrid, electric and hydrogen-powered vehicles. More vehicles will be repaired using reprogramming procedures. Each business should require mandatory training for all employees, including the shop owner.

Fortunately, there are numerous ways to get the necessary training: Courses offered through Automotive Service and Repair Week (ASRW), which includes NACE and CARS, both sponsored by the Automotive Service Association; the Automotive Managment Institute; vo-tech schools and colleges; hands-on training; trade publication articles; Web-based training and chat rooms; CD or DVD; and the newest on the block, Webinars.

Robbie Addison is the Mechanical Division manager for the Automotive Service Association. She can be reached at robbiea@asashop.org.

For 2008, there are an estimated 78,560 independent general mechanical service businesses in the United States. These independent businesses employ an estimated 328,480 individuals who provide service and repair for more than 251 million motor vehicles. It is estimated that 70 percent (176 million) of out-of-warranty vehicles are repaired at independent shops.

ASA projects total sales for general mechanical repair facilities in 2008 to be $37 billion, based on U.S. Census Bureau figures for general mechanical repair. Adding in specialty repair facilities, oil change facilities and transmission shops, the estimated total sales moves closer to $56 billion.

The figures do not include the approximately 21,522 auto dealerships with service facilities that took in approximately $30 billion ($17 billion in labor and $13 billion in parts) in 2007, according to the National Automobile Dealership Association.

Business Profile

Average Size of Facility and Years In Business The number of bays and size of mechanical repair facilities has shown a stable balance the past few years. According to ASA's 2008 results, the average business has six bays and encompasses nearly 5,532 total square feet (including office and shop).

Office space averages 768 square feet, and the service area encompasses 4,504 square feet. The remaining square footage (260) is used for inventory and various other uses.

Internet Usage The majority of independent mechanical service shops continue to be family-owned (89 percent) businesses that have been in operation an average of 16 years. Broken down by the number of years a shop has been in business, categories include businesses open less than one year (2 percent), one to five years (28 percent), six to 10 years (23 percent) and 11 to 15 years (11 percent). Categories also include 16 to 20 years (5 percent), 21 to 25 years (11 percent) and 26 to 30 years (7 percent). Those being open for 31 to 35 years totaled 4 percent; 36 to 40 years, 1 percent; and more than 41 years, 8 percent of the total responses. Although consolidation is occurring in other service industries, such as collision, ASA's mechanical repair sector remains predominantly independent, according to 99 percent of survey respondents.

Sixty-seven percent of respondents are AAA-approved facilities. Thirty-three percent of respondents are ASE Blue Seal facilities.

Participation in parts distribution program groups fluctuates from year to year for the independent mechanical sector. Currently, 33 percent of respondents participate in such a program, down from 52 percent in 2007.

Owner Profile

Shop Owner Demographics

Staff Profile

Locating New Technicians The 2008 HYB? survey strives to present an accurate picture of the staff population within the independent mechanical repair business. The survey determined the number of employees per facility by job type along with the percentage of facilities having various types of employees.

There are various levels of technicians employed at mechanical shops. For example, the apprentice technician has one year or less of experience, an entry-level technician has two to four years of experience, and the most common employee is the experienced technician with five or more years of experience.

Complex Cars Demand Well-Trained Technicians

Training Sources Because independent facilities perform service and repairs on approximately 70 percent of off-warranty vehicles, technicians and other mechanical staffers need to incorporate training into their schedules. Entry-level technicians receive an average of 24 hours of training annually at a cost of $781; experienced technicians receive an average of 26 hours, costing an average of $1,224; and management acquires an average of 33 hours of advanced learning a year, costing an average of $1,958.

The majority of educational funding continues to come from business owners. According to 2008 survey results, 67 percent of employers fund continuing education for technicians. Seventeen percent asked for a funding partnership between business and employee. Nine percent said they supply no training, up from 5 percent in 2007.

Seventy-one percent of business owners allow their technicians to attend training during the workday. Of those, 51 percent compensate technicians who attend training during the workday.

Sales

Repair Orders Broken Down by Quantity and Amount Businesses were asked to select areas where the sales increase occurred. Sixty percent noted an increase in profit, while 61 percent saw a growth in their customer base, and 51 percent had an increase in monthly repair orders compared to last year.

Decreases in profits were experienced by 26 percent. Twenty percent also cited a decrease in customers, shared equally with monthly repair orders. Collectively, an average of 14 percent saw no change in customers, profits or repair orders.

As of the third quarter of 2008, the outlook for sales in 2009 was projected to be positive for 76 percent of the population. Sixteen percent expected to hold steady, and 8 percent expected sales to decrease in 2009.

Ninety-nine percent of respondents said they offer a warranty. The warranties include both parts and labor (94 percent); parts only or labor only account for less than 5 percent each.

Respondents indicate they service the same car an average of four times within a 12-month period. Currently, 28 percent of businesses perform satisfaction surveys, down from 41 percent in 2007. The percentage of women and men having their vehicle serviced is approximately the same.

Customer Profile

Independent mechanical business customers are a loyal group. Currently, 79 percent of mechanical business customers are repeat customers. Typically, customer loyalty is a reflection of the quality of service and the customer care that businesses are willing to provide.

Marketing/Advertising

Marketing and advertising continue to be a contributing factor of increased sales, as noted by 45 percent of members. Currently, 98 percent of businesses perform some form of advertising to connect with the motoring public. Word-of-mouth is the leading form of advertising again this year.

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