A View of the Mechanical Sector For sure, these are changing times. And we must change too! by Robbie Addison There's no doubt about it: the automotive industry is still dealing with the aftermath of changes that began in 2008. And things are still evolving. For example: • Dealerships continue to close and their customers are left wondering where to get their vehicles serviced and repaired. • Cash for Clunkers created a flurry of activity (as well as a lot of anxiety) and produced mixed reviews. But many automotive repair businesses across the country felt the results of being "clunked." It did sell new vehicles and it took older vehicles off the road, but some viewed those retired vehicles as unwritten repair orders. • A small ray of hope came when financial institutions tightened requirements for vehicle loans. This may have encouraged people to hold on to their current vehicles and make a monetary investment to keep their vehicles safe and dependable. The good news: This seems to be the case; shops are reporting an increase in maintenance work. Along with dealing with all of these changes, shops must retain their current customer base while seeking new customers. Finding new customers is a top priority for any business. Shops report they have been wooing the customers "left up a creek" by dealerships closing. They're also trying to take advantage of the fact that there are more female vehicle owners than ever. In addition, they're trying to figure out how to market to people from other countries who suddenly are living in their market area. In short, shops are having to rethink their marketing strategy. One thing for sure: Anyone owning a business should have a Web site. A Web site provides common ground for everyone. Those who do have a Web site should invest the time and money to make it informative and user-friendly. Keep in mind that customers like having the ability to schedule appointments online. And advertising within the local community is no longer an option; it is a must. Customers are pushing businesses to delve further into the new dimension of electronic communication. Today's customers want to communicate with speed, simplicity and (most of all) convenience. Communications is a new world quite different from say five years ago. A typical business today may have its traditional telephone, fax machine, computer, Web site, e-mail address and offer mobile/e-mail/ texting. Also, don't forget the hands-free option, which allows a person to multi-task. As they say, "times are changing!" But I have no doubt that independent shops, as in times past, will rise up to the new challenges of doing business in today's fast-paced world. To survive, shops must adapt to all of these changes. Each must take an "up close and personal" look at their business. For example, it may be difficult for a shop to continue to offer service on all makes and models, in light of the training required on new vehicle technology and the cost of equipment necessary to perform service. So a shop may have to decide to specialize in certain makes of vehicles. If it's any consolation to ASA member-shops, this changing world is impacting their association too and presenting challenges. One challenge: How do we draw more young people into an automotive career? Young people today have to be dealt with differently than in the past. For example, they don't like information delivered to them on paper. Young people want fewer words, and they want their information simple and fast. For a look at how we're doing, see the 2009 "How's Your Business?" survey results on the following pages. Thanks to all who responded, and we wish everyone a smoother ride in 2010! Robbie Addison is the Mechanical Division manager for the Automotive Service Association. She can be reached at robbiea@asashop.org.

Introduction to Mechanical

For 2009, there are an estimated 80,061 independent general mechanical service businesses in the United States. These independent businesses employ an estimated 332,262 individuals who provide service and repair, administrative support and leadership to keep more than 251 million motor vehicles operational. It is estimated that 70 percent (176 million) of out-of-warranty vehicles are repaired at independent shops.

The average age of cars in the United States is 10.6 years. This number is up from 10.2 at the beginning of 2007 as reported by Lang Marketing Resources Inc.

Traffic volume trends, based on preliminary reports from the state highway agencies during June 2009 on all roads and streets, were up 2 percent from June 2008. The total includes 89.6 billion miles on rural roads and 167.1 billion miles on urban roads and streets for a cumulative total of 256.7 billion vehicle miles.

ASA projects total sales for general mechanical repair facilities in 2009 to be $39.8 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 $55 billion.

The figures do not include the approximately 20,010 auto dealerships with service facilities that took in approximately $30 billion ($17 billion in labor and $13 billion in parts) in 2008, according to the National Automobile Dealership Association. Dealership closures have collapsed the number of bays, down 8 percent between 2007 and 2008.

With new vehicle sales down 26 percent from September 2008 to September 2009, independent shops have an opportunity to serve consumers whose dealerships have or will soon close their doors. Experienced technicians working for independents, on average, receive 33 hours of training annually, making them skillful and well qualified to maintain and repair today's technologically advanced/computerized automobiles.

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Business Profile

The majority of independent mechanical service shops continue to be family-owned (94 percent), independent (97 percent) businesses that have been in operation an average of 24 years.

Bay count has averaged seven per shop for the past 10 years, fluctuating only marginally. Regionally, the Midwest averages seven bays, and the Northeast reports six bays per business. Southern repair businesses average eight operational bays, and the West averages seven.

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Owner Profile

Various staff levels participated in the survey. The majority were owners (78 percent), managers (21 percent) and technicians (7 percent). To help operate a successful business, many owners currently serve in all aspects of the shop including service writer, technician and office staff. According to survey results, the average participant is 51 and has 30 years of experience.

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Staff Profile

The Bureau of Labor Statistics, U.S. Department of Labor, reported that between August 2008 and 2009, dealership employee counts dropped by 11 percent, including sales and service positions. In the service sector, automotive repair and maintenance employee numbers dipped only 5 percent for the same period.

The 2009 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.

Some businesses employ two service writers (18 percent) and two office staff (15 percent) to better manage customer intake and subsequent paperwork. Most businesses employ one non-technical employee position.

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. The Bureau of Labor Statistics reports employment of automotive service technicians and mechanics is expected to increase 14 percent between 2006 and 2016, compared to 10 percent for all occupations. For 2008, there were 237,440 automotive service technicians and mechanics.

Forty-five percent indicated staffing one apprentice technician and of those, the annual salary averaged $21,842 annually. Entry-level technicians on average earn $29,499 annually. Forty-four percent of members report staffing one entry-level technician. One-third of survey participants staff two experienced technicians, whose average salary is $49,631 annually.

In trying to deal with an aging workforce that is either retiring or nearing retirement, there are more efforts to attract and retain technicians in this industry.

Apprenticeships are a great avenue for a shop to help grow and guide a young person into the automotive service and repair fields. In 2009, 44 percent of respondents hired an apprentice tech, and more than 50 percent hired an experienced tech.

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Sales Profile

Businesses were asked to select areas where sales increases occurred. Forty-three percent noted an increase in profit, and another 43 percent saw a growth in their customer base, and 38 percent had an increase in monthly repair orders compared to last year.

Decreases in profits were experienced by 39 percent. Thirty-nine percent also cited a decrease in customers, and 45 percent experienced a decrease in the number of monthly repair orders. An average of 18 percent saw no change in customers, profits or repair orders.

The average number of vehicles serviced per month, so far in 2009, is 183 and average $328 per ticket. Fifty-five percent of average ticket orders are for repair, 39 percent are for maintenance and 6 percent are for other services.

Based on current economic conditions, participants were asked about customer trends. Seventy-five percent believe their clients are regularly maintaining their vehicles, and 80 percent believe they are purchasing major repairs for their current vehicles. Sixty-two percent do not believe their customers are shopping for new vehicles and therefore believe that they are keeping their current vehicles.

So far in 2009, 43 percent of participants have seen a 16 percent increase in sales on average. To account for the increase, respondents credit customer service, marketing, and advertising efforts as the leading factors.

Sixteen percent said they experienced no change in 2009 sales, comparable to last year. For the 41 percent citing a decrease in sales of approximately 16 percent, 99 percent said it was due to economic reasons.

Almost 25 percent of members report 2008 sales between $250K to $500K, and 20 percent cite figures ranging from $500K to $750K. See the chart on page 22 for 2008 sales ranges.

As of the third quarter of 2009, the outlook for sales in 2010 was projected to be positive for 78 percent of the population.

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Customer Profile

Independent mechanical business customers are a loyal group. Currently, 78 percent of mechanical business customers are repeat customers. On average, the customer will travel up to 20 miles for service and repairs. Typically, customer loyalty is a reflection of the quality of service and the customer care that businesses provide.

Forty-three percent of respondents indicate they service the same car an average of three times within a 12-month period. The percentage of women (54 percent) and men (46 percent) having their vehicle serviced has slightly changed from 50/50 reported in previous surveys.

To reach new and existing customers, 78 percent of ASA mechanical businesses operate a Web site. Some offer online scheduling, hours of operation, coupons and monthly specials to generate new and repeat business.

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Conclusion to ASA's 2009 'How's Your Business?' Survey Report This year's report explores the overall success and business practices of ASA member businesses. Through the annual "How's Your Business?" survey, ASA provides an analysis of the independent collision and mechanical industries. Members may use this information as a comparison benchmark and as a platform for developing future business plans. Doug Hawker As incentive for participation, ASA offered a free "Economic Survival Guide," a collection of articles from AutoInc., and a drawing for a $250 gift card. The ASA winner of the gift card was Doug Hawker of Hawker Automotive Inc. in Saint George, Utah. Hawker Automotive performs both collision and mechanical repairs and has been an ASA member since 2005. We look forward to the participation of future contributors to the 2010 "How's Your Business?" survey.

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