Reprogramming: Is It Right for Your Shop?
"Every shop is going to have to deal with reprogramming," says Bob Pattengale, a technical account representative for Bosch Diagnostics. "The question is, how?" In today's collision landscape, some shops outsource reprogramming to dealerships, some employ the services of a mobile provider who comes to the shop (click here to see the related story, "Mobile Diagnostics: An Idea Whose Time Has Come") and some take more control of their destiny by reprogramming in-house. The optimal solution for a shop can evolve over time as awareness, expertise and car counts grow.
Reprogramming is inevitable
The growth in the computerization of vehicles across almost every function has ramped up greatly in recent years. It is expected to continue to gain traction in the years ahead, as automakers seek to optimize efficiencies in function, performance, weight and cost. Computer modules - the vehicle's hardware - can break, be destroyed in a fire, crushed in an accident, or just stop working during vehicle servicing or because of a power interruption. These modules need to be initialized on installation, updated when improvements are found, or reinitialized when replaced - each a different aspect of reprogramming. Therein lies the opportunity.
"Software is a beautiful thing," says Donny Seyfer, AAM, co-owner of Seyfer Automotive in Wheat Ridge, Colo., and an advocate for vehicle reprogramming by independent shops. Several car manufacturers use more than 10 million lines of software code to operate an engine management system. Many individual modules have more than 1 million lines of code, which equates to more than 21,000 typewritten pages. Soft_ware ensures that the computer modules inside vehicles operate as intended, in addition to allowing updates to improve their function over time.
In today's tough economy and political landscape, automakers need to ensure their vehicle computers can be readily and affordably reprogrammed in both independent shops and dealerships. Otherwise, they risk the consequences of consumers choosing an alternate vehicle at their next purchase.
Automakers now offer Web-based, Internet-delivered reprogramming software, a practice that protects the proprietary concerns of automakers, without compromising the ability to service or repair. While gaps still exist related to some voluntary J-2534-2 non-emission reprogramming software, industry cooperation and dialogue within the National Automotive Service Task Force (NASTF) have led to automakers closing this service gap noticeably in recent years, without regulation or legislation.
Collision shop realities warrant careful consideration
"Vehicle reprogramming is similar to doing a Windows software update on a PC," Seyfer tells those he trains as well as his customers. "Sometimes you're going to feel the update, while other times you won't notice a thing, except for a cleaner tailpipe."
To date, collision shops have not adopted reprogramming in-house as readily as mechanical shops have, relying on others to provide such services. Essentially, the core realities inherent to collision operations make the consideration to reprogram vehicles different from how mechanical shops weigh the decision.
Collision shops have more toxic environments. Without proper care and protection, keeping the required sensitive diagnostic equipment hardware in sound operating condition requires learning new handling procedures. Reprogramming can put many outside of their comfort zone and make the transition to a new skill set seem overwhelming.
In-house technician competency and continuing education is required. Collision shops don't always have the luxury of having a high-end reprogramming technician, let alone enough traffic. In addition, reprogramming can be more time-consuming in collision applications. Fires or other accidents can destroy original modules and require complete reinitialization of new modules, rather than quicker, less complex updates, meaning more technician time and reprogramming steps, each an opportunity for error.
Some doubt that the investment made in reprogramming can be recouped. Diagnostic equipment, software subscriptions, accessories and training can appear to be expensive and their value easily misunderstood, overlooked or dismissed. Shop owners must fully understand the pros and cons before determining their business plan.
Let car counts point the way
The difference between being "profitable and leading" rather than "novel but bleeding" rests in being prudent, grounding decisions on facts and adopting thorough practices. Being an early adopter of in-house reprogramming, let alone the first collision shop in your market to provide reprogramming isn't - in and of itself - cost-effective. Likewise, neither is prematurely dismissing what could be a growing, profitable revenue stream from vehicles that enter your shop every day.
Several sources can help shops recognize the value of reprogramming, acquire relevant training and continuing education and gain competency. Determining whether to outsource or perform reprogramming in-house boils down to researching the breakeven car count required to justify the investment. Consider the following example, which crunches the numbers.
XYZ Collision currently outsources reprogramming to a mobile service provider. The provider invoices XYZ a one-hour minimum service at $125 list/$100 cost,* which allows XYZ a gross margin of $25 per service. In addition, let's assume the provider's hourly wage was $35 (including benefits). The provider has a gross margin of $65 ($100 cost less $35 wages) to pay down diagnostic equipment, software subscriptions, etc.
Now, suppose XYZ Collision considers reprogramming in-house. While customers would still get billed $125 for the reprogramming service, the shop would now have $90 per service to defray reprogramming costs ($125 list less $35 labor). XYZ can now consider whether it should reprogram in-house by researching the total investment required (TIR) and then calculating what breakeven car count is needed for various vehicle brands, by dividing TIR by the $90 gross margin per service, as illustrated in Table 1.
For each scenario, the breakeven car count needed to justify reprogramming in-house can be determined simply by dividing the total reprogramming investment cost required by the $90 gross margin. For example, in the case of Ford, just 27 vehicles covers the investment. Should XYZ see a higher number of Ford (including Mazda) vehicles during the year, reprogramming provides a positive revenue stream.
Seyfer offers several tips. Enter the reprogramming business slowly, one automaker at a time. Tracking the vehicle brands repaired at your shop can indicate where to begin in-house reprogramming. He advises that at least half of the Fords and a greater number of GMs and Chryslers brought into his shop need reprogramming. In addition, to reduce the breakeven car count needed, consider purchasing used diagnostic tools, which lower TIR and enable a quicker payback.
There are also intangible benefits that can accrue to shops, Seyfer adds. Reprogramming enhances a shop's public image as a high-tech operation. Shops can also provide more complete service to customers, and avoid giving a poaching opportunity to a dealership or competitor. In addition, shop technicians feel more empowered because the shop can service a client's vehicle front-to-back, without having to ever rely on an outsider doing things right, cutting down on reasons for comebacks.
"Unlike many other tools that a shop owner has to pay to have in the shop, reprogramming tools can effectively pay their own way," Seyfer says.
Is it time your shop considers or revisits who does this for your customers? Understand your options to make an educated decision.
*Editor's Note: The figures used in the calculations in this article are for illustration purposes only and do not reflect actual margins, labor rates or other financial parameters.
Bob Chabot is an automotive writer and publisher of Techs4Tomorrow based in Bedford, Texas. He may be reached at email@example.com.
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