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Although our goal is to help you determine the best ways you can enhance your auto repair shop profit margin, we’re still going to shoot straight with you: opening a shop isn’t easy.  You’re going to have to put in some hard work, but exceeding your goals will be well worth it. Along the way you’ll learn new things through trial and error and encounter some unexpected challenges, but who doesn’t when they step outside of their comfort zone, pursuing something they’re passionate about?

One question you may have is, "Is it even a good time to start an auto repair business?" That's a tricky question to answer. Coming off the heels of a pandemic in an economy that has seen better times might scare any new business owner. But remember, some of the most long-standing businesses were started during economic recessions.

Although there’s been better times to start an auto repair business, your shop can still be successful. And it’s clear that the demand for automotive repairs isn't going anywhere.  

Take a look at these statistics on the latest automotive repair trends:

1. In 2022, there will be an estimated 76 million vehicles aged 16 years or older in the United States.
2. It’s estimated that by 2022, 18% of American households will use an auto repair service at least once a year.
3. The number of vehicles on the road that are 12 years or older is anticipated to increase by 15%.
4. In the past decade, the average length of time that drivers own their automobiles has increased by 60%.

As you can see, the need for vehicle repairs will likely increase due to the fact that drivers are choosing to stick to their trusty ol’ vehicles rather than opting for a shinier new ride. But regardless of whether the auto repair industry’s profit trends are growing or plateauing, making smart business decisions will not only prepare your shop for future transformation but also help your shop survive disruptive trends in the future.

Let’s get to boosting your shop’s short and long-term profits.  

We’ve listed each of these tactics in the order you should take during each of your business growth phases: the seed stage, the start-up stage, the established stage, or the expansion stage. The order of these 10 tactics does not determine their importance; each tactic complements one another to put your shop in the fast lane to success.

Fast Facts

• ‍Industry size and past growth: The U.S. auto mechanics industry is worth more than $68 billion in 2022 and has seen steady growth the past five years. ‍
• Growth forecast: The U.S. auto mechanics industry is projected to experience continued growth in the coming years and expand by more than 10% by 2026.
• ‍Number of businesses: As of early 2022, 264,121 auto mechanic businesses operated in the US.
• ‍Number of people employed: As of early 2022, the United States auto repair industry employed about 561,359 workers.

"Innovation is the ability to see change as an opportunity—not a threat.” - Steve Jobs

Like any business owner, auto repair shop owners must consider all aspects of their business: operations, marketing, collections, bookkeeping, payroll, profitability, and customer service.

But how do you track, monitor, and gain control over these various business functions and analyze the relationship between them? Many shop owners turn to automotive computer programs as a solution, but there are a lot of options to consider. As you research automotive computer programs, you may be asking yourself:

Is it better to have one program for each business function, or one system that covers various aspects? What is the right mix of programs?

Tekmetric is a cloud-based shop management system; but that doesn’t mean all other software and systems out there align with what our software can do. Some automotive computer programs cover diagnostics, some focus on marketing, some focus on digital inspections, and there are some systems out there that check off most—if not all—the boxes.

There is a lot to consider when determining which automotive computer programs are right for your business, and we want to make sure your shop’s needs are met.

You might have heard some myths about automotive repair software programs like “it’s too expensive to switch” and “training is tough.” But that's not necessarily true.

Don’t be deterred by shop management software misconceptions. We’re here to help break down these myths and rRevolutionize your shop with modern tools. See what your shop can accomplish once you have all the facts about auto repair software programs..

MISCONCEPTIONS ABOUT AUTOMOTIVE REPAIR SOFTWARE PROGRAMS

Now that you’re a shop owner, you’re probably looking for ways to level up your shop. Thanks to talking to fellow shop owners or browsing online, you may have become somewhat familiar with automotive repair software programs.

Finding the right automotive repair software program for your shop is one of the most effective ways you can increase your team’s productivity, boost your revenue, communicate better with customers, and more. However, there are some myths surrounding auto repair software programs that might be preventing you from taking your business to new heights.

To help you on your journey, we’ve compiled a list of some of the most common myths we’ve heard about auto repair software programs and then let you in on the real deal.

Starting a business can be a big risk. But if you map out a plan and execute it right, the outcome is well worth it. Having a solid automotive repair workshop business plan in place is especially important if you ever plan on owning multiple shops. 

When you realized that you wanted to be a shop owner, it’s likely you considered the good you can do for both yourself and other people. Helping customers get their vehicles back on the road, and helping service advisors and mechanics grow in their careers is an exceptionally rewarding aspect of owning and operating a repair shop. 

More than anything, partnerships should be mutually beneficial to everyone involved. When good partnerships are formed, the whole should be worth more than the sum of its parts.

Why Should Your Auto Business Partner with Other Brands?

For example, McDonald’s burgers make you thirsty enough to want a Coca-Cola, and sodas have a high margin. By partnering up, McDonald’s can lock in their costs on soda and improve their profit margins for the long term.

On the other hand, not all partnerships are beneficial. Partnerships can expand your opportunities but can also force you into making decisions you never intended to make. When McDonald’s decided to partner with Coca-Cola, they had to exclude other soda brands from their locations.

This exclusivity may have been worth it, but it meant removing options from customers, such as Dr. Pepper and Pepsi products. What may have made the partnership intriguing for McDonald’s is the fact that Coca-Cola owns a variety of beverages, including Diet Coke, Fanta, Sprite, Powerade, Minute Maid and Pibb Xtra.

Thanks to a variety of options, McDonald’s is able to satisfy most customers who ask for a Dr. Pepper by saying, “Will Pibb Xtra be okay?”

Partnerships in the Auto Repair Industry

In the auto repair industry, we face similar challenges when it comes to partnering with other businesses and brands.

Potential partnerships may include teaming up with parts suppliers, software companies, marketing and trade show affiliates, and any other service, resource or tool that could potentially improve your shop. In some cases, these partnerships will help shop owners enhance performance, save costs and drive revenue.

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For example, Tekmetric has partnered with BG Products, making it easy for shops to sell additional BG products with simple canned jobs built right into the repair-order process within Tekmetric.

Other times, auto partnerships may bind you to an agreement that doesn’t pay off.

Here are some questions you can ask yourself to determine whether a partnership is mutually beneficial or if they’re asking you for more than you’re getting in return.

1. Are You Free to Choose the Tools and Solutions You Want?

One sign of a bad partnership is being forced to do something you don’t want to do. If partnering with another company means taking valuable options off the table, then you may be at a disadvantage.

If your partner implies or directs you not to do business with their competitors because they would like for you to instead use their services or their partner’s services, think it through.

Before officially entering a partnership, imagine your shop one year, five years and ten years down the road. Where will it be then? What will happen if your shop grows? What if innovation has slowed down with your partner? Will you be allowed to innovate your business by using new tools and solutions that become available in the future?

If you’re restricted in a way that prevents you from innovating or adapting to market conditions by testing other products, tools, solutions, and software, you may be handcuffed and unable to compete with other shops.

Drivers typically come in with an expectation of what's wrong with their car, which can make it tricky to sell maintenance work. They might think you're trying to squeeze more money out of them, or may simply have a set budget in their mind and don’t plan on spending extra.  

In reality, you're simply trying to go above and beyond and provide them with the best service possible. So how do you show that, and which tools will help you transform the way you sell maintenance?

Here’s how to build customer trust while staying true to your auto repair shop’s mission of providing optimal maintenance recommendations.

Repeat jobs are common in auto repair work. How often does a customer walk in and ask for something common like an oil change or a tune-up? Or does your shop specialize in one type of vehicle, and you're constantly handling the same repairs?

What if we told you we could help you build those most common repair orders in a matter of seconds? That way your service writers can focus on providing amazing customer service every time.

Because let’s face it, regardless of the job, your customers are relying on your team to provide the same quality experience they're used to in so many other industries. And if you own multiple shops, then your customers are expecting you to provide the same quality of service at each location.

Canned jobs make it easy for your shop to not only save time when building estimates and serving customers but also make it easy to provide a consistent and smooth customer experience -- in the end making your shop even more money by boosting your shop's average repair order.

We are excited to release Tekmetric Multi-Shop Plan, the industry’s first multi-shop offering that gives auto repair shops the capability to access real-time data reports – from all locations – in one, central reporting suite.

Tekmetric Multi-Shop plan provides the tools shop owners need to monitor shop performance and manage processes across all locations. Through Multi-Shop, shop owners can track more than 16 reports with countless metrics in one central location.

It also enables easy, real-time analysis at all levels, including the entire organization, small groups and individual locations.

The new plan also offers a custom side-by-side analysis report, so shop owners can drive key business decisions and replicate the processes from high-performing shops throughout their organization.

‍Please note: This blog post does not constitute legal or financial advice. This blog post is merely a guide on how shop management software works with accounting software. Additionally, there is a difference between bookkeeping services and accounting services. If you’re seeking professional accounting services, contact Paar, Melis, & Associates.

For many shop owners, the accounting side of business can be overwhelming. After all, there’s probably a good reason why you decided to start an auto repair business and not an accounting firm—you enjoy fixing cars and helping people, not staring at numbers all day. That's where reporting features from Tekmetric come in, making it easier to see all your finances in one place.

But when you’re in the shop owner’s seat, it’s vital for you to have a firm grasp on your books. If you want your business to succeed over the long haul, your financial statements need to be complete, consistent, and comparable.

Well-written mechanic work orders help technicians stay on task and efficiently move jobs through to completion. With Tekmetric’s Job Board, mechanic work order templates, and Tech Board, you can craft and manage highly detailed work orders, strategically assign work, and track progress all from one intuitive shop management software.

If you're a service advisor, you probably know the ropes of preparing a work order like the back of your hand: you get the technician to perform an inspection, put together an estimate, get approval for the work, and then prompt the techs to complete the work. And if you’ve read our digital vehicle inspection guide, you know that Tekmetric makes drawing up mechanic work orders that much easier. But what happens when it’s time to assign work, and it seems like all the technicians are already stacked with jobs?

Without the right tools, assigning work evenly across your team of technicians can come with a serious learning curve. Fortunately, Tekmetric can simplify work order creation and job distribution, too. Small details and adjustments intentionally designed into our system can make a big difference in how efficiently the work is completed.

Technicians and service advisors, you know the pace and organization of a shop depends on the efficiency of its work order process. If you don’t know what to do, what to use, and how long you have to complete a job, it’s difficult to fix a car and get it back to the customer on time. And as your shop scales to take on more work, the management challenge increases exponentially. So let’s dive into how to streamline mechanic work orders and get more work done without it seeming like, well, work.  

Vehicle inspection checklists guide your technician’s through each aspect of a given inspection so that no problem areas go unaddressed.

Having a set list of points to check for each inspection will ensure they remember to look into each item listed. But before your shop gets started on inspections, you have to get down to the nitty-gritty of inspection checklists.

Find The Right Digital Vehicle Inspection Checklist For Your shop

There's no one-size-fits-all vehicle inspection checklist. It's essential to have different inspection checklists depending on the customer's concerns and what prompted them to bring their car to your shop.

One generic inspection checklist is not enough as it may be too broad or too narrow to cover all the necessary areas. 

Your shop may have its own variations of inspections depending on the services you provide. For instance, an auto body repair shop may focus on checking for scratches, dents, and cracks, while a general repair shop will mostly inspect the belts, filters, fluids, and everything else under the hood. 

So, how many vehicle inspection checklists do you need? As many checklists as there are common reasons for vehicle owners to bring their cars to your shop. 

Your auto repair labor revenue and parts margins are critical for enhancing your shop’s profitability. Adjusting your pricing on parts to make a profit is pretty straightforward.

But when it comes to labor times for auto repair shops…that’s where things can get a bit tricky. 

Yes, you need competitive labor rates, but you also need to keep those rates reasonable so you don’t scare off your customers with sky-high prices. 

3 ways your shop can make more money on labor: 

1. By using a labor matrix 
2. By creating custom labor rates 
3. By applying a labor guide markup 

Before we dive into the differences between these three methods for setting the best labor times at your shop, here’s a quick refresher on the one thing these methods have in common: the labor guide. 

What is a Labor Guide? 

A labor guide is like the gospel of labor times for auto repair shops. It tells you how long, on average, it takes to complete different types of repair work.

Remember that the times listed in auto repair labor guides are averages, so it’s best to treat them as a starting point.