As 2023 winds down, it's a great time to reflect on the strides made across the independent auto repair industry.
Throughout the year, we’ve been collecting data, talking to shops that rely on Tekmetric every day, and gaining valuable insight into how your shop can prepare for the best year possible in 2024.
That’s why we released our latest Industry Index Report earlier this year, to give shops and industry resources to not only compare their performance against other shops but also some concrete tips and tricks they can implement at their shop.
This comprehensive analysis not only assesses the industry's vitality but also seamlessly integrates unique Tekmetric’s partner shop data, presenting a goldmine of opportunities for optimizing shop management.
The result is a compelling narrative that provides a bird's-eye view of auto repair in 2023 and delves into Tekmetric-specific data, to offer shops like yours the actionable insights you need for success in 2024.
Here’s how shops can take advantage of these trends in 2024.
1. Ride the Wave of Industry Growth with the Right Tools For The Job
Despite the looming threat of a recession, the auto repair industry has expanded as customers choose to repair their existing vehicles rather than purchasing new.
This presents an opportunity for shop owners to ride the wave of industry growth and expand their businesses – with the right tools for the job.
In 2022, the auto repair industry defied economic uncertainties, witnessing a remarkable revenue surge of 9.7%, and the momentum continues with an anticipated additional growth of 8.1% in 2023.
Tekmetric shops in particular have been at the forefront of this upward trajectory, reporting a notable 6.35% increase in cars occupying their bays. Furthermore, a staggering 80% of open repair orders within Tekmetric shops were not only completed but also promptly paid in full.
As a testament to the efficacy of Tekmetric tools, users also experienced a robust 55.86% average profit margin, coupled with an impressive $585.91 Average Repair Order (ARO).
These trends underscore the potential for auto repair businesses to not just weather economic challenges, but to thrive and expand by leveraging insights and functionalities from a shop management system like Tekmetric.
2. Get More Value Out of The Work Your Shop Does
Maximizing efficiency through data is the key to unlocking the full value of a shop’s work.
One notable avenue is the strategic use of unique matrices. In 2023, shops that adopted this practice with their parts matrices experienced a 35% profit margin on parts.
This optimization not only enhances the shop’s bottom line but also underscores the potential for shops to boost their profitability through streamlined processes significantly.
Moreover, approximately 45% of shops used labor matrices to set varying labor rates, culminating in an average hourly technician rate of $27.26. This rate stands notably higher – 19% to be precise – than the national average reported in 2023.
Adopting these matrices demonstrates an intentional approach to labor management, allowing shops to tailor their pricing structures based on factors such as job type, expertise, specialization, or customer requirements.
3. Meet Customer Demands with Modern Solutions
Modern customers have modern expectations. That's exactly where modern solutions like a cloud-based shop management system come in.
Take Advantage of Digital Inspections and Tools
We've heard it time and time again, customers may not always trust auto repair shops and might feel a little weary approving costly repair bills, no matter how necessary they might be. Of course, this not only means a declined job for your shop, but more importantly, at best an even more costly repair down the line, or at worst a potentially dangerous situation on the road.
That's why your shop needs to work to build that trust with customers. When they feel that your shop is on their side offering valuable advice and transparency regarding necessary repairs, they'll be more likely to approve those repairs.
Shops should also consider texting their guests. We get text updates from our doctor's office or for our pizza delivery, so why shouldn't shops text their customers as well?
The convenience makes it easier for your shop, who can text directly from your SMS, while customers don't have to wait for a free minute to answer your call or authorize repairs -- that can all be done instantly, in real-time, through texts.
Prepare For the Year Ahead
Tekmetric's 2023 Industry Index Report serves as a beacon for auto repair shops, guiding them toward growth, profitability, and enhanced customer experiences in the dynamic landscape of the industry.
In fact, it’s more than a just report – it's a guide for shop owners looking to create a business that thrives in the next year and beyond.
Download the report now and unlock a roadmap to success, powered by data, innovation, and Tekmetric's commitment to shaping the future of the auto repair industry.
On busy days, it can feel like there are a million things happening at your shop. Technicians are hard at work getting repairs knocked out and service advisors are helping customers. Even on slow days, there’s work to be done. You might decide to tackle that new marketing plan or personally call customers to remind them of service work they’d previously put off.
No matter the circumstances, it’s important to have a way of juggling and managing it all. However, keeping track of everything with pen and paper, a whiteboard, or just by playing it by ear can quickly turn into a headache. After all, those methods are unreliable and complicated. Information can easily get lost in the mix, and all it takes is for one misunderstanding to knock things off track.
Repairs management software can keep you and your team on track and free up your time as a shop owner so you can focus on the high-level aspects of growing your business. Service advisors can use Tekmetric’s Job Board to see the status of repairs, appropriately delegate tasks to technicians, and give customers updates every step of the way.
Remember spring and summer of 2020? A lot of us are probably trying to forget and move forward, and we feel you. It was a scary time period for everyone, including the automotive repair industry.
Last April, auto shop owners were wondering, are my customers going to come into the shop? If people stay inside, are they going to drive less? If they drive less, are they still going to come into the shop as frequently? What if other industries are affected, and people have less money for repairs?
We were nervous like everyone else. But anyone who knows Tekmetric knows that we’re committed to driving the auto repair industry forward; we wanted to answer these questions and put Auto Repair Professionals’ minds at ease.
We also wanted to enable shops to not only endure the pandemic but also grow and come out stronger than ever before.
Strength in Numbers
If there’s one thing that makes us feel confident, empowered, and like we know what’s going on, it’s numbers. (Tracking shop performance and providing insights is kind of our thing).
We’ve seen the power of metrics in shops across America, and we know that customers, service advisors, technicians, and the entire auto repair industry benefit when auto shop owners can make informed decisions.
So we launched the TM-500 Index. The TM-500 tracks the Average Repair Order and Car Count of five hundred auto repair shops located across the United States. But data don’t mean squat if it ain’t easy to read. The TM-500 let’s users sort data by time and region so they can quickly explore trends.
Want to know the ARO and Car Count between the months of June and November of 2020? Simply set the time period “by month,” and the TM-500 will generate an easy-to-read graph.
Want to know if shops in midwest states had a higher or lower Car Count than southwest states last summer? Simply set the time period you want to observe, and hover over different regions on a map of the United States to learn how they performed.
Just as the Tekmetric system for auto repair shop management gives shop owners better insights into their shops, the TM-500 gives Auto Repair Professionals better insights into their industry.
But knowing is only half the battle.
A Catalyst for Digital Transformation
The auto repair industry has lagged behind almost every other service industry in how we utilize technology. Almost anyone with a smartphone can order a pizza, sushi, enchiladas, or any other food they want and track it while it’s being delivered to their door.
Meanwhile, someone paying hundreds or even thousands of dollars for a new transmission still has to go in-person and deal with a half-legible piece of paper that feels greasier than the pizza and enchiladas put together!
But we get it. People are sometimes reluctant to change. For many auto shop owners, however, the COVID-19 pandemic was the “now or never” moment to fully digitize their shops.
In 2020, Tekmetric prioritized the rollout of several features we had been working on to help shops provide their customers with the experience they’ve come to expect in almost every other part of their lives. In April of 2020, we rolled out Text-to-Pay, allowing shops to invoice and collect payment via text message.
In November of 2020, we rolled out True Two-Way Texting to make it easy for service advisors and customers to communicate throughout the entire repair process.
Combined, these two features enabled Tekmetric users to provide a completely touchless experience to their customers without sacrificing the quality of their work or customer service.
Much like in other industries, customers who bring their cars in for repairs appreciate the extra service and transparency of a more enhanced, digitally assisted customer experience.
As we watched many shops grow by using Tekmessage and Tekmerchant, we kept an eye on the overall performance of the TM-500. We were able to see when shops began to bounce back in summer after an early slump, and developed other understandings about where the industry was headed.
Over time, we have added new metrics to the TM-500 such as state-by-state Labor Margin, Parts Margin, Effective Labor Rate, and Car Count to gain a more complete picture of these high-performing shops.
What Have We Learned Since the Onset of the Pandemic?
When making conclusions about where the industry is going, we like to be informed by both quantitative and qualitative data.
The numbers give us a factual look at what’s gone up or down, and talking to people in the industry helps us make correlations between how certain behaviors, processes, and principles affect these trends.
Between the data we gathered from the TM-500 and the feedback we were able to gather from talking to auto shop owners, here’s what we have learned.
Auto repair shops generally calculate the cost of their repairs with numerous factors that contribute to the entire process.
This includes the cost of parts and any necessary upcharges for the shop to generate a profit, as well as the cost of labor.
In this guide, we will help your independent auto repair shop learn how to maximize your profit margin specifically on your shop's labor rate.
Want to learn more? Check out our latest Auto Repair Industry Index! We cover everything from overall industry health to unique shop settings for Tekmetric users to get the most value out of the work they already do!
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