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.
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.
Co-CEO and Co-Founder of Tekmetric Sunil Patel joined Editor Chris Jones on Ratchet+Wrench Radio to talk about how shop management software suites are changing the landscape of the auto repair industry, especially when it comes to building relationships and communicating effectively.
Sunil also touched on the history of some of Tekmetric’s relationships and how Tekmetric makes sure the voices of shop owners are heard.
Listen here, or catch some of the highlights below.
Note: some of the following answers have been condensed for clarity and brevity.
Relationship-Building 101: Laying Down a Solid Foundation
Jones: The last time we saw each other was at WorldPac STX in Orlando. And that’s where you guys announced a partnership with Advance Auto Parts. I know a lot of our readers have seen it, but can you share a little bit about the details with our audience, just from your own words and perspective?
Patel: So we’ve had a great relationship with Advance Auto Parts for a very long time. And we wanted to leverage the relationship to try to get more shops to use Tekmetric, and it just happened to be the right place, right time.
Side note: For those that don’t know, Advance Auto Parts actually owns WorldPac and Sunil Patel’s relationship with both goes way back. Before co-founding Tekmetric, Patel owned an auto repair shop that was one of the highest purchasers of parts from WorldPac in Houston for almost a decade.
Jones: That’s kind of cool to see how the relationship evolved over the years.
Patel: It’s a big company. It’s not like turning a speedboat, it’s like turning a steamship. Sometimes it just takes time to let some of these relationships play out. It affects so many people. We have to be absolutely sure of how this is going to play out, and how it’s going to work.
Using Shop Management Software to Get Everyone on the Same Page
Jones: So let’s talk about shop ownership a little bit. You were once a shop owner kind of in the Dark Ages before we had these robust shop management software suites. What was it like for you to operate on these limited tools?
Patel: You know, it was tough. Customers didn't always respond back, and we would always have to follow up with a phone call. There was always a disconnect.
We were probably ahead of our time 12 years ago trying to get some of this stuff out. Tekmetric used a combination of manual processes and text messaging. Text messaging was pretty popular back then, but MMS or multimedia messaging or picture messaging was not so popular.
So adding that in the mix with communications and whatnot into one platform has been very paramount to the success of our company because it closes the loop between the vehicle owner, the shop owner, the technician, and the service writer.
It keeps everybody on the same platform and communications thread. That way everybody has full visibility into what's going on with the repair of that vehicle to ensure a timely repair—ultimately making the customer happy.
Have you submitted your taxes yet, or are you struggling to get your records in order and submit everything on time? Wherever you are in your tax prep process, you need to pull together a plan and act fast or you may have to pay penalties.
Sometimes, even hearing the word taxes can be scary, but unfortunately, taxes are one fear we don’t get to avoid indefinitely. Auto repair shop Tax Day is the same day as everyone else’s Tax Day, and things just get more complicated if you don’t file on time. The clock is running out on your time to file without an extension this year, and even filing for an extension comes with its own deadline.
But if you tackle the process with knowledge and empowerment, doing business taxes and sales tax on car repairs at the shop doesn’t have to be difficult.
Here are five tips that can help you have a better auto repair shop tax season.
Disclosure: the information in this article is not to be taken as formal tax or legal advice. Individual business circumstances vary, and you should always consult with a CPA and tax attorney.
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