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.
Some of the minds behind Tekmetric have been exactly where you are: running a shop and trying to maintain that fine balance between success for your team, success for your customers, and success for your business.
And we know there's always that extra .001 millimeter room for improvement, which is why we set out to help shops find and make those improvements. Everything about Tekmetric is about making your shop better!
But we also know that you spend a lot of time running your shop, and that’s why we’re happy to do that heavy lifting. Part of the natural byproduct of helping great shops get better is we have a lot of data and a lot of insight into how shops can, and maybe even should, operate.
That's the beauty of modern cloud-based shop management systems, they provide businesses like yours with a strong foundation of organization, simplicity, and functionality to run your shop, with the flexibility and freedom to run it in whatever way works best for you.
Looking specifically at the first half of 2023, we set out to gather a high-level view of the entire independent auto repair industry alongside unique Tekmetric shop data to understand how shops like yours can save time, improve operations, and bolster your profit margins.
The goal behind our latest industry index report was simple: we wanted to make it as easy as possible for shops like yours to take advantage of all that amazing data and industry expertise we've gathered along the way.
Keep cars on the road, customers happy, and your team supported for a successful business.
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:
By using a labor matrix
By creating custom labor rates
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.
Factors That Can Affect Labor Times for Auto Repair Shops
Let’s take a look at some of the factors to consider when determining how much to mark up (or mark down) your shop’s labor rates.
Age of Vehicle
Older vehicles are often trickier to fix, especially because finding parts for them can require a time-consuming hunt across parts suppliers. You can make up for the time spent hunting down uncommon parts by charging more for all repairs involving vehicles over a certain age.
Geographic Location
Some areas lead to different types of repair challenges that can affect the time it takes for repairs. For example, shops in Syracuse, New York—the snowiest city in America—might find themselves working with cars that have rust, which can significantly add to the time it takes to remove or even clean certain parts.
Experience of Technician
Chances are, you’re already paying experienced technicians a higher base salary or hourly rate. However, certain situations might call for cranking up those numbers, like if you really need to put their skills to the test for a tricky repair for a client who wants it done ASAP.
Customer Needs
You can offer customers who need their cars back fast a “Pro Tech” rate, where your tech wraps up the job in record time. When you’re asking techs to complete a job faster than the time on the labor guide, and still do a good job, the customer is getting special service. Be sure to let customers know that speediness comes with a surcharge.
Relationship With Customers
It’s a good idea to consider giving loyal customers a special rate as a token of appreciation. With that said, industry leaders advise sticking to your labor rates as much as possible, because if it becomes a habit, you risk financially harming your business.
How to Choose a Reliable Labor Guide
A reliable auto repair labor guide is foundational for your shop when you’re setting labor rates, so you’ll want to use a labor guide that stays up-to-date with the latest labor times in the industry. Just like many people use online directories instead of the Yellow Pages, many auto repair shops use digital labor guides that are constantly updated with the latest labor times.
When seeking out a digital labor guide, look for one that:
Offers consistent, comprehensive data on labor times from industry leaders, so you can set accurate labor rates that will keep your shop profitable
Adds labor times for new vehicles and jobs periodically, so your shop’s pricing can stay competitive
Integrates with your auto repair shop management software, so you don’t have to dig through multiple systems
When my husband Dana and I started Haglin Automotive, our loyal customers found us from The Yellow Pages.
Things have drastically changed since then thanks to all the technology advancements. Online reviews and Google play a big part in whether a customer will set foot in your shop or return for future repairs.
At Haglin Auto, we always adjust to meet customers, and whether they’re a return customer or a new customer, we prioritize how they feel.
It’s important to meet your customers where they are. We even offer customers free vehicle pick-up and delivery service, free shuttle services, and free loaner vehicles.
But, more importantly, we make sure they understand their repairs and can see everything that’s going on with their cars.
Build Trust with Digital Vehicle Inspections (DVIs)
Haglin Auto has been around for 41 years in the Boulder area, and twice a year 30,000 people come in and out because of Boulder University of Colorado, so we’ve always had an influx of students.
And in order to cater to our college students, we started implementing DVIs.
The reason we made the change in the first place was because our service writers would call a local college student and say, “You car is doing this, this, and that,” and a lot of the times a student would respond with, “I don’t understand,” “I’m not the one paying,” or “Let me call my mom or dad.”
From there, the student would make a phone call home, they would ask questions, and then the student would call back with questions.
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