Every element of your team is critical, from the technicians who complete the repairs to the service writers who assist customers and keep repair orders flowing through your shop management system.
They’re the people who are responsible for directly communicating with guests or working on vehicles. They're the core of your everyday operations, ensuring cars are brought in, estimates move along, and repairs are completed on time.
It is absolutely critical for great shops to start with great talent!
With the power of cloud-based shop management systems, auto repair shops can build the best team possible with the right mindset, culture, and approach to hiring and retaining the best talent.
But Isn't There a Technician Shortage?
We know that there has been some discussion across the industry regarding a technician shortage -- whatever it is, shops feel like it's harder than it's been in the past to find the best talent possible to help them make their great shop even better.
What's interesting though, is that when we look at the numbers, there seems to be a bit of a different story.
For example, according to the 2024 Auto Care Association Fact Sheet, automotive technician employment increased by 3.5% in 2022 alone. Meaning, that there are now 915,000 men and women working at general repair shops, vehicle dealerships, and gasoline service stations.
The reality is, there are even more technicians! And the beauty is, there's no sign of slowing down within the aftermarket auto repair industry, just as we saw in our latest Auto Repair Industry Index.
1. Maximize Employee Compensation
Shops should structure their team and payroll operations to, of course, maximize labor profit margins. But it's also critical that shop owners ensure employees are paid adequately for their work.
Now, shops have the ability to pay different roles in different ways. When we dug into Tekmetric-specific data, we saw shops around the country utilizing different pay structures:
But more importantly, what we really noticed was how Tekmetric makes it possible for shops to find and retain the best talent. In fact, we found that on average, Tekmetric shops can pay their technicians almost $5 higher than the national average from 2022.
The best way to show your team how much you value their hard work is to compensate them well for the work they do. And of course, owners need to ensure the lights can stay on while running a business. That's why a cloud-based shop management system is so critical in maximizing the value of the work you already do.
1. Create an Open-Door Policy
You don’t want to create a situation where your team members feel like it’s required for them to keep you in the loop and ask for your permission before doing anything on their own; they still need to maintain a level of independence, so that they can complete their work, and you can tackle high-level business operations.
But an open-door policy is a great way to balance your team’s need for independence with your need for input.
When your auto repair team members know they can ask you or other members of the management team for help when they need it, they are more likely to speak up when they run into challenges.
By doing so, problems will be less likely to spiral out of control because you and your employees can work together to find solutions.
2. Hold Regular Team Meetings
By holding regular meetings, you can bring your technicians, service advisors, and the rest of your auto shop team together to share ideas and make improvements.
When your auto shop team members start discussing various processes and happenings at your shop, they’ll be able to brainstorm creative, effective solutions—solutions that they might not have come up with on their own.
“In the morning, when I used to go through residency, we would have breakfast in a room of 25 students, and we would discuss cases… It was like a puzzle. One person would discuss a patient, and everybody has to figure out the problem that patient had.
I did the same thing at Motorwërks. I would have breakfast provided, and we would sit in a room and discuss a car that would have a noise or leak and figure out what was wrong.”
What Sunil found was that the practice of daily meetings instilled confidence and camaraderie in his team.
By holding daily or weekly meetings with your entire auto shop team, you can quickly identify and solve problems while strengthening your team.
Use Tekmetric to Hire and Retain the Best Talent
With Tekmetric, your service advisors and technicians can work alongside each other as one unit.
Scaling your business and bringing in even more revenue for your shop doesn't have to rely on finding new customers.
Rather, shops can utilize the features of cloud-based shop management systems to help them maximize profit margins on the work they already do.
With a modern platform like Tekmetic, shops can not only get the most value out of the work they do, but hire the best talent to provide the best service possible.
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:
In 2022, there will be an estimated 76 million vehicles aged 16 years or older in the United States.
It’s estimated that by 2022, 18% of American households will use an auto repair service at least once a year.
The number of vehicles on the road that are 12 years or older is anticipated to increase by 15%.
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.
Considered the “gold standard” in security compliance, this certification is awarded in accordance with the American Institute of Certified Public Accountants (AICPA) standards for SOC for Service Organizations, also known as SSAE 18.
As one of the first auto repair shop management systems to achieve SOC 2 compliance, Tekmetric is well-positioned to continue safeguarding sensitive information for both auto repair shops and their valued customers.
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.
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