How to Sell an Auto Repair Business (3 Step Guide)

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June 14, 2023

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Read time: 3 min

There are many reasons you might want to sell your auto repair shop.

You might be ready for another venture; you might be trying to fund your retirement; or you might just be curious about the value of your business if you do decide to sell. 

Whether you're actively in the market to sell your shop, or you just want to know how to value an automotive repair shop just in case, you’ve come to the right place.

How to value your auto repair shop

The industry standard for establishing a sale price for an automotive repair business is to use total owner benefit (TOB) multiplied by four (or TOBx4).

So, if you took home an average of $50,000 a year for the past three years, the price of your business will likely be valued around $200,000. Keep in mind this TOB value does not include property value.

For those who are reading this with the hopes of selling in the near future, that valuation method might seem low to you. And it is.

The good news is that you can go above and beyond the industry standard, and sell your shop for a higher value, if you stay on top of your numbers.

Not only will diligent reporting and good customer service increase your TOB, but you’ll also have more leverage when negotiating offers from buyers.

Here are three steps you can take to improve the valuation of your business and secure the money that you worked hard to earn. 

Selling your automotive business

1. Be Tenacious About Gross Profit Margins (GPM)

The old business adage said it best: “It’s not what you make, it’s what you keep.” 

Potential buyers know the ins and outs of how to value an automotive repair shop that’s on the market. They’ll want to see what your shop’s gross profit margins (GPMs) are, not your shop’s revenue.

Your shop’s gross profit margins will give them an idea of what you were able to take home—and by extension, what they can expect to be able to take home if they go through with the purchase. 

Here are some strategies to start increasing your GPM today:

  • Increase prices on your parts or labor. A parts matrix and a labor matrix that’s built into a cloud-based shop management system can help you mark up your prices without sticker-shocking your customers. 
  • Ensure all cores and unused parts are returned. Reports within a shop management system, such as Tekmetric’s Parts Purchased Report and Parts Usage Report, can give you a clear picture of how much you’re spending versus how much you’re using. 
  • Cease ineffective marketing campaigns. Tracking the ROI you’re getting from various marketing campaigns by having your service advisors track marketing sources on each repair order can help you pinpoint what’s working and what’s not so that you can put your money where it will yield the best results. 

Tekmetric’s various built-in reports can give you a clear picture of what your margins are, so you can keep adjusting your strategy to get even better margins that will impress prospective buyers.

2. Increase Your Average Written Repair Order (AWRO)

In the majority of cases, your AWRO can and should be higher than you think. 

Let’s do some quick math. It costs drivers an average of 10 cents a mile to maintain their vehicles. If someone drives 15,000 miles a year, and each mile costs them around 10 cents of wear and tear, that person is looking at $1,500 in repairs each year.

Even if we stay on the conservative side, that person is looking at spending $1,000 on annual maintenance. 

When you consider how often each customer visits your shop annually, do those numbers sound in line with your shop’s current AWRO? 

By running thorough inspections on each vehicle, your technicians can catch all potential issues, including budding issues that will need to be addressed down the line.

Digital vehicle inspections encourage technicians to give customers a holistic overview of which issues need work immediately, which issues will need work soon, and what’s good as-is. And with these more thorough inspections, your service advisors can maximize their AWRO. 

Be careful not to prioritize a high AWRO at the expense of customer trust. One great way to balance AWRO with customer trust is by showing customers what work needs to be done ASAP, and what work can wait. 

3. Work to Maintain an Excellent Social Reputation Everywhere

Prospective buyers are going to look at your ratings on various platforms, including Google, Facebook, Yelp, Better Business Bureau, Indeed, and Glassdoor. 

Why?

Because buyers want to invest in a shop that has a strong social reputation among customers and employees, and by extension, the broader community.

Buyers might feel uneasy purchasing a shop with bad ratings. They might back out of the sale, or even try to pay less for the purchase, citing the low ratings as a reason why.

But when you have high ratings on these platforms, you’ll have more leverage to negotiate a higher price. 

👉 Ready to grow your automotive business? [Book a personalized Tekmetric Demo Here]

FAQ

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Choosing the best auto repair software for your shop is essential for staying competitive in today’s digital landscape.  While many shops are adopting digital solutions, the variety of options for the top auto shop software can make the choice overwhelming. To find success, it is important to identify a solution that aligns seamlessly with your business goals and strategy.

What is Auto Repair Shop Software?

Auto repair software is a digital tool shop owners can use to streamline workflows and help with daily tasks like invoices, reporting, and payments. These softwares are designed to make shops run smoother and reduce headaches. Each software has a unique set of features and functionality. This guide was created to help you find the best shop management software and compare and contrast features.

Benefits of Auto Repair Software

Auto repair software can offer a lot of benefits for your shop including:

  • Reduced back and forth with customers through two-way texting.
  • Quicker inspections leading to more vehicles per day.
  • More secure files through cloud-based software versus pen and paper.
  • Automated tasks take less time like parts ordering and repair order creation.
  • Increased visibility of how your business is doing through real-time dashboards.
  • Keep track of customer notes, names, and vehicle history in one place.

All of these benefits improve efficiency in your shop leading to more revenue. Plus, your staff will be able to do more in less time making their lives easier.

Top Shop Management Software Features to Look For

The solution you use in your shop should offer a comprehensive suite of features to streamline operations, enhance your customer experience and increase profitability. These features might take on several forms, so look for options that fall into one of the following five categories:

  • Security Features
  • Convenience Features
  • Trust Features
  • Efficiency Features
  • Expansion Features

Tek-Tip: While features are important, don't forget to calculate cost. Compare if the cost is monthly or yearly and what the ROI will be for your shop. Tekmetric users see a 25% average increase in repair orders within the first 120 days.

Security Features

The best automotive repair shop software is one that prioritizes security. Your shop collects tons of data both internally and externally each day. Not only do you store information on your shop’s productivity and financial performance, but vehicle owners also entrust you with their personal information. In all cases, that information should be stored safely and protected by your software solution. Some key features to look for include:

  • Cloud-based. Cloud-based systems are one of the most secure solutions available. Not only is the data stored in a cloud-based system available to you anytime, anywhere, but it is also regularly backed up to provide an additional layer of protection against unforeseen events like natural disasters or equipment failures.
  • Third-party security certification. Third-party certifications validate a shop management system’s commitment to data protection. Tekmetric recently achieved SOC II Type 2 Compliance, demonstrating its dedication to safeguarding customer data in five areas: security, availability, processing integrity, confidentiality and privacy.

Convenience Features

When customers have an excellent, convenient experience, they are more likely to return to your shop for future repairs. The best car repair software you can use in your shop helps you personalize the customer experience for your target audience and improve customer communication. Here are some customer-centric features to consider:

  • Digital payment solutions. With features like integrated payments, buy now pay later and text-to pay, customers can pay in a manner that works best for them, allowing them to pick up their car after hours, pay invoices from their office and even complete a payment for their college student from states away.
  • Two-way texting. Two-way texting features can streamline communications, allowing your team to easily text with customers. With two-way texting, you can even designate your shop’s existing landline number as the contact to avoid confusion.
  • Automation. With automation-based features like SmartJobs, your service advisors can create jobs in only one or two clicks, allowing them to focus less on manual tasks and more on interacting with customers.

Trust Features

In the auto repair industry, creating customer loyalty is critical for differentiating your shop and driving business. Your customers will keep coming back if they trust your team and the services you provide. As you search for the best shop management software for your shop, look for a solution that helps you increase transparency and build trust with new and existing customers alike. Some features might include:

  • Digital vehicle inspections. DVIs allow technicians to complete a comprehensive inspection of the vehicle and send customers pictures and videos of any repairs it might need. This strategy helps customers better understand what is happening with their vehicle, making them more likely to agree to necessary repairs.
  • Educational integrations. Some integrations can help educate your customers on the necessity of a repair or how their vehicle should work. With Tekmetric’s integration with MotoVisuals, for example, customers can view animated videos of proposed repairs that explain why these repairs are vital for their vehicle. This creates a seamless experience for your customers while building trust and strengthening the relationship.

Efficiency Features

In addition to providing secure data storage and enhancing your customer experience, investing in auto repair software can also help your mechanic shop run more efficiently. The best auto repair software for you should offer customizable functionality that streamlines your internal processes and workflow to help you finish repairs on time. Here are some features that promote efficiency:

  • Inventory orders. In addition to building the estimates, a comprehensive shop management system can support your team in ordering parts and managing inventory. Tekmetric has created an inventory management solution that enables your technician to order parts as they are completing the repair diagnosis. This streamlines the work order process and removes any potential miscommunications between technicians and managers or service advisors ordering parts, leading to a more accurate and efficient process.
  • Automatic progress updates. Tekmetric automatically updates new notes within a repair order for all team members to view the updates as soon as they are entered. Service advisors can then automatically send these updates to the customer, so the customer remains informed even if the service advisor is occupied with another task. With automatic updates, the customer has a play-by-play of the repair – and they can complete the next task, such as approval or payment, without any back-and-forth over the phone or having to come in person.
  • Mobile App for 24/7 access. A mobile app can help your technicians perform inspections faster and be able to take pictures/videos right from their device. Mobile apps can also help shop owners check on reporting and dashboards while away from their desks.
  • Shop dashboard real-time reporting. Reviewing dashboards in real-time allows you to respond to potential bottlenecks or problems that arise throughout the day. For example, you can review your profitability early in the week and determine if you’re on the right path or if you need to take steps such as calling customers for approvals or following up on declined work to generate more repairs.

Tek-Tip: Unbiased review sites like G2 can be helpful when comparing which software is best for you.

Expansion features

One common mistake shop owners make is buying an auto repair shop management software that only meets their current needs. The best auto repair softwares grow with your business and can integrate with other products.

  • Integrations. Each auto repair shop is unique and has different needs. In addition, each shop will grow and have new emerging needs down the road. Purchase an auto repair shop software that meets your current needs and can integrate with other features you will need later on. Ask fellow shop owners which integrations they find helpful and learn from their success.
  • Multi-Location. If you are a shop owner with a vision to expand into multiple locations, make sure your auto repair software can handle the task. Tekmetric offers multi-shop management where you can view all of your reports in one place and streamline your workflow across locations.
  • New Services and Products. Do you envision your shop offering tires or other products in the future? Not all auto repair softwares are built equal, so make sure your software is up the task.

What is the best auto repair shop software?

The best automotive repair shop software for you is one that allows you to run your business smoothly while also supporting security, convenience and transparency between you and your customers. When your software supports these areas, you will be better poised to streamline your shop’s processes and create a better customer experience – ultimately driving your bottom line.

Choosing a software is a personal decision based on your specific business strategy, budget, customers and team. Fortunately, many softwares have advanced features that can be customized to your goals and needs. These advanced features come at a price and each software has differing pricing plans. Make sure your research includes pricing and what the ROI will be for your shop.

Final Thoughts

When researching the right shop management solution for your shop, look for the right features to meet your needs and workflow. Another expert tip is to utilize unbiased review platforms like G2 to discern which software is best for you. Lastly, network and connect with fellow shop owners and see what they recommend.

How to Choose the Best Auto Repair Shop Software

October 15, 2024

Read time: 3 min

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Compare your shop's performance against real data from thousands of auto repair shops by state.

Benchmarking data is only useful when it changes what you do next.

If you've run your shop's numbers through the Tekmetric Shop Index and seen where you rank on ARO, car count, parts margin, and effective labor rate — good. You have a diagnosis. Now you need a plan.

This post walks through what each gap in your TSI results is actually signaling, which operational levers move the needle on each one, and how to build a focused 90-day improvement target that gives your team something concrete to work toward.

Start With the Biggest Gap

Your TSI results will show you four rankings. Resist the temptation to try to improve all four at once. The shops that make the most progress pick the metric with the largest gap and stay focused on it for a full quarter before adding another priority.

Trying to improve ARO, car count, parts margin, and effective labor rate simultaneously often means improving none of them because the operational changes required for each are different and can compete for your team's attention.

So step one is simple: look at your four rankings, find the biggest gap from the industry benchmark, and start there.

Gap: ARO Below Benchmark

If your average repair order is lagging, the most common root cause is inspection performance. Either digital vehicle inspections (DVIs) aren't being completed consistently, or they're being completed but not converted into approved work.

A few questions to answer before you act:

  • What percentage of repair orders have a completed DVI attached?
  • Of the DVIs sent to customers, what percentage include photos or video?
  • What's your close ratio on recommended work?

If DVI completion is below 90%, that's almost always the first lever. Tekmetric's Inspection Report shows completion rates by technician, making it straightforward to identify who needs coaching and who's already performing well.

"Now I can look at everybody at a glance. I can be in a different state, different city and know exactly what's going on in each location all the time."  — Leroy Ingram, Ooroo Auto Care, Tekmetric Customer

If DVI completion is strong but close ratio is low, the issue is likely in how inspections are being communicated to customers — photo and video quality, the language in findings, how quickly the estimate follows the inspection.

Shops on Tekmetric also have access to the Parts and Labor Matrix, which protects against underpricing. It can be a quiet ARO killer that doesn't show up until you look at margin data.

➡ See how your ARO compares →

Gap: Car Count Below Benchmark

A car count gap can mean two different things depending on how it breaks down: you're not bringing in enough new customers, or your existing customers aren't returning at the rate they should. Both problems need attention, but they need different solutions.

For new customers, the questions are acquisition-focused. Tekmetric's online booking gives customers a way to find you and schedule an appointment 24/7 — filling bays without your team picking up the phone. The more friction you remove from the booking process, the more new customers follow through.

For returning customers, the questions shift to communication. Are declined jobs being followed up? Are customers receiving service reminders? Tekmetric Marketing automates follow-ups on declined work and scheduled maintenance intervals — so your team stays in contact with your car count without adding manual effort.

"Seven hundred and two dollars in ad spend has generated 11 net-new customers and $12,802 in new customer revenue — an 18.3x return on ad spend before factoring in the lifetime value of those customers returning for future visits."  — Tanner Markham, Phase 2 Automotive, Tekmetric Customer

➡ See how your car count compares →

Gap: Parts Margin Below Benchmark


A parts margin gap is almost always a pricing problem — either your markup isn't keeping up with cost increases, you're applying flat markup where a tiered matrix would protect margin better, or your team is manually overriding prices inconsistently.

The fix starts with reviewing your Parts Matrix in Tekmetric. A well-structured matrix automatically applies the right markup based on part cost ranges, removing the inconsistency that comes from individual pricing decisions at the job level.

After updating the matrix, run your Parts Purchased Report to verify that retail pricing is reflecting the changes accurately. This is also a good time to cross-reference against recent vendor invoices — if costs have moved significantly in the last 6 months, your matrix thresholds may need updating.

➡ See how your parts margin compares →

Gap: Effective Labor Rate Below Benchmark


If your effective labor rate is trailing your posted rate, the most common culprits are inconsistent discounting, flat-rate job structures that cap labor recovery, or package pricing that doesn't account for actual labor time.

Start by pulling your Discount Detail Report to see where and how often discounts are being applied. If they're being applied inconsistently across your team, that's a coaching conversation — and Tekmetric's real-time reporting makes it easy to see which service writers are discounting most frequently.

The Labor Matrix is the structural fix. Similar to the parts matrix, a tiered labor matrix adjusts the billed hours or dollar amount based on configured ranges, protecting margin without changing what customers see on the invoice.

➡ See how your effective labor rate compares →

Building a 90-Day Improvement Target

Once you've identified your primary gap and the lever that addresses it, the last step is turning it into a measurable target for the next 90 days.

A good 90-day target is specific, tied to a leading indicator, and gives your team something to track week over week. For example:

  • ARO gap: "Increase DVI completion rate from 72% to 90% over 90 days, tracked weekly via Inspection Report"
  • Car count gap: "Launch declined-job follow-up automation within 30 days; track returning car count monthly for 90 days"
  • Parts margin gap: "Update Parts Matrix for all parts under $150 within two weeks; track parts margin weekly via Parts Purchased Report"
  • Labor rate gap: "Reduce average discount percentage by 15% over 90 days, tracked via Discount Detail Report"

These aren't arbitrary numbers — they're examples of the leading-indicator approach that lets you see progress before the outcome metric moves. Set yours based on where you're actually starting, not where you want to end.

Check Your Rankings Quarterly

Your TSI results are a snapshot. Set a reminder to re-run the benchmarking every quarter so you can see whether your numbers are moving relative to the industry — not just relative to your own history.

The shops that use benchmarking most effectively are the ones that treat it as a recurring discipline, not a one-time exercise.

"Thanks to Tekmetric, we've really enhanced our business and are looking to expand. We're the #1 shop, 6 years in a row in Upstate New York."  — Chris Chevalier, AAA Auto Repair, Tekmetric Customer

➡ Benchmark your shop now →

Takeaways

  • Start with your biggest gap — don't try to move all four metrics at once.
  • ARO gaps usually trace back to DVI completion rates or close ratios.
  • Car count gaps split into acquisition and retention problems — each needs a different fix.
  • Parts margin gaps are almost always a pricing matrix issue.
  • Effective labor rate gaps often come down to discounting habits and job structure.
  • A 90-day leading-indicator target turns benchmarking data into team direction.

➡ Benchmark your shop now →

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