How High Inflation Hits Your Automotive Repair Shop
With consumers paying more for gas and food, how does automotive repair rank in their priorities? Pretty high, according to the shop owners we asked.
Here’s some good news: All the chaos around supply chains and inflation could make your auto repair shop busier and more profitable. However, you only make the best of it when you have the right shop management software.
For example, each green dot in the image above represents one hour in a tech’s workday as represented by Shop-Ware’s Capacity feature.
“It becomes more clear in times of economic unrest that the auto repair industry is easily one of the few ‘recession-proof’ industries,” says Lucas Underwood. As president of L&N Performance Auto Repair, he sees drivers investing in keeping their cars on the road.
The United States’ real gross domestic product (GDP) dropped 1.5 percent in the first quarter of 2022. That came after an increase of 6.9 percent in 47 states in the fourth quarter of 2021. The growth ranged from 10.1 percent in Texas to 2.3 percent in Iowa.
Drivers were already keeping their cars on the road longer, even before COVID lockdown began. In a study by DriverSide.com and Kelton Research, 82 percent of car owners reported they intended to keep their current vehicle longer than originally planned due to the economic climate.
What we see in automotive repair today
Automotive repair and other trades thrive when people pull back on their finances, says Frank Scandura, owner of Frank’s European Service in Las Vegas. First, families spend less money on other types of travel. Instead, they keep their old car running for a year or two longer, thanks to their trusted automotive repair shop.
“We’re busier than we’ve ever been before,” Frank adds. Earlier this month, he had 96 open ROs on one day alone. “I’m also seeing the shops I coach and in my network are busier than ever.”
Read how Frank earned $3.25 million in sales volume over the past year.
Sadly, many automotive repair shops didn’t survive COVID shutdowns, despite the Paycheck Protection Program money and emergency disaster relief. That means the surviving shops take on customers who lost their usual automotive repair outlets.
Meanwhile, many drivers cannot get a new car, due to a semiconductor shortage, so they keep the one they have. Others cannot afford to buy new or used, given the demand for cars that pushes up prices. Either way, they invest in repairs.
“A small percentage will pay whatever for a new car but they are often the people who don’t plan well financially,” Frank notes. “The sad part is when the market corrects itself, you’ll never get what you paid for the car.”
Planning ahead pays off
While some people will pay more to buy new, Lucas sees more customers acting in a more practical way.
Above all, he notes they spend money to put off the need to replace their vehicles. While they cut back on eating out, consumers still invest in automotive repair for the cars they have.
“Interestingly, I’ve seen that our clients are planning further ahead,” he says. “They schedule repairs over six months as opposed to completing repairs all at once or simply replacing the car.”
“Shop-Ware is the perfect tool for this,” Lucas says. “Our clients can see a prioritized list of repairs for the next few months and budget for those repairs.”
This eliminates surprises and results in a stronger partnership between the consumer and automotive repair shop, he adds. That way, the shop avoids the role of the bearer of bad news when something goes wrong.
Take care of your staff’s needs
Meanwhile, automotive repair staff face the same price hikes as other consumers. That makes it even more vital to pay your employees well so they stay with you, Frank says.
“We had the hardest time getting technicians to respond to job ads and offers but you have to have something to offer them.”
For example, be ready to answer these questions:
What kind of future do I have here?
Do you offer flexibility so I can drop my kids off at school?
What growth do you have planned for your company?
Describe your retirement plan.
“Forward-thinking automotive repair shop owners are making these changes,” Frank says. “Wages are finally coming into line with what they should be.
The Automotive Management Network recently noted the difference between wages ranging from state to state. The blog post notes the gaps arise from these factors:
Area cost of living
Type of shop (independent or dealership)
Vehicles serviced (typical or luxury)
Business costs, including mortgage/rent, utilities, taxes,etc.
Tech training – skills or certifications necessary to work on vehicles
Shops should raise their prices to keep up with inflation, according to Frank. “Then you can afford to pay your techs better so they can afford to feed their families.”
Parts create a whole new challenge
Once a car comes in for a repair, hunting down the right parts may create the greatest mystery of all. Frank finds sourcing parts much harder compared to past years. For the most part, he can get his hands on parts for basic repairs and maintenance. However, some batteries are hard to find but his staff can often get others that fit.Techs used to easily get parts for cars that are 10 to 15 years old, he notes. Now, it can turn into a nightmare.
“It never used to be that way,” Frank says. “Even or a 30-year-old car, you could always figure out a way to get the right part.”
As a result, drivers get caught in a Catch-22. They cannot drive their car and they cannot buy a new one so they get alarmed.
“We do the best we can,” Frank says. “Customers are understanding since they call other automotive repair shops and hear the same message.”
This strain reminds him of the value of the right to repair movement: “We’re in that exact scenario where you cannot get the part you need or the information to make the repair.”
If you’re not aware, Right to Repair pushes makers of cars and other electronic devices to share data. For example, John Deere and Apple restrict information about how to fix their products. As a result, consumers face fewer choices and more hassles.
“Automakers cannot service all the cars they sell,” Frank points out. “They would be foolish to not team up with the automotive repair aftermarket. People want freedom of choice.”
Get the latest in your inbox.
15 minutes will transform your shop.
Demo the industry’s leading shop management technology.