As an independent auto shop owner, you could be on your way to bringing in the big bucks…assuming you know how to run your company the right way. According to IBISWorld, the US auto mechanic industry is worth $78 billion. However, the competition in this field is fierce—that dollar value is split between 282,637 businesses in the field.
Do you want to excel in the auto repair industry? If so, you’ll need to think about what your garage could be doing better. Here, we’re diving into six mistakes that could cut into your auto repair shop revenue. You’ll also find valuable advice on avoiding these issues and making your shop as efficient and profitable as possible.
1. Not Analyzing Your Prices and Services
The prices you charge for your auto shop’s services are at the heart of its profitability—or lack thereof. Do you think your rates could stand to be more competitive? Start by analyzing both your own prices and the prices offered by competitors in your area.
Overcharging for services is a quick way to encourage customers to look elsewhere. That said, undercharging can also cause problems. Even if your low rates attract customers, your profit margins may be too narrow for this strategy to be worth it.
You can also use this data to determine how profitable your garage’s individual services are. If a service is unprofitable because of its profit margins, consider a slight rate increase to even things out. On the other hand, if you aren’t making money on a service because nobody’s asking for it, don’t be afraid to cut it from your lineup entirely.
2. Eating Unnecessary Costs
Customers love perks, and things like free concessions in the waiting area, a complementary car air freshener, and waived credit card fees might not seem like they’d significantly impact your bottom line. Still, these costs–along with general shop expenses you don’t charge a customer for–can add up before you know it.
The good news is that you can continue to offer these benefits while protecting your bottom line. Instead of eliminating your shop’s frills, try introducing a small scaled or flat shop fee. If this fee isn’t exorbitantly high, most customers won’t complain and you’ll mitigate some of your own expenses.
3. Not Having a Parts Inventory System
Even at the best of times, dealing with backordered parts can seriously impact your shop’s workflow. That said, 2023 is far from “the best of times.” The supply chain problems that have arisen in the wake of COVID-19 continue to affect the availability of parts at all levels of the auto industry.
While this problem might seem insurmountable, you can reduce its impact on your auto repair shop revenue by taking a few common-sense precautions. Implementing a parts inventory system is one of the most effective ways to work around backorder issues. These systems will let you know when it’s time to reorder parts before you run out, lowering your risk of dealing with long waits. At the same time, a parts inventory system can make your shop more organized and efficient than ever.
4. Not Charging for Diagnostics
Some shops choose not to charge for diagnostics, since it can be an opportunity to get cars in the bay and find other services during the inspection. With that strategy in mind, you might be tempted to handle this task at no cost to your customers.
But the fact remains that this service—like any other service you offer—is made possible by the hard work of qualified technicians.
You wouldn’t expect your employees to work on any other automotive service for free. That means there’s no reason why you and your team shouldn’t be fairly compensated when handling diagnostics, too.
Additionally, offering free diagnostic services can make the quality of these services an afterthought. When diagnostics aren’t among your billable services, they become something your mechanics might try to finish as quickly as possible. However, this could lead to missing crucial issues with a customer’s vehicle in the process.
Since finding and resolving hidden problems is a fantastic way to boost your auto repair shop revenue, be sure your techs can take all the time they need on diagnostics.
5. Poor Hiring and Retention Practices
If you’ve been active in the auto repair industry for long enough, you’ve probably met a shop owner or two who’s hired their friends or relatives as mechanics regardless of their qualifications.
That might not seem like a major issue, but subpar technicians can cause anything from repair delays to vehicle damage. Thus, not being thoughtful about the people you hire could quickly put your shop’s reputation—and shop revenue—at risk.
Highly qualified technicians are at the heart of any worthwhile garage. On paper, these workers typically cost more to hire than less experienced mechanics. But they’ll make fewer mistakes and handle services as efficiently as possible, which will more than cancel out the higher salaries they command.
Of course, this doesn’t mean you can’t hire promising but inexperienced new mechanics—you just need to do this the right way. First, you should put these technicians through a thorough training program. You can have them gain real-world experience by “shadowing” your more experienced mechanics after that. When they’re ready to take on their first job, these new mechanics will have a solid foundation to build on.
Once you have high-quality talent on your team, value your employees to ensure they stay on board. Employee turnover in your auto shop can be incredibly expensive, especially when you factor in the time and energy it takes to hire and train new team members.
6. Ignoring Marketing
Even if you’re doing everything else right, potential customers won’t choose your auto shop for their repair and maintenance needs if they don’t know it exists.
If you’re a newcomer to the auto repair industry, the benefits of marketing are self-evident. Reaching out to people in the area will help you get your shop’s name out there. But even for long-lasting garages, marketing is a crucial part of increasing auto shop revenue and staying profitable in the face of stiff competition.
In the 2020s, focusing on “traditional” advertising platforms like TV and print ads is far from your best move. These marketing strategies can help you find new customers, but they aren’t nearly as effective as automotive digital marketing. You’ll need to work with a partner to reach local motorists where they are, and BayIQ can help.
BayIQ’s industry-leading automated marketing software is just what your auto shop needs to up its promotional game. When you start using this software, you’ll be able to handle email and text marketing (including maintenance reminders and promotional messages) without any effort on your part. Beyond that, BayIQ can automatically solicit online reviews and keep customers coming back with engaging loyalty programs.
Learn more about how BayIQ can supercharge your auto repair shop revenue by setting up a demo today!