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The independent mechanical repair sector continues to increase in size from 63,844 shops in 1995 to an estimated 75,944 facilities in 2000. The estimated number of employees in 2000 is 277,377. Currently, a total sales figure for independent mechanical facilities equals an ASA estimated $34.4 billion for 1999. These figures do not include the approximately 22,250 auto dealerships with service facilities that took in approximately $22.1 billion ($12.3 billion in service and $9.8 billion in parts) in 1999, according to the National Automobile Dealership Association.

Shop Profile

The 2000 How's Your Business results pointed to another promising year in automotive repair. According to the respondents, mostly facility owners (93 percent), gross sales in 1999 were evenly distributed with 32 percent reporting sales of $250,000 to $500,000; 20 percent reported $500,000 to $750,000; 12 percent reported $100,000 to $250,000; 13 percent reported $750,000 to $1 million; and 10 percent reported $1 million to $1.5 million. Interestingly, the $2 million plus and under $100,000 were in the single percentages of 3 percent and 4 percent respectively.

The average physical structure is seven bays and 5,709 square feet of floor space. The average shop has been in business 22 years. Besides being independently owned (92 percent), the facilities are family-owned businesses (85 percent). The remaining 15 percent are franchises.

With change and progress being a key to business success, 25 percent of respondents expanded or renovated their facilities in 2000 and 33 percent are planning expansions or renovations in 2001.

Equipment purchases are also planned by 45 percent of facilities. Twenty-eight percent plan to purchase lifts; 18 percent, diagnostic equipment; 6 percent, computer hardware; 16 percent, tire and alignment equipment; and 9 percent, computer software.

Internet access is common among 79 percent of facilities, with 83 percent of owners having Internet access at home. Internet usage ranges from 73.4 percent researching products and information to 12 percent transferring funds. The activities in the middle include: 50 percent purchase products, 42 percent seek entertainment, 36 percent advertise their facility, 35 percent gather repair procedures and news, 26 percent order parts and 22 percent chat or participate in discussions. Survey participants were asked to select all applicable Internet activities, therefore total results are greater than 100 percent.

Owner Profile

The ASA mechanical shop owner is layered with professionalism. The owner is 47 years old and comes to work with 27 years of experience. Sixty-seven percent of owners are ASE certified, and 36 percent participate in Automotive Management Institute (AMI) educational courses.

Currently, 24 percent of ASA shop respondents serve on advisory boards of vocational schools and 64 percent are willing to sponsor an apprentice, co-op or work-study student.

Technician Profile

Of the four technicians employed by an average ASA mechanical shop, three (75 percent) are ASE certified. Education for technicians increased, according to 45 percent of owners. Education stayed the same for 48 percent, and 6 percent noted a decrease in technician education hours. Technicians received 34 hours of updated education in 2000. This relates well to the 37 update hours received in 1999.

According to the 2000 How's Your Business results, 84 percent of employers fund the continuing education of their technicians. Two percent rely entirely on their technicians to fund education, and 10 percent incorporate a system in which both employer and technician finance continuing education.

Business owners and technicians gather their education from several sources, including product manufacturer's information (63 percent), industry (62 percent), association seminars (57 percent), trade magazines (52 percent), ASE certification (50 percent), and in-house programs (40 percent).

After education comes compensation. Rising from 1999's $21,715 entry-level technician salary, 2000 entry-level techs receive $22,934, experienced technicians earn $41,354, service writers earn $35,456 and shop managers receive $45,027 in 2000.

How technicians are compensated varies. Thirty-two percent of technicians receive an hourly wage, 21 percent receive a percentage of the flat rate, 11 percent get a salary, 14 percent are hourly plus commission, 4 percent earn a salary plus commission and 10 percent receive a percentage of the labor rate.

Repair facility owners also offer employee benefits. Ninety-two percent provide paid vacations, 91 percent provide work clothes, 82 percent cover training, 77 percent fund medical insurance, 46 percent give an employee yearly bonus, 40 percent offer a 401(k) plan, 33 percent have life insurance and 24 percent offer some form of dental insurance. Twenty percent of mechanical shops supply tools. Eye care insurance is increasing in popularity among repair facility owners with 19 percent offering it in 2000, compared to 13 percent offering eye care insurance in 1999.

The category of mechanical shop employee in highest demand is journeymen (52 percent), followed by entry-level technicians (24 percent), service writers (8 percent), and customer service/front counter staff (3 percent).

Facility owners reported the number of technicians leaving the shop in 1999 and the number of technicians hired by a shop in 1999 as one each.

New hires come from referrals or word-of-mouth advertising (53 percent), vocational schools (14 percent), classified ads (11 percent) and other repair facilities (8 percent). Two percent of repair facilities gain new technicians from apprenticeship or industry school-to-work programs. However, 64 percent said they would be willing to hire an apprentice, intern, work-study or co-op technician.

Sales

The average ticket is $318, with 48 percent going to parts and 52 percent going to labor in 2000. Four technicians, two managers and two support staff formed a team, accomplishing an average of 65 repair orders per week. This is up from the 57 repair orders in 1999 at an average of $302 per ticket.

Comparing sales from 1999 to sales of 2000, 61 percent experienced a sales increase, 24 percent reported no change and 15 percent noted a decrease in 2000. For those reporting an increase in sales, 14 percent is the sales growth. For the 15 percent expecting a decrease, 10 percent is the sales decrease.

Sales increases for 2000 were attributed to marketing and advertising campaigns (45 percent), poor weather conditions (23 percent), a better economy (21 percent), and an increase in labor rates (12 percent). Nineteen percent cited other reasons not listed, such as customer service, hiring of technicians and office help, facility and customer referral programs.

When comparing 2000 to 1999 in terms of profit, 54 percent cite a slight increase in profit, 15 percent find no change, 13 percent see a large increase in profit, and 15 percent note a slight decrease in profit. One percent experienced a large decrease during 2000.

Customer base comparisons for 2000 to 1999 brought about similar results. Fifty-four percent note a slight increase, 20 percent report no change, 13 percent see a large increase, and 10 percent expect a slight decrease.

When asked how the number of jobs per month in 2000 compares to those in 1999, 49 percent note a slight increase, 22 percent say no change, 16 percent cite a slight decrease and 10 percent note a large increase.

The final comparison concerns the number of employees. The majority, 61 percent, notes no change in 2000 compared to 1999, 20 percent cite a slight increase, 11 percent report a slight decrease, and 6 percent is divided among no response and a large increase.

The busiest time of the year for 74 percent is summer. The busiest day of the week is Monday (52 percent) followed by Friday (16 percent), Tuesday (9 percent), Thursday (6 percent), Wednesday (5 percent) and Saturday (3 percent).

In 2001, 79 percent of ASA mechanical shops are expecting an increase in sales, 14 percent are planning on holding steady and 4 percent expect a decrease in sales.

Respondents noted an average of two comebacks per week and two warranty repairs per week in 2000. That creates an average of 6 percent comeback and 6 percent warranty repair, weekly.

Customer Demographics

Currently, 79 percent of all customers come into mechanical shops as repeat customers. With such a large percentage of repeat business, it's essential for shops to meet the expectations of their customer base and be aware when customers are disappointed or satisfied. Customer satisfaction surveys keep 38 percent of shops in tune with their customers, their public image and their own workforce.

Forty-nine percent of facility customers are women and 51 percent are men. That has changed only slightly from 1999 when 50 percent were women and in 1997 when 50 percent were men.

The average customer base extends 23 miles from the repair shop.

Marketing and Advertising

The dollars being invested in advertising has increased to $14,227 in 2000. This is up from $13,369 in 1999.

Ninety percent of independent mechanical repair facilities advertise in various media.

Mechanical shops rely heaviest on customer referrals and word-of-mouth to promote their facility (73 percent). Fifty-five percent use the Yellow Pages. This has continuously decreased from 1997's average of 76 percent.

Direct mail comes in a close third at 42 percent. In the 10 percent to 20 percent ranges are newspapers (19 percent), the Internet (18 percent), radio (15 percent), neighborhood shoppers (12 percent) and other media (11 percent) such as event marketing, cause marketing, team sponsorship and community involvement. The lowest ranking media are cable television (7 percent), no advertising (6 percent), broadcast TV (4 percent) and billboards (3 percent).

Thirty-six percent of technically savvy mechanical shops have joined the ranks of businesses with Internet Web sites in 2000. This is an increase from the 32 percent reporting sites in 1999.

A personalized advertising medium being adopted by mechanical shops is the company newsletter for customers. According to How's Your Business 2000 respondents, 16 percent currently offer a company newsletter to their customers.

Industry Issues

The industry issue having the largest impact on business is finding good technicians (69 percent). ASA is currently addressing this issue by promoting vocational schools, school-to-work training and apprenticeship programs.

The second leading issue affecting mechanical repair facilities is keeping up with technology (65 percent). This issue may become even more important as hybrid-powered vehicles descend on the market.

The third major issue is industry image, according to 36 percent of mechanical shop owners. ASA is currently tackling this issue by sponsoring the Bobby Likis Car Care program on radio stations throughout the United States. Sponsorship of the program is designed to increase consumer awareness of ASA and increase traffic into ASA repair facilities. Ten percent of survey respondents stated they had heard the Bobby Likis Car Care radio program.

Currently, 35 percent of mechanical shops are affected by the availability of information. ASA's Mechanical Operations Committee understands this and is currently conducting a survey and readying Robert Redding, ASA's legislative representative, to work with governmental agencies on behalf of independent repair facilities.

Issues affecting mechanical repair facility business in the teen percentages included increased competition (19 percent), aftermarket parts (17 percent) and regulatory compliance (15 percent). Issues that ranked less than 10 percent included finding good management, legislative issues and shop licensing.

Although industry image ranks high as an issue affecting business, independent mechanical facility owners have hope. Survey results showed that 49 percent of respondents believe the industry's image is improving. Forty percent of the remaining 100 believe the image has stayed the same. A decline in industry image during 2000 was noted by 6 percent. Three percent cast a rapidly improving ballot for the industry's image.

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Similar to the increasing population of independent mechanical facilities, independent collision facilities continue to increase. ASA estimates the number of independent collision repair facilities to be 38,935 for 2000 with an estimated 211,326 employees. Currently, a total sales figure for independent collision facilities equals an ASA-estimated $22.84 billion for 1999. These figures do not include the approximate 10,500 auto dealerships with body shops that took in approximately $7.1 billion ($3.94 billion in service and $3.16 billion in parts) in 1999, according to the National Automobile Dealership Association.

Shop Profile

Respondents, mostly facility owners (92 percent), provided a range of their annual sales revenue for 1999: 27 percent cited $1 million to $1.5 million, 19 percent reported revenue at $2 million plus, 17 percent cited $750,000 to $1 million, 11 percent placed themselves in the $250,000 to $500,000 range, 11 percent also selected $500,000 to $750,000. Ten percent fell in the $1.5 million to $2 million range and 5 percent said up to $250,000 in sales revenue.

The average shop has been in business for 26 years, has 19 bays and is approximately 11,067 square feet in size. This is an increase from the 17-bay, 10,388-square-foot facility average in 1999.

Thirteen employees are involved in repairing an average of 30 vehicles per week. The jobs per week are up significantly from the 21 reported in 1999. A team of eight technicians, three management staff members and two support staff employees accomplish the average six-day cycle time.

In 2000, the average ticket totaled $2,033. This is a large increase from the 1999 figure of $1,690.

Parts and labor percentages remain constant at 45 percent parts, 49 percent labor with the remaining percentages being devoted to shop supplies and waste fees for 2000. This is similar to the parts and labor percentages for 1999.

Independent collision shops are just as Internet savvy as mechanical shops. Almost nine out of 10 (89 percent) have Internet access at their repair facility. This is followed closely by the 83 percent reporting Internet access at home.

The Internet is used to research products (74 percent), send and receive assignments (56 percent), advertise their shop (46 percent), entertainment (47 percent), gathering news (41 percent), get repair procedures (22 percent), order parts (17 percent), be involved in chats/discussions (14 percent) and transferring funds (12 percent).

The types of parts used in collision facilities in 2000 include OEM (77 percent), recycled OEM (13 percent), non-OEM (11 percent) and recycled non-OEM (9 percent). These figures are greater than 100 due to respondents' variation.

Direct Repair Programs (DRPs)

Currently, 81 percent of shops are involved in an average of five DRPs. On average, 42 percent of these shops' sales volume is generated by DRP referrals. This is up from the 36 percent of volume cited in 1999.

DRPs have a positive impact on the collision industry, according to 40 percent of ASA collision shops. Twenty-four percent of respondents cite DRPs as having a negative impact on the collision industry. Currently, 32 percent remain undecided.

In 1999, 40 percent of independent collision facilities had plans for expansion or renovation in 2000, while 32 percent of respondents in the latest survey report having expanded or renovated in 2000. Thirty-eight percent of collision facilities are planning renovations or expansions in 2001.

Equipment purchases are also on the agenda of 49 percent of ASA collision shops for 2001. More than a third (34 percent) are planning the purchase of spray booths; 20 percent are planning to purchase frame rack/alignment machines; 8 percent, computers and computer software; and 7 percent, lifts. The remaining percentages were scattered among spot welders, prep stations, new buildings, measuring systems and vacuum equipment as purchasing agendas for some facilities.

Owner Profile

Like the ASA mechanical shop owner, the ASA collision shop owner exemplifies skill and experience. The average owner is 47 years old, has 26 years of experience and manages one repair facility. The majority (87 percent) are family-owned facilities, and 95 percent are independent. A franchise owns 5 percent of shops. The most common franchiser mentioned was CARSTAR, which owns 12 of the 13 franchise shops represented by the survey.

Sixty-one percent of owners are ASE certified and 81 percent are I-CAR trained. Forty-four percent are continuing their education through AMI management courses.

Currently, 31 percent of respondents are serving on the advisory board of a vocational school and 71 percent are willing to sponsor an apprentice, co-op or work-study student. These are similar percentages to those from the 1999 survey.

Technician Profile

On average, eight technicians are employed by collision shops, of which at least four (55 percent) are ASE certified. An average of six technicians (75 percent) are earning I-CAR certification. A paint manufacturer certifies 84 percent of refinishing technicians.

For 60 percent of technicians, an update of 18 education hours is received annually. Almost a third (32 percent) of owners increased education within their facilities during 2000. Seven percent cited a decrease in education among their technicians.

Eighty-three percent of employers take the initiative to fund the education of their technicians. Twelve percent of a technician's education is cosponsored by both the employer and the technician. Only 4 percent of respondents require the technician to foot the entire bill.

Independent collision repair facilities rely on many sources for technical education. The sources include paint companies (85 percent), association seminars (79 percent), product manufacturers (72 percent), jobbers (54 percent), ASE certification (52 percent), trade magazines (49 percent), industry seminars (48 percent) and in-house programs (39 percent).

Compensation for entry-level collision technicians rose slightly compared to last year's salary. In 1999, entry-level technicians were compensated an average of $20,278. In 2000, they received $20,457. Experienced technicians fare well among independent collision facilities with annual pay of $44,139. Painters receive annual pay of $47,387 in 2000. An estimator's average annual pay for 2000 is $40,229. Respondents reported a manager's average annual pay to be $50,320 within independent collision repair facilities.

The way technicians are compensated varies among facilities. Forty-five percent receive an hourly wage, 25 percent are compensated by a percentage of the flat rate, 13 percent receive a percent of labor rate, 6 percent earn hourly plus commission, 5 percent are salaried and the remaining 6 percent are scattered among salary plus commission and other alternatives such as hourly plus team plan bonus and progressive flat rate with bonus.

In addition to monetary compensation, 92 percent of independent collision repair facilities also offer their employees a paid vacation, 85 percent of shops provide work clothes, 81 percent provide training and seminars, and 81 percent provide medical insurance. Fifty percent offer 401(k) plans, almost half (49 percent) give a yearly bonus, 40 percent offer life insurance and 30 percent offer dental insurance. Tools (19 percent) and eye care (23 percent) come in at the bottom of the benefits list.

When asked to rank the employee categories shops need most, 47 percent cited journeyman technicians followed by entry-level technicians at 29 percent. The remaining percentages went to customer service or front counter personnel at 4 percent, management at 5 percent and estimators at 4 percent. Other respondents cited detailers and helpers, or no response.

According to owners and managers, an average of two technicians left their collision repair facility and two were hired in 1999.

Sources for finding collision technicians includes referrals and word-of-mouth (61 percent), vocational schools (14 percent), other collision repair facilities (9 percent), paid classified advertising (6 percent) and apprentice and industry programs (3 percent).

This is a curious point considering that 31 percent of owners reported serving on educational advisory boards and 71 percent are willing to sponsor an apprentice, co-op or work study student.

Sales

According to survey results, 63 percent cited a sales increase in 2000 compared to 1999. An increase of 18 percent is expected. An additional 23 percent felt no change, and 14 percent of facilities cited a decrease in sales.

For those finding it more difficult this year compared to 1999, a 13 percent decrease in sales is expected at the end of 2000.

Respondents stated an average of one comeback per week can be expected by collision repair facilities.

Sales increases were attributed to better insurance company relationships/DRPs (27 percent), marketing strategies and advertising (24 percent), weather conditions (16 percent), and a better economy (11 percent). Nine percent said an increase in labor rates improved their sales numbers. Consolidation accounted for a slight 2 percent. Other responses include customer referrals, repeat customers and building expansions.

When comparing the profit of 2000 to 1999, 13 percent cited a large increase in profit, 53 percent reported a slight increase, 14 percent cited no change, 15 percent reported a slight decrease, and 2 percent combated a large decrease.

Customer base comparisons for 2000 to 1999 resembled those of profit with 18 percent citing a large increase, 53 percent chiming in with a slight customer increase, 17 percent reporting no change, 9 percent noting a slight decrease, and the remaining 3 percent giving no response.

Survey results showed an increase in the number of jobs comparing 1999 to 2000. This is true for 51 percent who saw a slight increase, however, 15 percent saw no change and 12 percent felt a slight decrease in the number of jobs per month. Only 1 percent reported a large decrease in jobs per month.

As for the number of employees working in a shop in 2000 as compared to 1999, the numbers showed some variation. According to survey results, 51 percent of shops retained the same number of employees. A slight increase was noted by 30 percent while 11 percent saw a slight decrease. Large increases were noted by 4 percent and a large decrease was noted by 1 percent.

The busiest season of the year is summer (36 percent), followed by winter (33 percent). Eleven percent selected fall and 10 percent selected spring.

The busiest day of the week is Monday (62 percent) followed by Friday (21 percent). The days in the middle of the week - Tuesday, Wednesday and Thursday - were cited to be the least busy for new job acquisitions with a combined percentage of 14.

Projecting their 2001 sales, collision shops appear to be optimistic. A strong majority (81 percent) is expecting an increase in sales. This is followed by 16 percent predicting no change, while 2 percent are preparing for a decrease in sales for the year 2001.

Customer Demographics

As in years past, the average customer base is split evenly with 50 percent women and 50 percent men. More than half (56 percent) of collision facility customers are repeat customers. Chances are that repeat business could be improved by performing a check on the levels of customer satisfaction. Currently, 55 percent of ASA collision shops conduct a follow-up customer satisfaction survey.

We all know that collision shops are visited when accidents happen. One way that 8 percent of shops are keeping their name in front of consumers is with a customer newsletter. This is down slightly from the 10 percent in 1999, but up from the 6 percent that produced newsletters in 1998 and 1997.

The average customer base extends 31 miles from the repair shop.

Marketing and Advertising >

In 2000, an average of $15,654 was invested in advertising, according to survey respondents. The 2001 projected advertising budget is slightly less at $15,125.

Similar to respondents in years past, 83 percent of collision shops advertise.

Selecting the best medium with which to advertise or market their shop has become a strong focus of shop owners.

According to survey results, 76 percent found word-of-mouth to be the strongest advertising medium. Yellow Pages advertising was second again in 2000, at 51 percent. Shops often use a combination of advertising media - two or three types, on average. Radio and newspaper came in next at 21 percent and 18 percent respectively.

Nontraditional advertising such as community involvement, event marketing, sports marketing, and cause marketing or sponsorship also scored 18 percent of the advertising vote. Internet advertising is increasing in popularity among 17 percent of respondents. The neighborhood shopper (11 percent), direct mail (10 percent), and cable television (10 percent) all received percentages in the teens. Billboard advertising (9 percent) and broadcast television (6 percent) garnered the lowest response rate from shop owners. Twelve percent of independent collision shops reported no advertising.

With 89 percent of independent collision shops reporting having access to the Internet at their repair facilities, it's reasonable to see that almost half (47 percent) of all independent collision facilities report having Web sites or Web pages.

Industry Issues

ASA collision repair facilities were asked to pinpoint the top three issues having the largest impact on their business. Finding good technicians (58 percent), insurance industry issues (45 percent) and being paid for necessary repairs (41 percent) received the highest marks. DRPs received 36 percent, followed by labor time allowances (20 percent) and cycle time at 16 percent. Keeping up with technology (15 percent), regulatory compliance (11 percent) and industry image (11 percent) were also listed. Other industry issues include aftermarket parts (9 percent), salvage parts (7 percent) and consolidation (2 percent).

ASA is currently tackling the industry image issue by advertising on the Bobby Likis Car Care program. Six percent of respondents have heard of the program.

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