For 2004, there are an estimated 79,695 independent general mechanical repair businesses in the United States. These independent businesses employ an estimated 318,186 individuals who provide service and repair for more than 216 million motor vehicles. With 70 percent (118 million) of warranty vehicles having maintenance and repair away from dealerships, independent shops continue to stay busy.

ASA projects total sales for general mechanical repair facilities in 2004 to be $32 billion, based on Bureau of Economic Analysis figures for general mechanical repair. If you add in specialty repair facilities, oil change facilities and transmission shops, the estimated total sales moves closer to $45 billion.

These figures do not include the approximate 21,650 auto dealerships with service facilities that took in approximately $30 billion ($17 billion in labor and $13 billion in parts) in 2003, according to the National Automobile Dealership Association.

Business Profile

The number of bays and size of the mechanical repair facilities has shown slight growth the past few years. According to the 2004 results, the average business has seven bays and encompasses nearly 6,323 total square feet (including office and shop).

By breaking the number of bays into categories, we see movement within the industry from one to three bays to 10 or more bays. It is too early to tell if this is an industry trend. As for bay categories, 15 percent have one to three bays and 36 percent have four to six bays. Twenty-three percent have seven to nine bays and 17 percent have 10 to 12 bays. Nine percent have 13 or more bays.

The independent mechanical repair business continues to be a family-owned, time-invested business with 88 percent having been in operation 25 years. Although consolidation is occurring in other service industries, the mechanical repair sector remains predominately independent, according to 97 percent of survey respondents.

Nearly a quarter (23 percent) of the general repair business market can be found in cities with populations under 25,000. Twenty-nine percent are located in cities of 25,000 to 100,000. Larger cities with populations of 100,001 to 500,000 provided 25 percent of the responses. The survey shows an increase in the percentage of businesses located in areas of more than 500,000 people. This increased from 14 percent in 2003 to 23 percent in 2004.

In addition to being ASA members, 74 percent of respondents are also ASE Blue Seal facilities. Half of respondents are AAA-approved facilities.

Participation in parts distribution program groups is becoming more common within the independent mechanical sector. This system allows for a reduced price on parts bought in larger quantities. Currently, 39 percent of respondents participate in such a program.

This year, respondents were asked the average dollar amount of parts inventory on hand in 2003. Although this had a wide range of answers, an average was $25,665. Category wise, 56 percent had $15,000 or less in parts inventory; 21 percent had $15,001 to $30,000 in parts; 9 percent had $30,001 to $50,000; and 14 percent had more than $50,000 in parts inventory.

Of those with a parts inventory (97 percent of respondents), about 25 percent noted a reduction in their parts dollar amount and the number of parts held in stock, while another 25 percent noted an increase in both. The remaining 50 percent cited no changes in their parts dollar amount and stock quantity.

With 89 percent of mechanical shops having Internet access, ASA asked respondents where their Internet connections were located within the facility. The office is the most common place (84 percent) followed by service bays (44 percent), consumer areas (10 percent) and other areas such as parts room, break room or library (10 percent).

Internet access is changing from dial-up to DSL and cable. Currently, 27 percent use the dial-up system of 28K or 56K modems. The most popular form of Internet access is DSL (46 percent), up 3 percent since the 2003. Cable access (23 percent) experienced a growth spurt, up from 12 percent in 2003; and 3 percent use ISDN for Internet access.

Communication and information are key elements of the Internet. The accessing of information has grown from 72 percent in 2003 to 88 percent in 2004. Seventy-four percent of mechanical business owners use the Internet for e-mail, up 1 percent from 2003. The Internet is also used to order and track parts (64 percent), do product research (51 percent) and purchase tools and equipment (51 percent).

Other uses for the Internet include reading industry news (33 percent), transferring funds (24 percent), participating in chats and discussions (23 percent) and entertainment (22 percent). Twenty percent of businesses use the Internet for customer contact/retention. The Internet is used by 16 percent of mechanical businesses for technician training and by 13 percent for management training.

Another trend occurring in the independent sector is being open Saturday. Currently 100 percent are open during the workweek and 26 percent are also opting to conduct business on Saturday - either all day or until noon.

Monday is cited by 38 percent of respondents to be the busiest day of the week. Summer continues to be cited as the busiest season by 55 percent of those surveyed. Thirty-two percent of respondents are busy all year.

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Owner Profile

The makeup of respondents to the 2004 How's Your Business survey is starting to change. Business owners answer nine out of 10 surveys. Of the remaining 10 percent of respondents, 8 percent are managers and 2 percent are office staff.

The ASA mechanical business owner possesses many professional qualities. According to survey results, the average owner is 49 and comes to work with 28 years of experience.

Only 1 percent of business owners are under the age of 25; 5 percent are 25 to 34 years old; 25 percent are 35 to 44; 42 percent are 45 to 54; 22 percent are 55 to 64; and 4 percent are 65 or older. The largest percentage of owners are between 45 and 54.

As far as industry experience goes, 7 percent of owners have 10 years or less experience, 16 percent have 11 to 20 years of industry experience, and 15 percent have 21 to 25 years. Twenty percent of business owners report having 26 to 30 years of experience, 21 percent have 31 to 35 years, 11 percent have 36 to 40 years of experience, and 10 percent of mechanical business owners have 41 to 55 years of experience.

This year, the How's Your Business survey clarified its questions regarding ASE certification to include the respondent's current status. Of those who report having ASE certification, 49 percent are currently certified; 23 percent are no longer current. Twenty-eight percent report no ASE certification.

One-third of business owners (32 percent) are continuing their management training through Automotive Management Institute (AMI) courses, down slightly from 37 percent in the 2003 report.

Currently, 12 percent of mechanical business owners and managers have earned the Accredited Automotive Manager (AAM) designation from AMI by earning 120 credits and completing a requisite self-study course.

Mechanical business owners come from a variety of educational backgrounds. Thirty-five percent are high school graduates. Twenty-one percent received training from a vocational or trade school. Twenty-five percent have completed a two-year college program, and 16 percent have completed a four-year college program. The remaining 3 percent attended graduate school.

Time deficiency is affecting mechanical business owners' ability to participate in industry activities. This year's survey showed 21 percent of mechanical business owners serving on secondary or post-secondary educational advisory committees, compared to 79 who aren't.

The ASA-sponsored Congress of Automotive Repair and Service (CARS) has become a prominent vehicle for training and networking in the automotive repair industry. This year, CARS set a record in attendance (see story on page 32). According to the survey, business owners either go alone or take an additional staff member with them to attend technical and management classes, exhibitor shows and industry celebrations.

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Staff Profile

Benefits Provided to Employees - Click here to enlarge graph.

The 2004 How's Your Business survey strives to present an accurate picture of the employee population within the independent mechanical repair business. This year, the survey determined the number of employees per facility by job type along with the percentage of facilities having various types of employees.

For example, 29 percent of shops have an average of one apprentice technician with one year or less of experience. Forty-two percent of shops have one entry-level technician with two to four years of experience.

The most common employee is the experienced technician with five or more years of experience. Currently, 95 percent of shops have an average of three experienced technicians. Fifty-three percent of shops have a service writer; and 54 percent of businesses have an office staff person.

ASE-certified technicians are a common element in the landscape of mechanical repair businesses. Currently, 79 percent have an average of three ASE-certified technicians. This number may also include certification of the owner or manager, who serves in a technician capacity on a limited basis.

Because independent facilities perform service and repairs on nearly 70 percent of off-warranty vehicles, technicians and other mechanical staffers need to incorporate training into their schedules. Entry-level technicians receive an average of 27 hours of training annually; experienced technicians receive an average of 31 hours; and management acquires an average of 31 hours of advanced learning a year.

The majority of educational funding continues to come from business owners. According to 2004 survey results, 79 percent of employers fund continuing education for technicians. Fifteen percent ask for a funding partnership between business and employee; 3 percent of employees fund their training. Three percent said they supply no training.

This year's survey asked how much money was spent on training the staff. Owners reported an average of $783 was spent per entry-level technician; an average of $1,199 was spent on experienced technicians; and an average of $1,412 was spent on managers. In relation to the funding, 75 percent of business owners allow their technicians to attend training during the workday. Of those, 87 percent compensate technicians who attend training during the workday.

Technicians garner a large portion of their training from jobbers/parts suppliers (78 percent), independent training providers (63 percent), trade magazines (57 percent), and association seminars (48 percent). Closely following association seminars are trade show seminars (45 percent) and equipment manufacturer resources (44 percent). Thirty-nine percent of businesses use in-house programs as a source of technician training.

One-third of businesses (33 percent) use technical schools as a source of technician training. Finishing out the choices for training are OEM training (24 percent); community college (22 percent); and Web-based training (14 percent).

Changes in the economy have affected the growth of wages and salaries over the past two years. Each technician position showed a slight decrease in salary compared to 2003 survey figures. Apprentice pay averaged $19,911 in 2004. The average salary for entry-level technicians in 2004 is $27,201, slightly less than the $27,880 in 2003. Experienced technicians saw a drop in annual earnings from $47,948 in 2003 to $45,633 in 2004. Thirty-six percent of technicians are paid a flat rate, which may account for the slight drop in salaries.

Office staff wages increased from an average of $25,013 in 2003 to $27,692 in 2004. Service writers earn an average salary of $40,464. For the small percentage of businesses that employ parts managers, these managers are paid an average of $38,171 annually. Outside sales staff, which only a small percentage of shops have, earn an average of $35,723. The 2004 figures show shop managers averaging $51,600 in earnings. Keep in mind, many owners also serve as shop managers and their yearly earnings or salaries may not be included within the shop manager salary calculations.

As mentioned above, 36 percent of technicians are paid flat rate, which is the most popular form of payment for technicians. This is followed by 28 percent receiving hourly wages and 15 percent receiving a percentage of hourly plus commission wages. Another 15 percent are paid by salary and 12 percent received a salary plus commission. A percentage of labor rate and a percentage of flat rate are received by 8 percent of technicians. The smallest pay type - team pay - is used by 4 percent.

Employee benefits continue to be a big part of the independent mechanical repair sector. Standard benefits provided to employees include paid vacations (95 percent), uniforms (91 percent), paid holidays (88 percent), technical training (82 percent) and health insurance (74 percent). Additional benefits offered include a yearly bonus (48 percent), 401K/simple IRA (39 percent), management education (32 percent), life insurance (31 percent), dental insurance (31 percent), eye care (16 percent), cafeteria plans (14 percent), and tool reimbursement (14 percent).

When asked which employee category type was needed most, 63 percent said experienced technicians, followed by entry-level technicians (20 percent), service writers (6 percent) and apprentices (5 percent). The remaining 5 percent would hire detailers, shop managers, parts managers and office staff.

The 2004 results showed 37 percent of businesses promoted an average of two technicians, 46 percent had an average of two technicians leave, and 51 percent hired two technicians. It is important to note that nearly 50 percent had no movement of technicians and that there was equality between shops that had hired technicians and those that had technicians leave.

The primary source for locating new technicians still comes from referrals and word of mouth (62 percent), followed by classified advertising (14 percent) and vocational schools (10 percent). Using the Internet as a source of locating new technicians grew from 1 percent in 2003 to 8 percent in 2004. Eight percent selected recruiting technicians from other shops as the best way.

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Sales

Gross Sales - Click here to enlarge graph.

For the 2004 How's Your Business survey, respondents were asked to give their average ticket price for 2003. This year, the survey removed the largest and smallest average ticket to create a more balanced figure. The average ticket price in 2003 was $302 per order.

By dividing the average ticket price into categories, it is easier to see where repair orders lie for the majority of respondents.

Two percent of businesses reported having an average ticket up to $100. Twenty-seven percent recorded an average ticket from $101-$200. The largest percentage - 33 percent - reported an average ticket from $201-$300. Although $302 is the average, 21 percent had repair orders from $301-$400. Ten percent cited a repair order average from $401-$500. One percent acknowledged an average ticket from $501-$600, and 2 percent averaged between $601 and $700. The remaining 4 percent have repair orders averaging $700 or more.

According to ASA's 2004 survey, the average repair order is broken down into 49 percent parts and 51 percent labor. Overall, respondents said they use 32 percent OEM parts and 62 percent aftermarket parts. Recycled OEM parts make up 4 percent of the parts breakdown. Recycled, non-OEM parts come in at 2 percent.

Similar to the average ticket calculation, the 2004 How's Your Business survey results for repair orders were determined by removing the largest and smallest response numbers to create a more balanced average of repair orders. By doing this, the number of repair orders per month was determined to be 194.

Responses were also categorized to better describe average monthly repair orders. Twenty-four percent of businesses had one to 100 repairs monthly; 37 percent had 101 to 200 repairs; 21 percent had 201 to 300; 8 percent had 301 to 400 repair orders, 5 percent had 401 to 500; and 2 percent had 501 to 1,000 repair orders. The remaining 3 percent accounted for the largest and smallest repair orders, which were removed from the calculations.

This year's survey compared the annual sales percentages of 2003 to those of 2002. Two percent reported gross annual sales revenue under $100,000 in 2003, slightly down from 3 percent in 2002. The percentage of businesses with sales of $100,000 to $250,000 decreased from 11 percent in 2002 to 10 percent in 2003. The $250,001 to $500,000 category continues to show an increase, up from 26 percent in 2002 to 28 percent in 2003.

Nearly 23 percent of businesses reported annual sales for 2003 in the $500,000 to $750,000 category. Businesses with sales of $750,001 to $1 million dropped from 18 percent in 2002 to 17 percent in 2003. The largest change in annual sales occurred in the $1 million to $1.5 million category with an increase from 11 percent in 2002 to 13 percent in 2003.

The annual sales category of $1.5 million to $2 million continues to hold 4 percent of the market. The remaining 2 percent of mechanical businesses are in the $2 million to $4 million category. Although this group noted the largest negative percent change (36 percent), the sample size is too small to draw any statistically significant conclusions.

The state of the economy and the large number of new vehicles entering the marketplace from 2001 to 2003 because of low interest rates appear to have hampered mechanical service and repair sales. The 2004 How's Your Business survey asked business owners to compare sales in 2003 to 2004. Forty-six percent cited an increase in sales, averaging 12 percent in 2004. Twenty-one percent found no change in sales and 33 percent saw a decrease of an average of 13 percent in 2004 compared to 2003.

The top reasons cited for a sales increase include customer service (46 percent), marketing and advertising (40 percent), technician proficiency (35 percent), management skills (34 percent) and economic conditions (34 percent). Labor rates (17 percent), increased services provided (16 percent) and quality of parts (12 percent) were also cited as reasons for increased sales.

For the 33 percent who cited a sales decrease in 2004 compared to the previous year, 79 percent said it was due to economic conditions. Weather conditions were cited by 24 percent of business owners. Other circumstances such as new car sales, store closings and technician skill were cited by 23 percent as reasons for decreased sales. Remaining percentages were single digits attached to technician proficiency, management skills, customer service, percent of parts profit, labor rates and a decrease in the services provided.

Businesses were asked to select areas where the sales increase occurred. Fifty-two percent noted an increase in profit, 47 percent saw growth in their customer base, and 45 percent had an increase in monthly repair orders. Decreases in profits were experienced by 25 percent. Twenty-two percent cited a decrease in customers, and 29 percent had a decrease in monthly repair orders.

The outlook for sales in 2004 is projected to be positive for 83 percent of the population. Fifteen percent expect to hold steady and a mere 2 percent expect sales to decrease in 2004.

Service contracts, extended warranties and warranty repair have entered into the independent repair business world. All respondents said they offer a warranty - 97 percent offer a warranty on both parts and labor. Three percent offer a labor-only warranty.

Although 90 percent report repairing vehicles covered by an extended warranty, the offering of such a product still belongs to the dealership. Six percent of respondents are currently selling an extended warranty to their customer base.

With an average of 194 repair orders per month, respondents said an average of six result in a customer comeback. Of those six comebacks, three were attributed to defective parts.

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Customer Profile

Independent mechanical business customers are a loyal group. Currently, 81 percent of mechanical business customers are repeat customers. Typically, customer loyalty is a reflection of the quality of service and customer care businesses are willing to provide.

12-month period. This turned out to be four. Survey results also show the use of customer satisfaction surveys continues to decline within mechanical repair businesses. Currently, 36 percent of businesses perform satisfaction surveys, down from 40 percent in 2003. The percentage of women and men having their vehicle serviced continues to be split 50/50.

Both the type of customer and the distance a customer travels are important aspects in creating a successful marketing plan. According to survey results, the average repair facility's customer base extends 22 miles.

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Marketing and Advertising

As noted earlier, marketing and advertising continue to be a source of increased sales. Currently, 97 percent of businesses perform some form of advertising. Top advertising methods include word of mouth (86 percent), Yellow Pages (79 percent), signage (60 percent), direct mail (44 percent) and shop Web sites (41 percent).

Thirty-one percent of businesses use shop-branded specialty items such as key rings, stickers, mugs and license plate covers to advertise. Thirty-one percent also use the newspaper to advertise. Radio (26 percent) and church bulletins (22 percent) also provided beneficial sources of advertising.

Other areas of advertising include the neighborhood shopper (17 percent), cable television (12 percent), sponsorship of community events/sports teams (8 percent), and broadcast television (7 percent).

Mechanical business owners presented an average advertising budget of $15,595 for 2004, down a bit from $17,170 in 2003.

Thirty-nine percent of businesses spend $5,000 or less on advertising annually. Thirty-two percent spend between $5,001 and $15,000, and the remaining 31 percent spend more than $15,000 on advertising (with 7 percent of those spending more than $50,000 annually).

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Issues Impacting an Individual's Business

This year's How's Your Business survey took a different angle at determining which issues are currently impacting the individual business owner. With each business applying its own needs and experiences, the responses do not reflect the impact of the issues on the industry as a whole, but rather the issues that impacted the business owners who responded.

The issues cited by most respondents as having a positive impact on their individual business included new technology (79 percent), technician training (75 percent), consumer awareness (72 percent), service information availability (70 percent), aftermarket parts availability (65 percent), parts profitability (65 percent), aftermarket parts quality (60 percent) and technician retention (58 percent). Nearly 50 percent of respondents also selected industry image (44 percent) and extended warranties (42 percent) as having a positive impact on their individual business.

Although more individuals said the following issues had no impact on their business, this does not mean these issues do not affect the industry as a whole. For example, 71 percent of shops feel that government-funded vocational schools have no impact on their individual business. This does not mean the necessity for government-funded vocational programs is limited, it just demonstrates that the majority of businesses do not use government- funded vocational programs.

Fifty-five percent of businesses also felt that the quality of recycled parts had no impact on their business. Here, one should remember that the overall business parts composition contains only 5 percent recycled parts.

Currently, few states mandate shop licensing. When asked about the impact of shop licensing on an individual's business, 54 percent found that shop licensing had no effect on their individual business.

Although technician recruitment is a hot industry topic, when businesses were asked how it is impacting their business, 51 percent reported that technician recruitment is having no impact on their business. This coincides with the 51 percent of business owners who hired a technician within the past year and the 53 percent who did not have any technicians leave.

None of the listed issues garnered more than 50 percent of survey respondents for having a negative impact.

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