For 2005, there are an estimated 81,533 independent general mechanical repair businesses in the United States. These independent businesses employ an estimated 339,170 individuals who provide service and repair for more than 231 million motor vehicles. With 70 percent (114 million) out-of-warranty vehicles having maintenance and repair performed away from dealerships, independent shops continue to stay busy.

ASA projects total sales for general mechanical repair facilities in 2005 to be $36 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 $49 billion.

The figures do not include the approximate 21,640 auto dealerships with service facilities that took in approximately $30 billion ($17 billion in labor and $13 billion in parts) in 2004, according to the 2005 National Automobile Dealership Association Data Report.

Business Profile

The number of bays and size of the mechanical repair facility has shown a stable balance the past few years. According to the 2005 results, the average business has seven bays and encompasses nearly 6,113 total square feet (including office and shop).

As for shop and office comparison, the majority (48 percent) of shop space ranges between 2,500 and 5,000 square feet while the majority of office space (59 percent) ranges between 500 and 1,000 square feet.

Eighty-eight percent of independent mechanical repair businesses continue to be family-owned, time-invested businesses. The average years in operation for independent mechancial repair businesses is 25 years. Although consolidation is occurring in other service industries, this is not the case for 99 percent of survey respondents.

Ten percent of the general repair business market can be found in cities with populations fewer than 10,000. Twelve percent are located in populations of 10,001 to 25,000. Eighteen percent are located in cities with populations of 25,001 to 50,000. Twenty-two percent are located in cities with populations of 50,001 to 100,000. Larger cities with populations of more than 100,000 made up the principal segment (38 percent) of the responses.

In addition to being ASA members, 65 percent of respondents are also ASE Blue Seal facilities. Forty percent of respondents are AAA-approved facilities.

Participation in parts distribution program groups is down slightly within the independent mechanical sector. This system allows for a reduced price on parts bought in larger quantities. Currently, 36 percent of respondents participate in such a program, down from 39 percent in 2004.

This year, respondents were asked the average dollar amount of parts inventory on hand in 2004. Although this had a wide range of answers, an average was $35,210. By categorizing inventory, half of the survey contributors indicated an average of $15,000 or less in parts inventory; 26 percent had $15,001 to $30,000 in parts; 11 percent had $30,001 to $50,000; and 13 percent had more than $50,000 in parts inventory.

Of those with a parts inventory (98 percent of respondents), about 44 percent noted a reduction in their parts dollar amount and the number of parts held in stock, while another 18 percent noted an increase in both. The remaining 36 percent cited no changes in their parts dollar amount and stock quantity.

With 94 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 (54 percent) followed by service bays (33 percent), consumer areas (5 percent) and other areas such as counter, parts room, break room or other offices (2 percent) and 6 percent citing they do not subscribe to Internet service at their business.

Internet access is changing from dial-up to DSL and cable. With advances in Internet technology and the affordability of providers, more shops are moving away from dial-up to faster connectivity. Currently, 22 percent use the dial-up system of 28K or 56K modems, down from 27 percent last year. The most popular form of Internet access is DSL (55 percent), up 9 percent from 2004. Cable access (21 percent) experienced a decrease, down from 23 percent in 2004; and almost 1 percent use ISDN for Internet access. ISDN, short for integrated services digital network, is about five times faster than your average dial-up service. The remainders are satellite subscribers.

Communication and information are key elements of the Internet. The accessing of information has grown slightly from 88 percent in 2004 to 90 percent in 2005. Seventy-six percent of mechanical business owners use the Internet for e-mail, up 2 percent from 2004. The Internet is also used to order and track parts (65 percent), do product research (51 percent) and purchase tools and equipment (50 percent).

Twenty-six percent of businesses use the Internet for customer contact/retention. The Internet is used by 26 percent of mechanical businesses for technician training and by 18 percent for management training.

We've seen Internet usage, in general, grow across the board. Our members indicate that the trend will continue to grow annually.

Currently 100 percent are open during the workweek, and 20 percent are also opting to conduct business on Saturday - either all day or until Noon. This figure is down from last year's 26 percent.

Monday is cited by 45 percent of respondents to be the busiest day of the week, followed by Friday at 39 percent. Summer continues to be cited as the busiest season by 59 percent of those surveyed. Thirty percent of respondents are consistently busy all year.

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Owner Profile

The makeup of respondents to the annual HYB? survey is evolving. Of those who took the 2005 survey, 71 percent was comprised of business owners. Of the remaining 29 percent of respondents, 23 percent are owner/managers, 5 percent are managers, and office staff accounts for approximately 1 percent of the total survey responders. Technician respondents teeter just below the 1 percentile range.

The ASA mechanical business owner possesses many professional qualities. According to survey results, the average owner is 49 and arrives at work with 28 years of experience. This is consistent with results from last year.

Only 2 percent of business owners are under the age of 25; 6 percent are 25 to 35 years old; 25 percent are 36 to 45; 45 percent are 46 to 55; 12 percent are 55 to 60; and 11 percent are 65 or older. The largest percentages of owners are between 46 and 50 years.

As far as industry experience goes, 6 percent of owners have 11 years or less experience, 18 percent have 12 to 20 years of industry experience, and 17 percent have 21 to 26 years. Twenty-three percent of business owners report having 26 to 32 years of experience and 15 percent have 33 to 35 years of experience. Eleven percent have 36 to 41 years of experience, and 9 percent of mechanical business owners have 42 to 55 years of experience. Just less than 1 percent has more than 55 years of experience in the automotive service industry.

This year, the HYB? survey again asked about respondents' current status in regard to ASE certification. Of those who report having ASE certification, 58 percent are currently certified; 20 percent are no longer current. Twenty-two percent report no ASE certification.

One-third of business owners (34 percent) are continuing their management training through Automotive Management Institute (AMI) courses, up from 32 percent in the 2004 report. Currently, 15 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. Twenty-seven percent are high school graduates. Twenty-eight percent received training from a vocational or trade school. Twenty-three percent have completed a two-year college program, and 18 percent have completed a four-year college program. The remaining 5 percent attended graduate school.

This year's survey showed 25 percent of mechanical business owners serving on secondary or postsecondary educational advisory committees, up 4 percent from last year.

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Staff Profile

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The 2005 HYB? 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, 34 percent of shops have an average of one apprentice technician with one year or less of experience. Thirty-five 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, 91 percent of shops have an average of three experienced technicians. Fifty-six 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, 89 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.

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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 40 hours of training annually, experienced technicians receive an average of 32 hours and management acquires an average of 32 hours of advanced learning a year.

The majority of educational funding continues to come from business owners. According to 2005 survey results, 79 percent of employers fund continuing education for technicians. Eleven percent ask for a funding partnership between business and employee; 3 percent of employees fund their training. Seven percent said they supply no training.

This year's survey asked how much money was spent annually on training the staff. Owners reported an average of $940 was spent per entry-level technician; an average of $1,064 was spent on experienced technicians; and an average of $1,262 was spent on managers. In relation to the funding, 72 percent of business owners allow their technicians to attend training during the workday. Of those, half or 50 percent compensate technicians who attend training during the workday.

Technicians garner a large portion of their training from jobbers/parts suppliers (76 percent), association seminars (54 percent), independent training providers (51 percent) and trade magazines (50 percent). Closely following trade magazines are equipment manufacturer resources (49 percent) and trade show seminars (41 percent). Thirty-four percent of businesses use in-house programs as a source of technician training.

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Twenty-four percent use technical schools as a source of technician training. Finishing out the variety of training provisions are OEM training (22 percent); community college (19 percent); and Web-based training (18 percent).

Changes in the economy have affected the growth of wages and salaries over the past years. Also, one can factor employee benefits for those shops that supply insurance and other paid extras. Each technician position showed a slight increase in salary compared to 2004 survey figures. Apprentice pay averaged $22,976 in 2005. The average salary for entry-level technicians in 2005 is $31,039, up slightly from $27,201 in 2004. Experienced technicians saw a rise in annual earnings from $45,633 in 2004 to $46,746 in 2005.

Office staff wages decreased from an average of $27,692 in 2004 to $27,201 in 2005. Service writers earn an average salary of $42,022. For the small percentage of businesses that employ parts managers, these managers are paid an average of $37,467 annually. The 2005 figures show shop managers averaging $51,085 in earnings. Keep in mind, many owners also serve as shop managers and their annual salaries may not be included within the shop manager salary calculations.

Twenty-nine percent of experienced technicians are paid a flat rate, which is equal to 29 percent receiving hourly wages. Twenty percent receive a percentage of hourly plus commission wages. Another 19 percent are paid by salary, and 11 percent received a salary plus commission. A percentage of labor rate and a percentage of flat rate are received by 8 percent of experienced technicians. The smallest pay type - team pay - is used by 3 percent.

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Employee benefits continue to be a big part of the independent mechanical repair sector. Standard benefits provided to employees include paid vacations (85 percent), uniforms (85 percent), paid holidays (84 percent), health insurance (71 percent) and technical training (69 percent). Additional benefits offered include a yearly bonus (42 percent), 401K/simple IRA (41 percent), management education (30 percent), life insurance (30 percent), dental insurance (25 percent). Cafeteria plans and tool reimbursement are equal at an average of 14 percent and vision insurance at 10 percent.

When asked which employee category type was needed most, 57 percent said experienced technicians, followed by entry-level technicians (24 percent), service writers (20 percent) and apprentices, up sharply from 6 percent last year to 19 percent in 2005.

The 2005 results showed 43 percent of businesses promoted an average of three technicians. Half of shops polled reported an average of two technicians left, and 53 percent hired two technicians. It is important to note that 49 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 (82 percent), followed by classified advertising (51 percent). Thirty-six percent selected recruiting technicians from other shops as the best way to recruit staff, followed by getting technicians from vocational schools at 27 percent. Using the Internet as a source of locating new technicians doubled from 8 percent in 2004 to 16 percent in 2005.

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Sales

For the 2005 HYB? survey, respondents were asked to give their average ticket price for 2004. The average ticket price in 2004 was $306 per order, up slightly from $302 in 2003.

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

Forty-three percent of businesses reported having an average ticket up to $250. Fifty-two percent recorded an average ticket from $251-$500. Three percent reported an average ticket from $501-$1,000 and 2 percent reported tickets over $1,000.

According to ASA's 2005 survey, the average repair order is broken down into 49 percent parts and 51 percent labor, unchanged from 2004. Overall, respondents said they use 33 percent OEM parts and 67 percent aftermarket parts. Recycled OEM parts make up 8 percent of the parts breakdown.

The median number of repair orders per month was 185, down from 194 in 2004.

Responses were also categorized to better describe average monthly repair orders. Twenty-seven percent of businesses had one to 100 repairs monthly; 67 percent had 101 to 500 repairs; 5 percent had 501 to 1,000 and 2 percent had 1,001 to 1,500.

This year's survey compared the annual sales percentages of 2004 to those of 2003. Five percent reported gross annual sales revenue under $100,000 in 2004, up from 2 percent in 2003. The percentage of businesses with sales of $100,000 to $500,000 slightly decreased from 38 percent in 2003 to 37 percent in 2004. The $500,001 to $750,000 category shows a decrease, down from 23 percent in 2003 to 19 percent in 2004.

Seventeen percent of businesses reported annual sales for 2004 in the $750,000 to $1 million category compared to the same number in 2003. Businesses with sales of $1 million to $1.5 million leveled at 13 percent in 2003 and 2004. Similarly, the $1.5 million to $2 million category leveled at 4 percent in 2004.

The state of the economy and the large number of new vehicles entering the marketplace from 2001 to 2004 (due to low interest rates and new car sales) appear to have hampered mechanical service and repair sales. The 2005 HYB? survey asked business owners to compare sales in 2004 to 2005. Fifty-four percent cited an increase in sales, averaging 13 percent in 2005. Twenty-three percent found no change in sales, and 22 percent saw a decrease of an average of 13 percent in 2005 compared to 2004.

The top reasons cited for a sales increase include customer service (52 percent), marketing and advertising (41 percent), economic conditions (35 percent), technician proficiency (31 percent) and management skills (34 percent). Labor rates (20 percent), increased services provided (15 percent) and quality of parts (15 percent) were also cited as reasons for increased sales.

For the 22 percent who cited a sales decrease in 2005 compared to the previous year, 76 percent said it was due to economic conditions. Weather conditions were cited by 28 percent of business owners. Other circumstances such as new car sales and technician shortage were cited by 15 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 an increase had occurred. Fifty-nine percent noted an increase in profit, 52 percent saw growth in their customer base, and 44 percent had an increase in monthly repair orders. Decreases in profits were experienced by 18 percent. Seventeen percent cited a decrease in customers, and 24 percent had a decrease in monthly repair orders. Collectively, an average of 28 percent saw no change in customers, profits or repair orders.

The outlook for sales in 2006 is projected to be positive for 81 percent of the population. Fifteen percent expect to hold steady and a mere 4 percent expect sales to decrease in 2006.

Service contracts, extended warranties and warranty repair have entered into the independent repair business world. Ninety-nine percent of respondents said they offer a warranty. Of that 99 percent, 94 percent offer a warranty on both parts and labor; 3 percent offer parts only and 1 percent, labor-only.

Although 75 percent report repairing vehicles covered by an extended warranty, the offering of such a product still belongs to the dealership. Down 1 percent from last year, 5 percent of respondents are currently selling an extended warranty to their customer base.

With an average of 185 repair orders per month, respondents said an average of six results in a customer comeback. Of those six comebacks, four were attributed to defective parts.

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Customer Profile

Independent mechanical business customers are a loyal group. Currently, 79 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.

This year, respondents were asked to identify the average number of times they service the same vehicle within a 12-month period. This turned out to be three. Survey results also show that the use of customer satisfaction surveys continues to increase within mechanical repair businesses. Currently, 40 percent of businesses perform satisfaction surveys, up from 36 percent in 2004.

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 21 miles. The percentage of women and men having their vehicle serviced is split at 52 percent women and 48 percent men.

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Marketing and Advertising

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As noted earlier, marketing and advertising continue to be a source of increased sales. Currently, 95 percent of businesses perform some form of advertising. Top advertising methods include word-of-mouth (90 percent), Yellow Pages (73 percent), and signage (55 percent). Community involvement was added to the equation to make up 49 percent of responses. Following community involvement are direct mail (47 percent) and shop Web sites (38 percent).

Twenty-six percent also use the newspaper to advertise, and 23 percent use church bulletins to attract new business. Radio (20 percent) is down from 27 percent but remains a valuable source of advertising.

Other areas of advertising include the neighborhood shopper (15 percent), cable television (8 percent), and broadcast television (5 percent).

Mechanical business owners presented an average advertising budget of $17,992 for 2005, a notable increase from $15,595 in 2004.

Thirty-eight percent of businesses spend $5,000 or less on advertising annually. Twenty-five percent spend between $5,000 and $15,000, and the remaining 37 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

The HYB? survey determined 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 top three issues cited by most respondents as having an impact on their individual business included parts profitability (33 percent), which ranked highest, followed by service writer training (24 percent) and consumer awareness (22 percent). The least common issue that impacts the individual business is tech training in Spanish (6 percent).

Issues Impacting Industry

Diesel vehicle technical training (19 percent) took the No. 1 spot for issues that affect the automotive industry. In second and third place are used air bag installation (17 percent) and diesel vehicle service and repair (16 percent). Closing the top five issues that affect the industry are emissions testing (15 percent) and tire monitoring systems (14 percent).

Issues Impacting Individual and Industry

There were several issues that impact both individual and industry. Aftermarket parts quality ranked the highest, with 80 percent of respondent findings. A/C refrigerants (78 percent) and the consumer image of automotive service (77 percent) were also among the top issues impacting both the industry and individual businesses. Antifreeze/coolants (73 percent) followed by OSHA/EPA compliance (68 percent) capped off the top issues concluded by survey respondents. Technician training in Spanish also ranked lowest with 24 percent impact on both industry and individual businesses.

Technician recruitment is a hot industry topic. When businesses were asked how it is impacting their business, 62 percent reported that technician recruitment is having an impact on their business and industry as a whole. This coincides with the 53 percent of business owners who hired a technician within the past year and the 50 percent who did not have any technicians leave.

None of the listed issues garnered more than 55 percent of survey respondents for having a negative impact.

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'How's Your Business?' is written by Karin White, ASA's research and project specialist. She can be reached at (800) 272-7467, ext. 252, or by e-mail at karinw@asashop.org.

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