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  Special Feature

Surival of the Fittest

Posted 12/11/2007
By Karin White

2007 'How's Your Business?' Survey Results

Mechanical

Business Profile || Owner Profile || Staff Profile || Sales ||
Customer Profile || Marketing and Advertising

For 2007, there are an estimated 78,567 independent general mechanical service businesses in the United States. These independent businesses employ an estimated 328,301 individuals who provide service and repair for more than 249 million motor vehicles. It is estimated that 70 percent (174 million) of out-of-warranty vehicles are repaired at independent shops.

ASA projects total sales for general mechanical repair facilities in 2007 to be $35 billion, based on Bureau of Economic Analysis figures for general mechanical repair. Adding in specialty repair facilities, oil change facilities and transmission shops, the estimated total sales moves closer to $54 billion.

The figures do not include the approximately 21,200 auto dealerships with service facilities that took in approximately $29 billion ($17 billion in labor and $12 billion in parts) in 2006, according to the National Automobile Dealership Association.

Business Profile

The number of bays and size of the mechanical repair facilities has shown a stable balance the past few years. According to the 2007 results, the average business has seven bays and encompasses nearly 5,297 total square feet (including office and shop).

Office space averages 929 square feet and the service area encompasses 4,189 square feet. The remaining square footage (179) is used for inventory and various other uses.

The independent mechanical service business continues to be a family owned (92 percent) business that has been in operation an average of 19 years. Broken down by the number of years a shop has been in business, categories include businesses open less than one year (2 percent), one to five years (12 percent), six to 10 years (17 percent) and 11 to 15 years (12 percent). Categories also include 16 to 20 years (17 percent), 21 to 25 years (9 percent) and 26 to 30 years (13 percent). Those being open for 31 to 40 years totaled 12 percent and more than 41 years earned 6 percent of the total responses. Although consolidation is occurring in other service industries, such as collision, the mechanical repair sector remains predominantly independent, according to 97 percent of survey respondents.

Thirty-nine percent of respondents are AAA-approved facilities. Twenty-nine percent maintain affiliations with parts groups such as NAPA (35 percent), ACDelco and Tech Net (15 percent each) and Bosch (10 percent).

Participation in parts distribution program groups continues to grow within the independent mechanical sector. Currently, 52 percent of respondents participate in such a program, up from 37 percent in 2006.

Complex Cars Demand Well-Trained Technicians

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 25 hours of training annually at a cost of $880; experienced technicians receive an average of 29 hours, costing an average of $1,184; and management acquires an average of 33 hours of advanced learning a year, costing an average of $1,704.

The majority of educational funding continues to come from business owners. According to 2007 survey results, 84 percent of employers fund continuing education for technicians. Eleven percent asked for a funding partnership between business and employee. A mere 5 percent said they supply no training, down from 13 percent from 2006.

In relation to education funding, 63 percent of business owners allow their technicians to attend training during the workday. Of those, 47 percent compensate technicians who attend training during the workday.

Technicians garner a large portion of their training from jobbers/ parts suppliers (85 percent), followed by equipment manufacturers and independent training at 51 percent each.
- K.W.


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Owner Profile

The makeup of respondents to the 2007 HYB? survey is evolving. Of the respondents who took the survey, 70 percent are business owners. Of the remaining 30 percent of respondents, 28 percent indicated that they were both owners/managers and 3 percent are managers only. Office staffers account for 1 percent of survey respondents. A few respondents (8 percent) indicated that they not only own and manage their shop but are technicians. Note: Respondents were able to select all that apply, averaging more than 100 percent.

The ASA mechanical business owner possesses many professional qualities. According to survey results, the average owner is 49 and has 29 years of experience.

An average of 40 percent of members are continuing their management training through Automotive Management Institute (AMI) courses, up 1 percent from the 2006 report. Currently, 10 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.

Time deficiency may affect mechanical business owners' ability to participate in industry activities. This year's survey showed 23 percent of mechanical business owners serving on secondary or postsecondary educational advisory committees, down 7 percent from last year.

With 98 percent of mechanical shops having Internet access in 2007, ASA asked respondents where their Internet connections were located within the facility.

With the increasing popularity of DSL and cable Internet, only 4 percent of shops had dial-up in 2007. DSL leads the list of Internet connectivity at 62 percent, followed by cable at 27 percent. Satellite (4 percent) and T1 connection (3 percent) round out the list.



Staff Profile

The 2007 HYB? survey strives to present an accurate picture of the staff population within the independent mechanical repair business. The survey determined the number of employees per facility by job type along with the percentage of facilities having various types of employees.

There are various levels of technicians employed at mechanical shops. For example, the apprentice technician has one year or less of experience, an entry-level technician has two to four years of experience, and the most common employee is the experienced technician with five or more years of experience.

When asked which employee category type was needed most, 32 percent said experienced technicians, followed by entry-level technicians (18 percent), apprentice technicians (14 percent), office staff (7 percent) and service writers (13 percent).

The 2007 results showed 39 percent of businesses promoted an average of two technicians. Fifty-eight percent of shops polled reported that they had an average of two technicians leave, and 56 percent hired two technicians. It is important to note that 43 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 (77 percent), followed by classified advertising (44 percent). Thirty-nine percent selected recruiting technicians from other shops equally to acquiring technicians from vocational schools. Using the Internet as a source of locating new technicians increased from 15 percent in 2006 to 22 percent in 2007, and reaching out to apprenticeship (15 percent) programs.

ASA members also pursue new candidates from school-to-work programs (6 percent) and high schools (3 percent). School-to-work employees are staffed by 20 percent of ASA members and account for one employee (15 percent) or two employees (5 percent).

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Sales

Repair Orders Broken Down By Quantity and Amount By dividing the average ticket price and number of repair orders written into categories, it is easier to see where repair orders lie for the majority of respondents.

The 2007 HYB? survey asked business owners to compare sales in 2006 to 2007. Sixty-three percent cited an increase in sales, averaging 12 percent. Eighteen percent found no change in sales, and 19 percent saw a decrease of an average of 11 percent in 2007 compared to 2006. The state of the economy and the large number of new vehicles entering the marketplace from 2001 to 2006 (due to low interest rates and new car sales) appear to have hampered mechanical service and repair sales in recent years.

Businesses were asked to select areas where the sales increase occurred. Fifty-eight percent noted an increase in profit, while 59 percent saw a growth in their customer base, and 50 percent had an increase in monthly repair orders compared to last year.

Decreases in profits were experienced by 20 percent. Twenty percent also cited a decrease in customers, shared equally with monthly repair orders. Collectively, an average of 25 percent saw no change in customers, profits or repair orders.

The outlook for sales in 2008 is projected to be positive for 86 percent of the population. Eleven percent expect to hold steady, and a mere 3 percent expect sales to decrease in 2008.

One hundred percent of respondents said they offer a warranty. The warranties include both parts and labor (98 percent); parts only and labor only account for less than1 percent each.

With an average of 226 repair orders per month, respondents said an average of five repair orders result in customer comeback. Of those five comebacks, three were attributed to defective parts.

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Customer Profile

Independent mechanical business customers are a loyal group. Currently, 78 percent of mechanical business customers are repeat customers. Typically, customer loyalty is a reflection of the quality of service and the customer care that businesses are willing to provide.

Respondents indicate they service the same car an average of three times within a 12-month period. Survey results also show that the use of customer satisfaction surveys has slightly increased within mechanical repair businesses. Currently, 41 percent of businesses perform satisfaction surveys, up from 35 percent in 2006. The percentage of women and men having their vehicle serviced is split at 50 percent each.

Both the type of customer and the distance a customer travels are important considerations in creating a successful marketing plan. According to survey results, the average service facility's customer base extends 22 miles, a reduction of four miles from 2006 figures.

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Marketing/Advertising

Mechanical business owners have an average advertising budget of $21,347 for 2007, a notable increase from $13,170 in 2006.

A few ASA members said they spend 5 percent to 15 percent of their annual sales to advertise their businesses.

As noted earlier, marketing and advertising continue to be a contributing factor of increased sales, as noted by 47 percent of members. Currently, 97 percent of businesses perform some form of advertising to connect with the motoring public. Word-of-mouth is the leading form of advertising again this year.

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