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How's Your Business?Posted 12/16/1998By Ken Roberts
For six consecutive years, the Automotive Service Association (ASA) has surveyed its members to track sales and profits within the independent automotive service sector. In addition to questions concerning sales, the survey also asks what are the most challenging issues shops face, how do shops market their businesses and what are the business forecasts and projections for the coming year. The survey was mailed in September to randomly selected ASA members. Results are based on a 10 percent response from surveyed mechanical members and a 10 percent response from surveyed collision members. Responses are anonymous.
Some percentages noted in the article and accompanying graphics may not total 100 percent due to "no response" or "other" results.
Mechanical Business owners represented 93 percent of the respondents to the mechanical survey while managers represented 7 percent. The respondents range from 22 to 70 years of age with the average age of 45 and the average number of years of industry experience equaling 24. Sixty-two percent are ASE certified. A majority of the mechanical respondents, 86 percent, said their shop is family-owned. The average age of the shops is 19 years old and the oldest shop represented in the survey is 74 years old. Only 6 percent were identified as part of a franchise or conglomerate. Counting service bays, 41 percent have two to five bays, 32 percent have six to eight bays, and 27 percent have nine or more bays. As in the previous year's survey, responding establishments employ an average of four technicians. However, the average number of total employees has increased from seven to eight in one year's time. An hourly wage remains the most popular method for paying techs with 35 percent of shops. This number is down slightly from 36 percent paying hourly in 1997 and 40 percent in 1996. Nineteen percent pay a percentage of flat rate, 13 percent pay techs a salary, and 11 percent pay a percentage of labor rate. Ten percent of the mechanical shops pay an hourly rate plus commission while 6 percent pay a salary plus commission. The average entry-level salary for technicians who have completed some vocational or proprietary schooling is $22,167 annually. As in previous years, the majority of responses cite journeymen technicians (56 percent) and entry-level techs (24 percent) as the strongest employment needs for the upcoming year.
Sales On the positive side, sales of $500,000 to $750,000 were reported by 20 percent of the respondents, compared to 17 percent in last year's survey. Both this year and last, 15 percent ranged between $100,000 and $250,000. Sales of $750,000 to $1 million were reported by 13 percent while 12 percent had sales of $1 million to $1.5 million. Six percent had sales in excess of $1.5 million. When asked to compare 1997 sales vs. year-to-date 1998 sales, 61 percent said they have experienced an increase in sales. Eighteen percent saw no change, while 21 percent reported a revenue decrease. Of those reporting an upturn in sales revenue, the average percentage of increase is 16 percent; while those reporting a decrease in sales are averaging a 10 percent decline. The most cited reason for sales increase was attributed to marketing and advertising efforts followed by a better economy and increase in labor rates. Shops report that poor weather conditions had a minimal impact on increased sales. In terms of profit, 20 percent expected to see a large increase in 1998 vs. 1997. A slight increase is anticipated by 46 percent of the respondents, while 16 percent predicted no change. On the down side, 17 percent anticipated a slight decrease, while only 2 percent expected a large decrease. According to the survey, the average ticket price per job in 1998 is $295, virtually unchanged since last year's average of $294. But, shops are busier this year, averaging 70 repair orders per week vs. 64 last year. Eleven percent reported a large increase in their number of customers this year and more than half - 56 percent - say they've had a slight increase. Shops that say there has been no change in their number of customers total 19 percent. A slight decrease was reported by 11 percent, while only 1 percent reported a large decrease. Similarly, 11 percent report a large increase in jobs per month in 1998 compared to 1997. Forty-six percent have shown a slight increase in jobs per month while 19 percent report no change. A slight decrease in jobs per month has been experienced in 19 percent of the responding shops and 3 percent report a large decrease. When are mechanical shops the busiest? Far and away during the summer. Seventy-three percent said summer is the busiest season. Winter was a distant second at 8 percent. Monday is the busiest day of the week for 52 percent. Friday follows with 13 percent listing it as their busiest day. No respondent indicated that Sunday was their busiest day and only 4 percent checked Saturday. What do shops predict for next year?
Advertising and Marketing The majority of shops use the Yellow Pages. This is followed in descending order by direct mail, newspaper, radio, the neighborhood shopper and the Internet. Those who listed the Internet as an advertising medium totaled 14 percent, up from last year's total of 10 percent. Many respondents stated that they use multiple mediums in their advertising campaigns. Customers are not deterred by distance, according to shop responses. Twenty-five percent said their shop's customer base extends 30 miles or more. An additional 22 percent said their customers drive from 20 miles away for service. Fifteen percent maintain that a majority of their customers are from a 15-mile base, while 24 percent gather the largest portion of their customers from a 10-mile base. The remaining 14 percent reported that the majority of their customer base is within five miles of their shop. Customer loyalty remains a strong profit factor for the majority of mechanical shops. According to survey results, an average of 77 percent of customers are repeat customers. To communicate with their customers, 46 percent of the respondents said they use customer satisfaction surveys, up a full 10 percent from last year. Seventeen percent of shops said they have a customer newsletter, up 5 percent from 1997.
Education Over the past 12 months, shops reported that on average, 36 hours of updated education, including self-study, was undertaken by the typical technician. Educational materials for technicians come from several strong sources. The largest portion of technicians (69 percent) received training from product manufacturers followed by industry seminars (61 percent) and association seminars (60 percent). Other important sources for training include trade magazines (57 percent) and in-house programs (42 percent).
Industry Issues The concern of industry image is changing. In 1996, 16 percent felt image was a major concern. This decreased slightly in 1997 to 13 percent. This year, however, 20 percent listed this as their primary industry issue. Is the public's perception of automotive repair changing? According to the survey, 46 percent perceive it's improving. An additional 2 percent believe it's rapidly improving. Forty percent reported that they believe the image is staying the same with little or no change, while 10 percent report an image decline. XXMaintaining a clean, modern shop is a priority of many ASA mechanical division members. Twenty-five percent said they either renovated or expanded their shop during 1998. Nearly a third (31 percent) are planning to do so in 1999. Collision Eighty-nine percent of collision division respondents to the How's Your Business survey are shop owners. The remaining 11 percent are ASA shop managers. The average age of the respondent is 47 years old with an average of 26 years of experience in the collision repair industry. Results show that 86 percent of shops are family-owned. The average age of a collision shop is 25 years, according to AutoInc.'s survey. A small portion·5 percent·are part of a franchise or conglomerate. By bay count, shop sizes vary widely. Those with three to eight bays comprise 22 percent of all shops represented in the survey; nine to 12 bays, 24 percent; 13 to 16 bays, 18 percent; 17 to 24, 16 percent; 25 to 32, 8 percent; and 33 or more bays, 12 percent. On average, a shop employs eight collision repair technicians. Fifty-two percent of technicians are compensated with hourly wages followed by 22 percent receiving a percentage of flat rate. Other forms of compensation include percentage of labor rate (13 percent), hourly wage plus commission (7 percent) and salary (6 percent). The average entry-level salary for technicians who have completed some vocational or proprietary schooling is $19,945 annually. Respondents predict that locating journeymen technicians (54 percent) and entry-level techs (30 percent) will be the greatest employee needs for collision shops in 1999. A significant number of respondents have renovated or expanded their facility this year (33 percent) or plan to do so in 1999 (40 percent).
Sales Only 7 percent had revenue of $1.5 million to $2 million. The smallest revenue shops, those earning $100,000 to $250,000, comprise 8 percent of the respondents. The largest revenue shops, those earning in excess of $2 million, represent 18 percent of the respondents. When asked to compare 1997 sales to 1998 sales, 54 percent report an increase in sales while 24 percent show a decrease. Twenty-one percent of the respondents say they have seen virtually no change in sales revenue. Of those reporting an increase, 14 percent is the average amount of additional revenue this year vs. 1997; and those reporting a decrease say their revenue has dropped 15 percent. According to the 54 percent who reported experiencing a sales increase, 17 percent attribute it to marketing strategy and advertising. Fourteen percent credit more insurance referrals, including direct repair programs (DRPs), while 12 percent credit the better economy for their improved revenue. Poor weather conditions and more vehicle accidents were cited by only 10 percent of the respondents as the primary reason for increased business. In correlation to profit changes, 51 percent noted a slight increase in terms of their customer base in 1998 vs. 1997. Additionally, 15 percent noted a large increase. No change in customer base was reported by 16 percent, while 20 percent reported a slight decrease. Only 7 percent say they've experienced a large decrease in their customer base. Jobs per month correspond with these results. Forty-seven percent report a slight increase and 12 percent report a large increase in jobs per month. No change was shown by 17 percent of the respondents, while 21 percent say they have experienced a slight decrease. A large decrease was reported by only 3 percent of the respondents. Employment numbers have been relatively stable from 1997 to 1998. Fifty-three percent of respondents said they have the same number of employees this year as last. A slight increase in employees was reported by 26 percent and 4 percent said they've had a large increase. Conversely, 14 percent have had a slight decrease in employees while only 2 percent have had a large decrease. Forty-one percent of shops say winter is their busiest season, followed by summer (30 percent), fall (13 percent) and spring (11 percent.) Shops are averaging 35 repair orders a week, up from 28 in last year's survey. The average ticket price per job is $1,850, also up from last year's average of $1,545. As with mechanical shops, most collision shops, 62 percent, say Monday is their busiest day. Twenty-four percent report that Friday is their busiest day. Positive attitudes prevail among collision shops. When asked what shops expected sales to do in 1999, a large majority, 82 percent, anticipate an increase; 13 percent anticipate no change and 5 percent foresee a decrease in sales. Similarly, 79 percent expect business will be better in five years.
Marketing & Advertising According to those respondents who advertise, 74 percent use the Yellow Pages as an advertising medium. This is followed by 31 percent using radio, 28 percent incorporating newspaper advertising, 16 percent using the Internet, and 14 percent investing in their local neighborhood shopper. Forms of advertising used to a lesser degree include direct mail (13 percent), cable television (11 percent) and billboards (7 percent). Providing quality service proves to be an effective means of securing customers. On average, 54 percent of collision shop customers are re- peaters. The customer gender distribution is balanced at 50 percent for both female and male. Nearly half - 49 percent - of the respondents report using customer satisfaction surveys. Only 6 percent, however, mail company newsletters to their customers.
Education Sources for education come from a variety of avenues: product manufacturers (67 percent), industry seminars (62 percent), association seminars (58 percent), in-house programs (48 percent), and trade magazines (47 percent). More than half of all respondents (58 percent) are ASE-certified and 79 percent are I-CAR trained. Both numbers represent a notable increase in just one year. Forty-eight percent of the respondents in 1997 were ASE-certified and 68 percent were I-CAR trained.
Employee Recruitment
Industry Issues Other issues cited by the respondents include: industry image, regulatory compliance, labor time allowances, and caps on labor hours or materials. When asked if the impact of DRPs on the collision industry is positive or negative, 34 percent responded that it is negative while 28 percent said positive. Many have yet to reach a conclusion on this matter as 34 percent said they were undecided. Seventy percent of the respondents participate in at least one DRP. On average, each participating shop is in four DRPs and 41 percent of their business volume is derived from DRPs.
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Copyright (c) 1996-2008. Automotive Service Association. All rights reserved.
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