How’s Your Business?
For four years now, results of the Automotive Service Association’s (ASA’s) How’s Your Business survey have given us a glance at how the year is going for ASA members in terms of sales and profits. They also give us an understanding of the most challenging issues shops face, how shops market their businesses and some forecasts for the coming year. The survey was sent to 2,000 ASA collision repair businesses, of which 21 percent responded, and to 2,500 ASA mechanical repair shops, of which 19 percent responded. The survey was mailed in July 1996 and responses were anonymous. Some percentages noted in the article and accompanying graphics may not total 100 percent due to "no response" or "other" results.
Collision Repair
Ninety-two percent of the ASA collision members who responded to the survey are the business owner. The average age of the respondent is 45 years old and the average number of years of industry experience is 25. A full 83 percent report being part of a family-owned business and the average number of years the shop has been in business is 21. Only 9 percent own more than one shop and 10 percent report being part of a collision repair franchise.The largest number of respondents — 61 percent — have 12 or more bays in the shop, with 12 percent reporting six to eight bays and 17 percent with nine to 11 bays. The average number of technicians that the business employs is eight. According to survey results, 46 percent use an hourly pay structure to compensate their technicians; 23 percent use a percentage of the flat rate and 12 percent use a percentage of the labor rate. A small number of respondents report paying their technicians a salary, an hourly wage plus commission or a salary plus commission.
Collision repairers forecast that in the next five years, their greatest staffing needs will be for journeymen technicians, followed closely by the need for entry-level technicians.
Sales
Results regarding the gross annual sales revenue for ASA collision shops in 1995 showed great variance among respondents. The largest group — 19 percent — report revenues between $250,000 to $500,000, followed closely by 18 percent who placed themselves in the $1 million to $1.5 million range. Seventeen percent reported their gross annual sales revenue between $500,000 and $750,000, with 15 percent in the $750,000 to $1 million category. Ten percent had revenues between $1.5 million and $2 million.
Compared to 1995, how have sales been in the shop so far in 1996? Keeping in mind the survey was done in July, 74 percent have had an increase in sales, 15 percent said there has been no change and 10 percent have experienced a decrease in sales. Most attribute their sales increase to marketing and advertising strategies.
When asked to forecast their sales for 1997, optimism prevailed with 81 percent expecting an increase; 16 percent don’t expect any change and only 2 percent expect a decline.
In terms of profit, how are shops doing compared to last year? Slightly more than the majority have had a slight increase in profits; 29 percent report no change or a slight decrease in profits; only 15 percent have had a large increase in profits.
Sixty-one percent have slightly more customers now than in 1995; 19 percent have had no change or a slight decrease in their customer base, while 17 percent say they’ve had a large increase in the number of customers coming to their businesses. In terms of jobs per month, 59 percent have had a slight increase compared to 1995, with 16 percent reporting a large increase and 22 percent experiencing no change or a slight decrease.
Advertising And Marketing
In response to "Do you advertise your business?" 87 percent indicated yes. Forty percent use the Yellow Pages to market their businesses, with an additional 17 percent who said they rely on newspaper advertising. Radio is used by 14 percent of respondents; the neighborhood shopper is used by 10 percent. Small numbers of respondents indicated they use direct mail, television, billboards and the Internet to market their shops. Next year, advertising budgets for collision shops will average $15,429, according to the survey.
How far does the ASA collision shop’s customer base extend? Approximately one-third of shops report a customer base that extends 30 miles or greater; 11 percent stay within a 10-mile radius; 17 percent draw from 15 miles away; and 33 percent get their customers from within 16 to 25 miles of their shop.
In the ASA collision shop, 66 percent of the customers are repeat, according to the survey. An average of 49 percent of all customers visiting these shops are women. Do shops conduct customer satisfaction surveys? Sixty-one percent said yes; 37 percent responded no to the question.
Education
Within the last year, 53 percent of the shops responding said they had increased the amount of education for their technicians. The study showed that the typical technician received an average of 41 hours of education, including self-study, within the past 12 months. The National Institute for Automotive Service Excellence (ASE) and the Inter-Industry Conference on Auto Collision Repair (I-CAR) were cited as the leading sources of certification and industry education for collision shops.
An average of 54 percent of the shop’s technicians are ASE-certified and 70 percent are I-CAR trained, according to the survey. Word-of-mouth remains the best source for finding new technicians followed by vo-tech schools and classified ads, which tied at 13 percent. Another 9 percent report finding technicians by attracting them from other shops, while 4 percent rely on apprenticeship programs.
Industry Issues
Insurance industry influence was listed by 38 percent of survey respondents as the single industry issue of greatest importance to collision repair. Finding good technicians was noted as the most pressing issue by 31 percent of those responding, and 5 percent listed keeping up with technology as the greatest issue they face. Other issues listed as most challenging were poor industry image, regulatory compliance, the threat of Preferred Provider Organizations (PPOs), labor time allowances and materials caps.
When asked about direct repair program (DRP) participation, 66 percent said they were involved in such programs; 33 percent indicated they did not participate in DRPs. Are DRPs good for the industry? Thirty-two percent said yes; another 32 percent said no; and 36 percent are undecided.
Questions about salvage parts were included to determine the degree of usage and satisfaction. Ninety-four percent of the shops responding said they used salvage parts and 75 percent believe there should be a grading system to rate the condition and quality of salvage parts and assemblies.
Overall, when asked to look at their collision repair business in five years, optimism again prevailed with 85 percent saying it will be better; only 11 percent expect business to sour in the next five years.
Mechanical Repair
Of those responding to the mechanical survey, 96 percent are business owners, while 4 percent are shop managers. Sixty-one percent say they are also a technician in the shop, even though their primary role is owner or manager. The average age of the respondent is 47 and the average number of years of industry experience is 25. A very large amount — 84 percent — are part of a family-owned business and 91 percent state having only one shop. The study shows that mechanical shops on average have been in business 18 years. A very small number — 6 percent — report being part of a franchise.The largest number of respondents (40 percent) have three to five service bays, with 29 percent reporting six to eight bays. Thirteen percent have nine to 11 bays and 10 percent have 12 or more bays. The average number of technicians these businesses employ is four. The most used method of compensating mechanical repair technicians is an hourly wage pay structure as noted by 40 percent of the respondents. Nineteen percent pay based on a percentage of the flat rate, while 10 percent pay their technicians a salary. The least used pay structure, according to the study, is a salary plus commission.
Similar to results of the collision repair study, the mechanical shop’s greatest employment needs during the next five years will be for journeymen technicians, followed by entry-level technicians.
Sales
The largest number of respondents — 37 percent — said gross annual sales revenue in 1995 was between $250,000 and $500,000. The next largest group, 21 percent, report sales revenue between $100,000 and $250,000; 18 percent placed themselves in the $500,000 to $750,000 range, while 10 percent said revenue for 1995 was between $750,000 to $1 million. Six percent had revenues between $1 million and $1.5 million.
According to the survey, 1996 sales (as of July) compare quite well to 1995. Nearly three-quarters of the respondents say they are having an increase in sales this year; 27 percent report no change or a decrease in sales. The most cited reason for the sales increase was marketing and advertising efforts, followed by a better economy. Shops report that weather conditions have had little or no effect on their sales.
What do shops forecast for 1997? A sales increase, according to 85 percent, while 13 percent are less hopeful and expect to see no change in sales.
Comparing 1996 to 1995 in terms of profits, 64 percent expect to see a slight increase and 11 percent project a large increase. Twenty-two percent forecast no change or a slight decrease in profits by the end of 1996. Approximately two-thirds of the shops have seen a slight increase in the number of customers they serve compared to last year, and more than half of the respondents report a slight increase in the number of jobs per month.
Advertising And Marketing
The study showed that mechanical repair businesses appear to be as diligent in their marketing and advertising efforts as collision repair shops. A full 87 percent of mechanical shops report that they advertise their business through some means. The Yellow Pages top the list of the most used advertising medium by these shops, followed by direct mail, newspaper and radio advertising. Similar to collision shops, mechanical businesses are reporting some use of the Internet as a marketing and advertising medium.
In 1997, advertising budgets for mechanical shops will average $12,701, according to the study.
How far does the typical shop’s customer base extend? Thirty-eight percent report drawing customers from 30 miles or greater; 17 percent stay within a 10-mile radius; 13 percent draw from up to 15 miles; and 24 percent report a customer base from 16 to 25 miles.
Whereas in collision shops, 66 percent of the customers are repeat ones, in the mechanical shop, three-quarters of the customers are repeat, according to the study. And the percentage of women customers as noted by mechanical shops falls slightly below 50 percent.
Only 42 percent of mechanical shops conduct customer satisfaction surveys, while 56 percent report having no such programs.
Education
Within the last year, the majority of mechanical shops did not increase the amount of education they provide to technicians. Forty-four percent did up the amount of education for technicians. Shops report technicians received an average of 34 hours of update education, including self-study, in the past 12 months. Respondents look to a number of sources for technician education and certification, with the National Institute for Automotive Service Excellence (ASE) being the most cited source, followed by industry trade magazines, product manufacturers and association and industry groups.
An average of 66 percent of the shop’s technicians are ASE-certified, and 65 percent have at least one technician who is ASE master-certified. To find new technicians, word-of-mouth remains on the top of the list, followed by vo-tech schools and classified advertising. Only 1 percent look to apprenticeship programs as a source for new technicians, while 8 percent aim to attract technicians from other shops.
Industry Issues
The single most important issue that mechanical shops face is finding good technicians, according to 40 percent of the respondents. Another 26 percent put keeping up with new technology on the top of their list, and 16 percent cite the industry’s poor image as the most pressing issue. Other issues mentioned by some shops include regulatory compliance, repair information availability, increased competition and shop licensing.
Slightly more than the majority of shops say the public’s image of automotive repair is improving. Only 8 percent think it’s declining, while 31 percent say the industry’s image is staying about the same.
Will business be better in five years? Yes, according to 86 percent of the shops and no, say 6 percent.
NACE Pre-Show Coverage
Keeping Up With Industry Trends
Colin Powell – Soldier, Leader ... Automotive Technician?
NACE Show Specials
How's Your Business? || Taking Your Scan Tool To The Next Level
Cruising Instead Of Abusing || Putting The Brakes On Payroll Headaches
What’s Ahead For The Collision Industry?
Guest Editorial -- The Mouse That Roared
Tech To Tech || TechTips || Stat Corner || News Briefs
Taking The Hill || Directions || Chairman's Message
AutoInc. Magazine ®, Vol. XLIV No. 11, November 1996