By Jeff Stankard
Babcox Tech Group Publisher
The signs that business will be good in 2005 continue to be apparent from the shop owner level. Optimism among repair shop owners remains as high as it’s ever been during the five years we’ve been tracking this data. Typically the busiest months for most shops are June, July and August and the survey results indicate the third quarter will be strong.
During the first week of July, we faxed a survey to 3,000 automotive service and repair shop owners across the country to gauge their business performance for the second quarter of 2005. The following information summarizes the pertinent data and allows you to compare your shop’s figures to this nationally representative sample.
The second-quarter 2005 results show that 42% of repair shop owners reported revenue to be above the second-quarter 2004 levels. Rarely does this score come in above 40%, so this is a solid sign of good business conditions and high demand for auto service. Twenty-six percent said business was flat and 32% reported a decrease.
Another positive sign that bay activity is increasing comes from the number of shops looking to hire technicians. The second-quarter results show 41% of shops need additional qualified workers. With all the anxiety about gasoline prices and their affect on driving and automotive repairs, it’s a bit surprising to see three consecutive quarters where the search for qualified techs is at 40% or higher.
This quarter, we included an extra question in the survey, which asked shop owners if they had raised prices on parts and labor in the past 12 months. Forty-nine percent of shops raised their labor rates an average of 10% (from $63.48 to $69.55 per hour). Thirty-eight percent raised their parts prices an average of 7%. Looking at this price increase data and matching it up with revenue growth, a pattern starts to appear. Of the shop owners who reported positive revenue growth, 60% raised their labor rates and 48% increased parts prices. Of the shop owners who had a decrease in revenue, only 35% raised labor rates and only 27% raised parts prices.
I think there are quite a few shop owners who are missing the opportunity to improve their bottom line by raising prices. Think about it. Your costs have to be on the rise. Can you compensate for these cost increases with higher car counts? All the macro indicators show positive signs that demand for service will continue to increase as the number of vehicles on the road continues to increase, the number of licensed drivers grows and the age of vehicles continues to increase. Don’t miss the chance to help grow your business.