Survey Reveals Atlantic Region Must Embrace Change Quicker
Automotive Aftermarket E-Learning Centre Ltd. conducts national semi-annual automotive shop surveys in order to measure the pulse of the independent sector. Our eleventh national semi-annual survey as of June 30th 2010 continues to show the stresses that are throughout the Atlantic region, yet some positive steps have been made.
Through the supply/demand economic formula, automotive service technician wages are finally starting to move forward, however shop owners have not passed on the increased cost in wages to the consumer sufficiently to resolve the business issues. This will create many further stresses if management does not move quickly.
Soon to be showing up at your shop. Question is, will you have the know-how to service it, or do you wish to risk losing a customer?
For example, based on what the average technician is being paid in Atlantic Canada reported in our survey, maintenance labour door rates in this region of the country should be a minimum of $89.71 per hour ($90.00) and diagnostic rates should be $114.27 per hour ($115.00). The current rate averages are $65.70/hr for maintenance and $74.42/hr for diagnostic. Realistically, diagnostic rates will have to be in the $150 range within a year, yet management has not embraced this understanding.
Businesses operating within these current ranges for door rates will not have the funds for the average 100 hours per year required today for technical training, six-to-eight days per year for professional development, investment dollars required to realign the shop computer equipment for downloading solutions and re-flashing vehicle computers, new and on-going diagnostic equipment required to analyze vehicle issues, and will not have the capability to install proper staff profit sharing and retention programs. On top of those issues, management will not be able to prove sustained proper shop bottom-line profitability after a professional management wage has been paid. Consequently, the future sale or succession of the business is definitely in doubt. They just end up closing the doors and get absolutely nothing for the business; a business they have worked a lifetime in.
These are all serious issues that need to be addressed. Yes there is urgency here, because this industry is now shifting into fourth gear and within two years the aftermarket will be operating at full speed in a new business format. The shops that do not get it will suffer terribly with extremely poor personal incomes because they are relying on the old breakdown-and-repair business model which is drying up faster than ever and current management will be chained to the bays for the rest of their career without hope for any improved quality of life.
That is not the picture anyone wants to see sustained or developed.
Nothing can or will happen until management makes the decision that the current business format is not acceptable.
It is not just about the door rates in the Atlantic region. Door rates are just the starting point that begins to outline where the problems are in a business.
I’m sure most shop operators reading at this point are starting to wonder what to do over the next three-to-five years, or don’t believe that the above points are issues at all as it “does not apply to our community . . . that is big city stuff.”
I strongly disagree. I just spent two days in early September at a client’s shop in a community of 900 people in the middle of nowhere western Canada, two hours east of Edmonton. Look on a map and you will see a big blank area out there. My client “owns the community” and much of the surrounding area. People drive 80-to-100 kilometers to deal with him because their shop is that competent, despite the fact the dealerships are reasonably accessible to consumers out there at the same driving distance. Seven licensed techs, three apprentices and three service advisors work in this shop only because management gets it and has the discipline to implement. That is not meant to impress you, it is meant to impress a point!
Going electric on the rock!
Consider the following facts. The 2005 and 2006 vehicles are now entering the aftermarket in droves. They are computers on wheels. Their programs must be kept up- to-date. A simple scan tool does not suffice. We have access to the manufacturer’s websites now that the Right to Repair issue has been resolved, but if you don’t have the right OE equipment for each vehicle brand in your shop, coupled with the proper Internet connection through hardwire to individual high quality laptops throughout the shop, you are not serving your clientele professionally at all. In fact you might have lost some good clients to the dealership arena. That is not the client’s fault. That is current management’s fault.
Of course a shop that is not focused on bottom-line profitability does not have the funds to obtain the right equipment and now the excuses and complaining from the aftermarket start to role in.
It does not have to be this way at all. There has to be more substantial discussion throughout the Atlantic Region as to the path to be chartered. Shops must get involved and implement change strategies within their own walls of business. You will need to hire a personal business coach to see it through. You will need a huge amount of self-discipline to get results. The new aftermarket structure is here and it is exciting, however if you are one of the shop owners/managers who defy change and will not accept the truth, no one can help you. You are simply in the wrong business today.
The math does not lie. Our semi-annual national statistics keep pointing out the issues; issues that will not go away but only grow in intensity if not addressed in a timely manner. Where do you stand today, and more importantly, where will you be tomorrow? The complete surveys are presented and discussed in our live management courses. Go to aaec.ca and click on “Upcoming Courses”
Much, much more in the print addition of Auto Atlantic.
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