Some shop owners and industry consultants have postulated that for a shop to survive today and in the future, it will require an annual revenue of at least $1 million with a growth rate of 4% to 5% annually.
The rational for this high revenue figure is that shops will need this revenue to support tools and training expenditures so they can repair late-model vehicles profitably. Being able to do this will allow a shop to retain current customers after they purchase a new vehicle as well as gain new customers.
Not being able to (or being unwilling to) invest in new tools and training will result in you or your staff saying, “Sorry, you are going to have to take it to the dealer.” Every time this phrase is uttered to a customer, a little bit of your business dies with little chance of returning. Don’t blame OEMs or say “they don’t make ’em like they used to,” because 98% of the time the training and tools are available. The problem is just the shop did not invest. It is a fact that every referral to the dealer or productivity lost due to not having the right tools or training costs your shop today and in the future. Technology has been on the march since the Model-T, but in the past few years, technology has been on a “run” and is threatening to break into an “all out sprint” in order to meet the 35 mpg CAFE fuel economy numbers for 2020.
You may think your local vehicle population will not change much in five or 10 years, but when you consider that on average 13 million vehicles are scrapped every year and are replaced by at least 16 million new vehicles (2014 sales), it is easy to see that more complex vehicles are heading your way, even if you are off the beaten path. You might think the underhood maintenance specialist is safe, but you are wrong. My prediction is the $35 oil change and free battery replacement will be gone in 10 years. Sure, the fundamentals will stay the same, but these services will require new tools and training to complete the job the right way.
In the case of oil changes, a new grade of oil will become more expensive along with more advanced filters. Also, oil capacities are increasing as engineers are able to manage oil more effectively during cold starts. Shops will also need to invest in tooling to reset maintenance lights and oil life indicators.
Free battery replacement will soon go the way of the tuneup. I am making the prediction that by the year 2020, most retail stores selling automotive batteries will no longer offer free installation. Modern wet and AGM batteries offer drivers trouble-free performance for longer periods of time, but keeping these batteries charged at the correct levels requires more than just a functioning alternator. It requires the system to know the state of the battery. To do this, the system must be aware if a new battery is installed by using a scan tool.
If a battery is replaced with out recalibrating the system, the battery will be fried. The situation is even worse when you consider basic parts swapping. More parts are starting to come with embedded electronic controllers. This started with power windows and is moving to EGR valves, fuel injectors and even steering racks. Shops may be able to replace the components, but to get them to work, they need to, initiate, calibrate or program the new part, which requires a scan tool capable of communicating with the vehicle. One million dollars and a healthy growth rate may sound like a tall order to some shop owners who started their shops with a floor jack, tool box and a dream, but the dream is not dead — it just takes more tools.