Seeking Advice From Shop Owners/Operators

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Dec 9, 2013
Alabama, United States
For those of you who own and/or operate an independent auto repair shop, I have a few questions pertaining to your fluids purchases and how you price them to customers. First, what do you use, and how do you price/package it for the customer? Include what you pay for it and how you receive it(i.e. 12 qt. cases, 55 gal. drums, etc.) please. Second, have you had any luck doing "specials" for customers. Say maybe, a 5 quart change and filter for $xx.xx. While we're at it, what about service parts such as brake pads, wiper blades, spark plugs, etc. I ask because, I'd like to try convincing my father to look into these things more in depth. Business has slacked terribly for all the indie repair shops in the area. I'm hoping maybe we could experiment with specials on routine services, to wrangle in new customers and re-entice our old customers. The big issue I think the industry is suffering with is, we have acquired a Nissan dealership who has a "no credit/no problem" policy. People who use to spring for an engine replacement, head gaskets, transmission replacement, etc., now just take the affected auto to the Nissan place, and drive off in a new Versa or Sentra. Now, I'm not knocking the Nissan place. My view is that if the Nissan dealer is selling cars a making money in our own, then the town is making money. We just need to adjust to compensate for the loss of major repair. Any advice is welcome, and thanks in advance.
I'm not the owner but I'm the head cheese and I'm in charge of purchasing stuff. Unless the car takes a 502 oil or something else weird I buy what's cheapest. Often pep boys has there pro line for $1.95 a qt. Another place sells super-s semi syn for $2.25/qt. I know that oil is going to be $4.50-$5.50 a qt if a person walks in and buys it so I price it around there. I usually buy QTS. We buy antifreeze in a 55 gal drum. I pay $6.50 a gallon for it unmixed.sell it for $14 gallon,we do not charge for the deionized water we use in the mix. So I charge pretty close, sometimes less than the auto parts store. The special oils I buy what I need and pay accordingly. No way can I compete with jiffy lube and I tell my customers this.but they get a quality lube,something they may not get at jiffy. I use napa proselect filters the most.they cost $2.50 and I'll sell them for around $5. I use all these products in my own stuff as well.
Be wary of the cheap oil change special. They do get people in the door, but it doesn't mean they will buy anything other than the loss leader oil change. Even getting great bulk deals on fluids and filters, you lose money doing oil changes for $20. It tends to attract hoopties, and people with no intention of getting anything but an oil change even if their car needs a lot of work. As Chris pointed out, you don't save much buying in drums over quarts, if any. Quarts give you the flexibility to stock a wider range of oils. Brakes can be a good money maker. Some parts houses will give you even bigger discounts by selling rotors and pads. Call local parts suppliers and ask what kind of specials they have for commercial customers on brake parts. When I worked at Advance, they were aggressively pursuing shops, trying to steer them away from Napa, and brake parts were the big thing. Tune ups on most inline engines are easy, but with varying spark plug requirements, and varying labor time on V engines, I'd be careful offering set 4 cyl, 6 cyl, 8 cyl tune ups. Do remind people that tune ups are needed AT LEAST every 100K miles though. A lot of cars are running around with way more than that on the original plugs. You can do set prices for many jobs, just be sure to have the *most vehicles disclaimer or you will have a bunch of people with Euro cars beating down your door wanting the Camry I4 special. I would offer more maintenance services if you're not already doing that. Show and tell people why things need to be done. Do a quick check of the air & cabin filters, check lights, get some coolant test strips, etc. Maybe look into things like a Midtronics battery/charging system tester (those are quite expensive though). Some things to consider...what kind of vehicles are most common in your area? How close is the parts store, and how quick can they deliver (for managing your parts inventory on hand)? You don't want a lot of money tied up in inventory that will sit, but you also don't want customers waiting around a long time getting grumpy. More important than running specials, what services are you not offering, and what niches can you fill? The problem with specials is everybody has those. Being able to honestly sell services so that people don't need the engine or transmission in the first place can get customers to put money into the car and keep it up. One thing I have noticed is that shops that specialize in a certain segment of cars attract people who are into their cars and want to keep them. You don't want to attract the kind of people who just say screw it, I just need car, and go buy a Versa or whatever.
My friend and I are a general repair shop that is out of the city limits a ways. We will work on pretty much anything that breaks. ATV's, snowmobiles, mowers, auto/light truck, medium/heavy truck, ag... You name it. We also deal in filter sales, tire sales and hydraulic hose making. To better illustrate what I do- my week has consisted of a transmission swap (which snowballed into several other repairs), a head gasket on a tractor (still working on it), repairing transmission cooler lines on a hacked together Focus, a Kawasaki Bayou 4 wheeler in need of a little TLC, oil change and leak repair on a Ford E-350, oil change and check over an S-10 Blazer, rear tires on a 2500HD Chevy and probably something I'm forgetting as well as all the phone calls and parts chasing it takes to get things moving along. We buy our oil from several places. Local auto parts stores, farm stores or even larger distributors that we have accounts with. We buy based on brand and price. I prefer to sell a name brand of some kind over a "house brand". Very few people make big money on oil- distributors, stores and us included. So it's hard to mark up and still be competitive/fair since we don't get squat for a discount. On our passenger car motor oil, we make decent money, but we watch the sales fliers like a hawk- and yes, even here where members have pointed out some killer sales. This allows us to sell a quality name brand product at a good price and still profit nicely. We buy in cases of quarts- because we don't don't really do the volume to justify drums. Hydraulic oil and diesel oil are bought in 55gal drums, but we also use it for ourselves- as my friend farms and has several tractors to maintain. When billing, I'll just take our cost, divide by 55, then by 4 to get price/qt, then mark up 15%. Other lube and shop related goods like antifreeze get a 15% mark up. Repair parts vary in mark up, but the typical auto part gets 30% up to 100.00, then scaled back from there. So if I bought a gallon of antifreeze for 11.99, I'd sell for 14.11. A 39.99 auto part will be resold for 57.13. Auto dealer parts typically just get resold at list. Repairs are billed by the hour- no book time for me. For an oil change we get 3.89/qt of oil, unless it's not from regular stock- like Mpbil 1 0w-40, then it's price plus 15% and a 30% mark up on filters- but we get good pricing on main line, name brand filters so the customer still gets a more than fair price. We don't do "specials" in the way you described. Again, not enough volume to profit from, and at 15.00 an oil change (plus materials) for a non four wheel drive, I'm hurting anyway. We do send out flyers from time to time on tire or filter specials- typically spring and fall to catch our farm customers. Not sure if I answered your questions, but I hope this sheds a little light on the subject. Just keep in mind that we operate a bit different from a middle of town, auto centric repair/oil change shop. As an aside- customers really make the shop. We've been blessed with an abundance of really good, down to earth customers and that makes doing business MUCH more enjoyable. In a way, I'm glad we aren't in the middle of a metropolitan area.
Red91: Are you competent, honest, and have reasonable prices? If you do you should get loyal customers that refer others they know to your business. If you are a really "good shop" for the customer (with the characteristics I mentioned above) you shouldn't need to many discount specials although from time to time they can help generate some new customers. I only wish could find a "good indie shop" near my location in the upstate of SC, most of what you find here are incompetent, dishonest, and obnoxious places that completely turn me off. Not that the dealers or chain store here are any better, they are worse for the most part.
Having worked as a lube tech during a winter of $16.88 OC specials, the upsell might work 10% of the time. Also how you motivate your service writers is key, mine was apparantly by gross receipts, so he pushed me to do 3-4 lubes per hour. Whatever money we lost on each one, he thought, we'd make up for by doing more. ??? This meant little to no time for the drudge work of checking air filters and other points on the inspection sheet. I'd market yourself as a "bring us your estimate paperwork" shop, 4 struts & an alignment from a chain tire store would be $800 there and $450 with you, for example. This would doubly stab them by stealing their profitable work and yet still having them do boring loss leader OCs. Call around your local TV places and see if they need any "trade" work on their company vehicles for some airtime, which can be cheaper than you think. Can you add a used car dealership easily in your jurisdiction? Seems like flipping clunkers that would otherwise go to the nissan dealer might net some coin.
Ya we don't do loss leaders.whoever said that brings in hoopties and cheapskates was correct. We charge accordingly.that's why I can't compete with jiffy of wm. I do have some loyal customers that have me change there oil. They know they can get it done cheaper.
I worked at a privately owned Pennzoil lube center for two summers during college (2004 & 2005). We did around 30-35 cars a day at $20.99 for LOF and $23.99 for LOF plus windows & vacuuming. Up sales on air filters and wipers hardly ever worked. The 10% mentioned above is probably correct. The owners of the joint openly admitted to basically breaking even on the lube center business. They made their $$$ from the massive cell tower erected on the property. Back then, they were buying bulk oil from the Pennzoil distributor for around $1 a quart, oil filters were around $1 or $2, air filters were around $4 or $5 and they sold the used oil to a recycling company for $0.50 per gallon. We had a 100% mark up on air filters and wipers. They even got crafty and started charging $3 to 'install' the air filter. If you assume 5 quarts of oil w/ filter you had around $8 in a $21 oil change but you had to pay utilities, insurance, wages, taxes and other overhead on the remaining $12.99 per change and this was 10 years ago. We had synthetic oils in single quarts available but it was $$$ sitting in inventory that hardly moved. 75% of our business was a LOF change. Our Pennzoil oils were in bulk tanks. Filters came in cases of 12. There were some Volvo and Volkswagen cars we didn't stock oil filters for because they simply cost too much from Pennzoil. We had a "lady's day" on Wednesday. We might do 40 cars that day. The owners tried offering specials/deals and it never even approached the break even point. The company's owners had a gas station next door. They tried offering a car wash and oil change special. Again, it never really paid off. Nothing they ever tried really increased their business enough to justify continue doing it. We were in a prime, high traffic area as well. I don't know how some of these small Iffy Lube places keep their doors open now a days. If you can't offer batteries, tires, brakes and minor repairs I don't know how they survive. Considering what stuff was going for 10 years ago and fast forward to today I don't know how they survive. A LOF is around $30+ now a days and we all know that the oil/filters are way up in prices versus 10 years ago and the overhead costs had done nothing but rise.
Dad has had his shop for almost 20 years, and has 35 years in the field. We do good work, and most all of our parts come through commercial accounts at NAPA, O'Reilly's, and AAP. Typically, our oil is store brand, and filters are the same. We don't stock anything other than the oil and filters, a few fuel filters, a small stock of batteries and wiper blades, light bulbs, and a few sets of brake pads. There are no less than 6 quick lubes in our area. Up sales are difficult. We do a good bit of work for a "buy here, pay here" lot. The owner deals with a lot of repossessions due to customers abandoning payments, so the work we might do for him isn't always consistent. Most with major mechanical issues get run back through the sale. We are incredibly small. We don't have a service writer, or a manager of sorts. Dad owns and operates, and everything is run through him. This has worked well for years, but this recent lack of business is just making me wonder what's changed. It's an honest shop, and we do our best to keep it going. It's not an ideal business to be in, just to be honest.
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Also, on the note of our common cars; We get a lot of domestic pickups, SUV's, and cars. Chevy Tahoe's/ Suburban's/ C/K pickups, Chevy Impala's, Malibu's, Cavalier's/ Cobalt's, Ford Taurus's, F-Series pickups, Explorer's, Dodge Rams, Dakota's. We also do some Foreign work, mostly Japanese. We don't work on Mercedes Benz's or Volkswagens, at least not newer ones. Oil changes are incredibly rare, and we cannot compete with our current set up.
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Don't even try to compete with the quick lubes then. Sounds like there are plenty in your area, and trying to compete with them on oil changes and such will be a race to the bottom. What kind of advertising do you do? Any papers like American Classifieds or Mule Trader in your area? Maybe approach other used car lots in the area and see what you can do for them. BHPH lots are notoriously cheap and will try to do a lot of things themselves even if it is over their head, and they can be difficult customers, but if you build a good relationship with them they will be regulars. I would focus on the light trucks, since new Silverados and F-150s are very expensive. Without emissions, and without rust, a truck has just about an infinite life in AL. Maybe come up with set prices for common jobs like GM intake gaskets and water pumps, Ford spark plug replacement/Helicoil, etc and advertise them. Not only do people know a ballpark price before they come in, but they know you have some familiarity with the issue.
Originally Posted By: Red91
Also, on the note of our common cars; We get a lot of domestic pickups, SUV's, and cars. Chevy Tahoe's/ Suburban's/ C/K pickups, Chevy Impala's, Malibu's, Cavalier's/ Cobalt's, Ford Taurus's, F-Series pickups, Explorer's, Dodge Rams, Dakota's. We also do some Foreign work, mostly Japanese. We don't work on Mercedes Benz's or Volkswagens, at least not newer ones. Oil changes are incredibly rare, and we cannot compete with our current set up.
Pretty good selection of brands there. But you don't work on VW's, now the latest I can see due to the cost of the diagnostic tool, but the earlier ones VAGCOM is as good as the VW tool itself. I have a 96 VW Golf with the 2.0L ABA and it is fairly straight forward and simple to work on, can you work on these? You can make a good chunk of change if you work on these because VW owners like their cars and many tend to take very good care of them. I would have do much more maintenance and repair if I only could find a good, competent, and honest shop. I've been having an issue of late where I get low power after the car warms up. I checked the codes and nothing shows up, the only thing I can notice obviously is the pump when priming is much quieter than it was just prior to the issue. But I shudder to have the local shops here touch it because they mostly seem incompetent, and dishonest.
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