Repair Shop Advice

Six months ago, experts were debating when a recession would hit.  Now, they’re trying to predict how bad the Coronavirus-induced recession is going to be, and how long it’s going to last.  Most experts think it’s extremely bad, and it will probably last through 2021.

On the whole, recessions are bad for business.  But there have always been opportunities during recessions.  Some products and business models just do better when most everyone else is doing worse.

With that in mind, here are two types of auto repair shop customers who will struggle during this recession, and two who won’t.

Recession-Risky: The Maintainers

The people who spend the least on vehicles over their lifetimes are also among the most profitable for repair shops.  They are the Maintainers – people who come into the shop regularly to make sure their vehicle isn’t slowly falling apart in some way that will cost thousands of dollars to fix.  They may not follow the maintenance guidelines in their owner’s manual, but they do follow your advice to keep their vehicle running for as long as they can.

Or at least they do for as long as they have the money to do it.  When smart people are short of money, they pull out their bills and start asking the question “what happens if I stop paying this one?”  The mortgage, power and water bills get kept pretty quickly.  Other quality-of-life expenses make the cut, too.  But what happens to a well-maintained vehicle if it skips one service?  Probably nothing – so it’s likely to get cut.

Unfortunately, one missed appointment can quickly turn in to three or four.

Recession-Risky: The Business Drivers

Six months ago, the sharing economy had made business vehicles one of the fastest growing category of customers.  While Uber and Lyft drivers didn’t make a lot of money, they were reliable customers for many shops.  For these drivers, a vehicle was a business expense, and they understood that maintaining a vehicle was cheaper than replacing it.  They also knew that a day off the road was a day without pay.

While food delivery remains strong, the ride-sharing business model has been eviscerated by Coronavirus.  While it’s true that some people who relied on ride-sharing exclusively will be forced to buy a car (good news for shops) most of these lost miles will simply be trips that aren’t taken. People won’t drive downtown if they don’t feel comfortable taking an Uber – they just won’t go at all.  And those billions of lost miles will hurt shops and manufacturers alike.  And it’s not just Uber and Lyft – the rental market has declined so quickly that Hertz lost 75% of its value within a month of the lockdown and went bankrupt within three months.

Recession-Resistant: The New Car Crowd

One group of people you rarely see in an independent shop are members of the New Car Crowd.  These people love having the latest tech and the newest design, and they’re willing to pay for it.  The most obsessed members of the New Car Crowd lease their vehicles, Others buy their vehicle, but trade it in for a new one right after their monthly payment is gone.  Dealerships understand the amount of money they can make on these customers, and they put extra effort into getting them to come to the dealership for repairs as often as possible, hoping they’ll drive off with a shiny new vehicle instead of their old one.

Unfortunately for dealers, the new car market has collapsed.  Sales are down more than 50% year-over-year.  And as salaries and credit ratings go down, some members of the New Car Crowd make the responsible decisions to hold on to their cars for a bit longer than they used to.  After their extended maintenance contract expires and dealership repairs start costing an arm and a leg, they’re more likely than ever to give your shop a call, especially if you have a stellar reputation.

Even if members of the New Car Crowd do decide to trade-in their vehicle, the lightly used vehicle market is currently lopsided in the buyer’s favor, making it an attractive money-saving option.  And if most or all of Hertz’s 500,000 vehicle fleet floods the used car market, buyers may be able to buy a used vehicle at some of the best prices ever.

Recession-Resistant – The End-of-the-Road Customers

One customer that shops can always rely on is the End-of-the-Road crowd.  These are the opposite of the maintenance crowd – they ignore their vehicle until it stops running for some reason, and then end up in your shop to figure out what the damage is.

It’s true that many people who ignore maintenance don’t have the money to pay for it.  These customers aren’t going to be in any better shape during a recession.  But not having a vehicle means not having a job for many people – and if there’s a way to get back on the road, they’ll prioritize it over almost anything.  While you may need to work with these customers on price, these vehicles are likely to keep showing up at your shop, likely on the back of a tow truck.

Not all End-of-the-Road Customers are in dire financial straits, however.  Some people just really hate taking their vehicles to the shop and avoid it at all costs.  Others always have something “more important” going on until their car strands them on the side of the road.  Many of these customers will be able to pay a reasonable price – and they may not really care to know all of the details about what you have to do to get the car back on the road.

To learn how Repair Shop Websites can help your business earn more business with a strong web presence, call us at 855-394-6397 or email us at Team_RSW@RepairShopWebsites.com.

In most states, governors are looking at the new infection data presented to them each day, trying to answer the unanswerable: which restrictions should be lifted, and when?  If they move too fast, there’s a strong possibility that everything will get shut down again.  If they move too slow, millions of more people will needlessly lose their jobs.

As a business owner, the decisions these government bodies make will have a big impact on your business.  But as an auto repair shop owner, the decisions that individuals make about their comfort level with getting back out in public will matter even more.

People will make their own decisions about what safety looks like.  Some are quickly trying to return to their lives already, unconcerned about what the government says.  A much larger number, however, are likely to be morecautious than their state’s guidelines.  And whatever your state’s “final” stage of lockdown is, you won’t likely be able to enjoy a major-league sports game in the stadiums the week you reach that stage.  It’s going to be a long time until things get back to normal.

It boils down to this – if a person is mostly staying home, they probably aren’t going to be visiting your shop.

As soon as the “official” lockdowns end, businesses will be turning their eyes towards their customers.  When will they decide to get back out and live their lives?  That depends on where the infection numbers go.

Nobody knows where those numbers will go – but here are three factors to consider as you try to forecast your revenue over the coming months.

More new confirmed cases doesn’t necessarily mean there are more new cases.

More than 90,000 people have died from COVID-19 in the US.  There is no doubt that it is extremely dangerous.  That doesn’t mean that it puts everyone in the hospital.  In fact, 25% to 50% of people who got COVID-19 didn’t realize they were sick.  They certainly didn’t get a test.

In the early days, people who felt like they had a bad cold, got a high fever, or lost their sense of taste also didn’t get a test.  There just weren’t enough tests for that.  Mild and moderate cases of COVID-19 were not being confirmed.

As testing has been ramping up, moderate cases are being confirmed, and in some places mild cases are even being confirmed.  This is going to lead to a growing number of confirmed cases – but it doesn’t mean that the rate of new cases is growing faster than before, just the rate of confirmed cases.

Any good analysis of what’s happening in your state won’t just throw out some large number of new cases.  It will also consider what percentage of people being tested are positive for Coronavirus, which will hopefully be going down every week.

We don’t know the tipping point.

The reason we’re opening in phases is that no one really knows what activity is going to lead to a breakout.  Otherwise, government would just ban those specific activities and open everything else up.

A recent article claimed that significant indoor spread is fairly unlikely in most casual circumstances,  while another said talking for one second can emit enough particles to infect someone, and that those droplets can stay in the air for fourteen minutes.

We just don’t know what, if anything, is going to send the new case number skyrocketing.

Bouncing back and forth between a mostly open economy and a mostly closed economy would be miserable, especially for businesses.  But there’s a chance that it could happen, causing yet another unplanned disruption to your car count.  There are significant steps left to take between our current status and something “close to normal”, and any of them could be the straw that breaks the camel’s back.

None of this is black and white

If most businesses are closed in your state, it probably feels like someone flipped off the light switch.  When the shutdowns first occurred, you likely went from fixing cars to spending a lot of idle time in the shop (or shutting it down entirely). Chances are good that you haven’t made nearly as much money as you would have hoped over the last two months.

As long as the people in your area aren’t resuming their normal lives, all businesses will be impacted.  Whoever the biggest employers are in your town, it’s going to affect you if they aren’t open. Whether that company’s employees are your customers, or your customers’ customers, it’s going to impact how much money people around town have to spend.

If most of your potential customers are working from home, they aren’t driving their vehicles nearly as much. And a vehicle that isn’t driven isn’t likely to need repairs.

The good news is that, no matter what the impact is, you can make decisions now that will influence how your repair shop fares in 2020.  Expenses may need to be quickly adjusted as your local economy changes from week to week or month to month.

The most important thing is to take the steps you need to take to make sure your employees avoid becoming a statistic while they’re at work.  Businesses that are thorough in planning (and executing) ways to minimize co-workers’ physical interactions are less likely to have a COVID-19 breakout imported into their shop by an employee that “felt fine until later that day.”

Spread to other employees or customers would be terrible news for the shop, even if they had few or no symptoms.  While a work-from-home order has been devastating to many small businesses across the country, a local reputation as “the COVID shop” would be far worse.

To learn how Repair Shop Websites can help your business earn more business through your web presence, call us at 855-394-6397 or email us at Team_RSW@RepairShopWebsites.com.