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Repair Shop Advice

Three Threats to Independent Automotive Shops’ Relevance – And How to Stay Ahead of Them

October 21, 2016

Automobiles have been the primary mode of transportation in the United States for nearly a century – but that doesn’t mean that there haven’t been big changes in that time.  Changes to any industry bring threats and opportunities.

Independent repair shops, in particular, face unique threats because there’s always an incentive for the companies that manufacture vehicles to try to cut them out of the industry, taking that repair revenue for themselves or their franchisees.  Here are three threats that independent automotive shops are already facing, but will become more intense over the next decade.

technology and independent repair threats

Threat #1 – Manufacturer ownership of telematics system data.

Independent shops are always fighting to maintain access to the information they need to repair vehicles, from repair codes to installation diagrams.  Vehicle telematics systems present the most recent informational threat to independent shops.  The most modern vehicles can self-report many repair needs directly to the manufacturer, who can them forward that information to the dealership where the vehicle was last serviced.  That dealership then contacts the customer to schedule an appointment, cutting out independent shops entirely.

This makes it more important than ever to establish a relationship of trust with your customers before they move to one of these new vehicles.  Make sure you retain the technical expertise to repair modern vehicles, and as customers near a new purchase, remind them that you are happy to help them more affordably once the vehicle is no longer warrantied.  If you know they’re looking at one of these vehicles, offer a free inspection or two while the vehicle is under warranty, so they can take their vehicle back to the dealership for free repairs before their warranty expires.  Ultimately, when the dealership calls and tells them they’re due for maintenance that will be invoiced, you want them to say “thanks for the notification, I’ll call my own mechanic and get it done”.

Recommendation: Build relationships with your customers that are powerful enough to withstand the effort to cut your shop out of the repair business.  Also, keep up-to-date on the Auto Care Association’s efforts to gain independent repair shop access to this telematic information.
Threat #2 – Technician Shortage

We discussed the difficulty of hiring techs recently and also provided some tips on attracting great technicians.  This challenge is only going to get worse, as fewer and fewer high-schoolers consider skilled trades despite relatively strong pay for these careers.

The problem finding new technicians is going to be compounded by the cost of maintaining the knowledge base of your existing technicians.  While there has been a shift in web-based training in the past few years due to scheduling convenience and affordability, there’s now a slight trend back towards in-person training because systems are becoming too complex for a quick video and web-based quiz to suffice.  Small shops will find it especially difficult to retain a strong knowledge base across so many different vehicle systems and vehicle manufacturers, as they can’t spread this knowledge across a half-dozen mechanics.  If you get behind the curve on this training, catching up will be even more difficult than staying up to speed.

Recommendation: Establish an expectation that your technicians keep current on vehicle technology, maintenance and repair, and make sure you’re providing them with the time and resources to meet that expectation.

Threat #3 – Electric Vehicles

Doomsayers have been predicting the end of the internal combustion engine at least since the release of GM’s first electric vehicle in 1996.  They’ve been wrong for 20 years, and they’ll be wrong for 20 more.

But there are going to be many, many more electric cars on the road in 20 years than there are today.  How many?  Audi predicts 25% of all US sales will be electric by 2025, and Honda says 66% of all models will plug in by 2020.  It’s not just goodwill – battery prices have dropped from $1,000 to less than $400 per kilowatt hour in the last five years, and electric vehicles are slowly becoming the most affordable way to meet ever-more-stringent fuel economy standards worldwide.

As gas vehicles get replaced with electric ones, independent automotive shops without the ability to service these vehicles will find fewer and fewer customers.  However, independent shops that can repair these vehicles will be well-positioned to grab market share.  The labor rates will likely be higher, too – this market will be much less competitive than repair and maintenance of traditional gas-only vehicles, simply because fewer shops will be able to do it.

Recommendation: Make sure you’re up-to-date on electric vehicle purchase rates in your area in the coming years.  When they start climbing, make sure your shop, and your technicians, gain the knowledge and certifications to service them before the majority of them are out-of-warranty!


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