Automotive Industry Evolve or Become Extinct
Back when education was real we learned on all types of subjects. In biology we discussed evolution. The idea is that as a species, the mutations that make us more robust allow us to survive. The weak of the species die off and the strong are able to reproduce and continue on. This process is called natural selection. When we examine the animal kingdom it is amazing to see all the variants of genetics that allow that animal to survive.
As in nature, the automotive business is much the same. We as an industry have to evolve in order to acquire success. I sell automotive scan tools as part of my business. I also do a fair amount of travel. While traveling I often see automotive and truck shops off the freeway. I will stop by and talk to the shop owner. I am blown away by the owners that tell me that they would rather shut down than purchase a tool to help them diagnose problems. This is especially common with truck and off road repair shops.
Every year we hear about shops going out of business. These are businesses that have been in operation for generations. One trend that I have seen for the last few years is businesses hiring coaches to help them succeed. Quite often I hear shop owners tell me that they paid these coaches $40K and they did not help. I wonder if the shop owner heeded the council of the coach? I also am suspect of the coach that took the money but did not assure success. There are many good associations out there that bring shop owners together to compare notes and share ideas. Some owners buy into franchises. The ideal of the franchise is that someone has already done the trial and error. The business is supposed to be turnkey. It still takes hard work. You do have to follow the road map. Too many times we find that the franchisees want to modify the map. Many times this results in failure.
I am not going to have a magic bullet today. I am hardly a poster child for success if you measure it by one's net worth. I can say that after nearly 40 years of hard work I am free of debt and have a few dollars in the bank. I am a partner with my son in a business where we are experiencing rapid growth. Our business more than doubled last year and we have budgeted a doubling this year. We will see how that goes.
My suggestion would be to be careful in your purchases. Research the area in which you want to work. Live lean. Save for rainy days. See your employees as equals. Treat them as you would your finest customers. Be fair in compensation. Pay your employees as professionals. One who is treated well and compensated well will stay with you. Gone are the days of "don't let the door hit you on the way out" and "There are 20 guys outside just waiting to get your job". This was and is no way to treat your employees.
Technology is biting us in the backside. So much so that the aftermarket is having a hard time keeping up with the OEM. The OEM is locking down systems and making it harder for us as technicians and owners. Everyone has their hand out telling us we have to pay them for "access". One solution is to hire mobile technicians. Another is to start to invest in more OE level tools. Or maybe like the shops who don't want to invest we just give up and shut down. I think many enjoy working with the Mom and Pop shops. It creates a sense of community. It would be a real tragedy if they become extinct. We want the local automotive shop to survive. Can they evolve?
A couple of weeks ago I wrote an article on linked in. linkedin.com/pulse/get-read… This article argues changes needed for the evolution of our industry. Your comments are always welcome.
As someone who's seen business owners reject the advice of experts and go out of business, I would be suspect of a consultant who did assure success (without a long list of caveats). Change is not something people tend to embrace, and it's even harder to convince someone to do something new when their old business model had a proven track record. As the saying goes, you can lead a horse to water
Specialization is now and will be the key in the future.
Here's the thing. Owners need to charge for what they do and stop giving the store away. That includes the people who cite a you tube video or some other such nonsense accusing the shop of overcharging or worse. This also applies to parts. You need to supply them, NOT the customer and you need to charge a reasonable markup even if they claim they can get it for less from another source. The auto
Michael, I agree. Free diagnostics just devalues your shop and technicians. This past week I spoke to several shop owners in several states. I heard more than once that customers want them to apply the diagnostic charge to their repair bill. This is insane. THE MOST VALUABLE TIME YOU SPEND IS DIAGNOSTIC TIME. Many can swap parts. Few can accurately determine which to swap. As the business owner