Every couple of years, MTD takes the pulse of our readers’ auto service business through our Tire Dealer Automotive Service Survey. The feedback we receive is always enlightening.
Since many of you derive a big percentage of your revenue from auto service, I thought it would be interesting to share some results from the 2020-2021 edition of our study.
First, to establish a baseline, we asked dealers to provide the percentage of sales that auto service generated for them in 2020. On average, respondents estimated that auto service made up 48% of their total sales.
We then asked, “Of your estimated total profits in 2020, what was the percentage from automotive service in your dealership?” Respondents said auto service made up 47% of their overall profit.
We also wanted to know the number of locations and service bays that each respondent had, as well as the number of technicians they employ at each outlet.
Fifty-four percent reported that they have one location. Sixteen percent said they have two locations. At the other end of the spectrum, 14% of respondents said they have more than 10 outlets.
The average number of service bays was seven. Looking at the outliers, 4% percent of respondents said they have one service bay and 7% said they have more than 15 bays. The vast majority of respondents have fewer than 10 bays.
We also found that the average number of technicians employed per outlet is six. Twenty percent of respondents said they employ three techs per outlet. Only 1% reported that they employ more than 15 techs per outlet.
We also wanted to know how many technicians at respondents’ dealerships are ASE-certified. Approximately 35% of respondents reported that at least 50% of their technicians have earned ASE approval.
Ever wonder how you stack up against your peers when it comes to how you pay your technicians? Nearly 50% of survey respondents — 47% to be precise — told us they pay their techs by the hour. Twelve percent pay on a commission-only basis. Thirty-four percent pay both salary and commission. And seven percent of respondents said they compensate their techs via salary alone.
We also looked at services offered. It came as no surprise that nearly 100% of respondents reported that they offer tire pressure monitoring system service. Ninety-five percent perform mounting and balancing. Ninety-two percent offer brake service.
Eighty-six percent said they offer both shock and strut work, as well as battery and electrical service. Eighty-five percent of respondents work on bearings and seals, while 83% do oil changes and 82% offer chassis and suspension service. Seventy-nine percent offer alignments. (This figure caught my attention. I thought more would offer alignments.)
Seventy-nine percent of respondents also replace wiper blades. (I always use the term “windshield wiper blades,” but it seems like more and more vehicles are coming with rear window wiper blades, too. I have to keep that in mind.)
Here’s the rest of the “services offered” list: ignition and spark plugs (65%), electronic diagnosis (65%), engine repair/diagnostics (61%), cooling systems (64%), air conditioning (59%), chemicals/ injectors/cleaners (55%) and exhaust systems (52%.)
Given the brutal heat experienced in many parts of the country this past summer, I would not be surprised if more dealers add air conditioning service to their menu.
Now for the big question. What are the most profitable services offered by dealers who replied to our survey? That would be alignments, which yield an average profit margin of 75%. TPMS service has an average profit margin of 65%. Air conditioning service yields a 62% margin, on average, according to survey respondents.
Brake service and engine repair/diagnostics provide the same average margin (59%) and cooling system work, on average, yields a profit margin of 58%. The service with the smallest profit margin — as reported by survey respondents — is oil/lubrication.
At this point, you might be asking, “What’s the biggest average ticket per service?” That would be $521 for shock and strut work. Air conditioning service takes the “number two” spot, with an average ticket of $458.75. The service that generates the smallest ticket? Wiper blade replacement — at $27.44.
Do any of the above numbers support what you see at your own dealership? Are they wildly different?
Because this column is limited in space, I’m unable to provide all of the numbers that our most recent survey generated. If you want more, feel free to drop me a line. And let me know if you would like to participate in our next study. Nothing tops feedback from you, our readers.
If you have any questions or comments, please email me at [email protected]
