Is Increasing Car Counts the Solution to Your Auto Repair Shop’s Challenges?

When clients join the Elite coaching program, many of them state they would like help increasing their car counts. While car count is an important key performance indicator (KPI) and should be tracked, indiscriminately increasing car counts is often not the answer to improving performance and profitability. In fact, as we have seen time and time again, increasing car counts is often accompanied by a decrease in average repair order dollars (ARO), which only adds to a shop’s financial problems.

 

There are three common myths regarding car counts: increasing car counts leads to increased profits, more advertising is the only way to create steady car counts, and car counts are the true measure of a company’s success.  The truth? It’s not that simple.

 

A key factor that is often overlooked is that not all repair shops operate under the same business model. For example, a six-bay diesel repair shop and a twelve-bay general service shop performing oil changes and maintenance are completely different businesses, each with different car count requirements.

 

In this article, we’ll break down the misconceptions about car counts and walk through how to determine the right car count for your shop so you can improve efficiency, profitability, and customer retention.

 

How to Determine Your Shop’s Needed Car Counts

In many instances, when a shop owner is struggling financially, their first reaction is to bump up car counts. As an Elite business coach, I have seen all too often that car counts are usually not the problem. As mentioned earlier, no two shops are completely alike. You must determine the right car counts for your shop. While there are several methods to determine the right car count, the simplest way is to understand three metrics: the number of technicians you employ, your total available billable labor hours, and your average number of weekly billed labor hours per repair order. Your average labor hours per repair order and average billed labor hours per technician can be obtained from your business management program.  

 

Let’s run through a typical scenario. A sample shop employs two skilled technicians and produces on average 90  billable labor hours in a 40-hour work week. In this situation, your potential labor inventory is 90 hours. Let’s say for this sample shop, the average billed hours per repair order is 2.5 hours. Divide your potential labor inventory (90) by your average billed hours per repair order (2.5); that equals 36. In this scenario, your average needed car count is 36. See the formula below:

90 potential labor hours divided by 2.5 average bill labor hours per R.O. equals 36 cars needed per week.

 

Now, what if we improve our estimating process and workflow processes and increase our average billed labor hours to 3 hours per repair order?  Let’s do the math again: 90 potential labor hours for the same two technicians, divided by 3 hours per repair order, equals 30 cars. See the formula below:

90 potential labor hours divided by 3.0 average bill labor hours per R.O. equals 30, a decrease of 6 cars needed per week.

 

By now, you can see that increasing car counts is not always the best strategy. In many cases, improving how you build estimates and selling more profitable jobs with higher billable labor hours can improve efficiency and reduce the car count demand.

 

New Customer Acquisition vs. Customer Retention

What if an auto repair shop truly has a car count issue? Many shop owners resort to increasing their advertising budget to bring in more customers. On the surface, this appears to be a sound strategy. Plus, every shop should have a continual marketing plan to attract new customers. However, the reasons for a low car count need to be explored. The reason is usually found in the customer processes, particularly the sales process and the vehicle delivery process.

 

While advertising may bring a shop new blood, no amount of advertising sells anything, nor does it retain customers. The job of advertising is to make consumers aware of your brand and to reinforce your brand to your existing customers. Effective advertising brings people to your business. It’s then up to you and your team to sell the jobs and deliver an amazing experience that ensures customers will return in the future.

 

For these reasons, a repair shop must track its first-time customer acquisition rate and also its customer retention rate. Retention is the key. Every auto repair shop must provide an amazing customer experience and sales process, combined with a vehicle delivery process that gives the shop the best opportunity to get customers to return again and again. One of the best strategies to maintain and build future car counts is to book the customer’s next appointment.

 

Many repair shops spend a significant amount of money on new-customer acquisition, only to have car counts plateau, and sometimes, even decline.  Why? Poor customer experience, and a car delivery process that does not set the next vehicle appointment.

 

Think about this: Let’s assume your technicians are doing a complete vehicle multipoint inspection, and your service advisors are discussing the concept of total car care with your customers. This strategy results in a lot of discovered repairs and services you can offer to your customers today and in the future. This means a steady flow of customers and cars. Remember this: vehicle delivery is the first step to your next sale. 

 

Let’s Review the Steps to Attain the Right Car Counts

As you can see by now, knowing the right car counts for a repair shop takes due diligence and planning. It requires understanding your labor inventory potential and average billable labor hours. It also means finding ways to improve efficiency to improve billable labor hours. At this point, you can determine the right car count for your company.

 

In summary, create a marketing plan that continually promotes your brand with a focus on your core profile customer. This strategy will help bring you the right customers and reinforce your brand to your existing customers. Then, build an internal marketing plan where your employees deliver an amazing custom experience. An experience that sets you apart from your competitors. Lastly, work on your vehicle inspection process and make sure that your service advisors are promoting the concept of total car care and are booking the next appointments.

 

Conclusion

If you are an auto shop owner interested in learning more about car counts or looking for innovative ways to enhance and grow your business, Elite Worldwide can help. At Elite, we have world-class, experienced coaches who understand your business. Our coaches have lived in the trenches and built amazing, successful companies. Elite also has sales, management training, and peer groups that can take you and your business right to the top. No matter where you are in your business career, startup, growth mode, or looking to retire, Elite can guide you and help you achieve your goals and build a more profitable and successful business.