Does the Consumer Know What You’re Worth?
by Chasidy Rae Sisk & Alana Quartuccio Bonillo
Do customers really understand what’s involved in repairing a vehicle and running a shop?
Automotive and collision repair shops don’t have it easy. Keeping up with changing technology, trying to get through the volume of work with limited staff and contending with insurers consume most days, but those challenges are worth it for many repairers who take pride in what they do: Protect consumers by safely and properly restoring their vehicles to pre-accident condition.
Your customers appreciate what you do, especially when you take the time to educate them, but do they really understand all that’s involved with repairing a vehicle and running a shop? Do they know how heavily shops invest their time, energy and funds into training, tools and equipment? Are they capable of “getting it?” Do they even care?
Unfortunately, most consumers don’t really understand their vehicles and the complexity of repairing them, making it critical for mechanical and collision shops to educate their customers and involve them in the repair process so they have a better comprehension of what’s happening with their vehicle.
This becomes even more imperative on the collision side where customers have even less experience and knowledge of the process, but many auto body shops try to protect consumers by insulating them from insurer negotiations, leaving them even more confused. Acting as a partner to the consumer to help them navigate the insurance process creates a more loyal customer…and it also helps the shop collect full payment on the work performed by expanding the customer’s knowledge and converting them into an advocate for your business.
Because this is such an important concept, AASP-MN News decided to try our hand at “educating the consumer” to find out if they actually know what you’re worth.
Our 10 consumers reside in areas all over Minnesota and surrounding states, and they represent various age groups and careers. All respondents were unaffiliated and unfamiliar with the collision repair industry; most indicated that their knowledge was limited to one or two interactions they’d previously had with body shops after collisions. Many struggled to understand the difference between automotive and collision repair, despite repeated clarifications and explanations.
We began by assessing their current knowledge on three topics: the length of time needed to learn the trade, the amount shops invest in tools, equipment and training and the all-important question of Labor Rate. After obtaining that feedback, we provided a two-minute lesson on the industry and asked them to re-evaluate their responses. Let’s find out what they had to say!
“I don’t have a clue.” “I’ve never really considered it before.” “A lot?”
It wasn’t exactly shocking to hear that few people have contemplated what goes into repairing their vehicles…or to the shops and technicians who ensure their vehicles’ safety after an accident. Yet, that was the only similarity expressed by participants – identifying what the average consumer thinks they know about this industry offered diverse responses.
Contemplating the amount of training necessary for someone to become a qualified technician, consumers’ guesses ranged from “40 hours” to seven years.
“I think at least 40 hours total would be necessary to learn the bare minimum skills necessary and start working on cars,” suggested a warehouse coordinator from Bloomington.
A Savage-based construction worker guessed six months, followed by on-the-job training, while a household maintenance technician from St. Paul proposed that it could take anywhere from six months to two years “depending on the motivation of the person learning the trade.”
Half of our consumers indicated that two years seemed like a reasonable timeframe for learning the skills needed to repair vehicles, and most of them also recognized the need for employers to offer additional training in the shop.
“About two years to learn almost everything, but they’re also going to get a lot of field experience obviously,” said a Canby-based caretaker who also noted, “It’s really not extremely difficult to learn how to work on your own vehicle; YouTube offers a lot of do-it-yourself training videos.” (Oh no!)
“They probably go to school for a year or two, but they’d also need to learn some of the most complicated aspects while on the job,” a dental hygienist from Apple Valley reckoned. “It has to take years for them to get really good at it, so a talented technician could become proficient in 10 years or so.”
A college student residing in Marshall estimated that it would take five years or less, “depending on their upbringing and whether they grew up around cars,” and a Canby-based college professor offered a similar guess of five to seven years.
Most consumers acknowledged the need for shops to invest annually in tools, equipment and training, but it was evident that few understood what is required to run a collision repair facility. The concept of needing specialized equipment to repair specific makes and models took many of them by surprise. Conjectures ran the gamut from “a couple thousand” to $500,000.
“Tools and equipment are expensive, but those wouldn’t be annual charges – once you have them, they last forever,” the dental hygienist opined. “They may occasionally need some specialized equipment, and tools probably cost around $500 each year to replace what employees break. Add in training, and they’re probably spending a couple thousand each year on tools, equipment and training.”
A Plymouth-based front desk clerk in the hospitality industry considered $15,000 to be sufficient for equipping and training shop technicians, but the majority of consumers believed that these expenses would amount to closer to $50,000 per annum.
“Shops would need to spend at least $20,000 annually on tools and equipment,” an internet technician from Rochester believed. “If they actively hire new employees, they’d invest another $20,000 or more in training, but if their employees are tenured, they could likely get away with just $5,000 per year for training expenses.”
The caretaker and construction worker both calculated that spending $50,000 each year seemed reasonable, and the college professor predicted a range of $50,000-$75,000 since “tools and equipment cost a lot; that stuff is not inexpensive!”
Offering a “really high” conjecture of $120,000, an IT professional from Plymouth observed, “Once you buy your tools and equipment, you’re probably not going to have to buy those items again unless you just need a new one. I’d think training is the highest expense each year since they’re doing a lot of really high-tech stuff with cars now.”
The college student provided the highest guess of $500,000 for the cost of tools, training and equipment.
Questions about the Labor Rate that shops should charge elicited conjectures ranging from $25 to as high as $200, with an average of approximately $75 per hour. The front desk clerk was one of two consumers who supported the belief that a $25 Labor Rate would cover a shop’s expenses and labor.
“Body shops should charge at least $25 hourly,” stated the warehouse coordinator. He added, “They have to completely take the car apart, make the necessary repairs and then reapply those parts onto the vehicle. That seems like a lot of work.”
“The job requires a lot of prep work, right?” The construction worker sought to confirm his belief before voicing the opinion that “roughly $30 an hour seems fair and not too high for the shop to charge and still be able to pay their technician.”
“Don’t they get paid a lot?” asked the college student. “If the guy repairing the car makes $20-25, the shop probably charges $50-75.”
The caretaker took a different stance:
“It depends on whether the repairer has a degree and how much prior experience they have. They should definitely have a base salary of $15 an hour, and if the shop offers any kind of bonuses or incentives (which I think they should), they’d need to include that in their charges. It also depends on what they’re doing for the vehicle. I know some shops likely charge $200 an hour, but that’s outrageous. I think
$50-60 is reasonable and allows them to fairly pay their workers as well.”
“Shops should charge by the job, not by the hour,” the household maintenance technician proffered, and the dental hygienist estimated that “$70 should cover it all.”
“Around $100 an hour leaves enough room for the shop to pay a good rate to the technician and still make decent money for the business,” the internet technician expressed.
“I know nothing about cars or shops…I always put complete faith in the people who work on my cars,” admitted the college professor before posing an estimate of $100-150 per hour. “I’d assume they’d charge different rates depending on the tenure the employee has and the skill level needed to effect the repair. They may offer lower rates of $75 for basic stuff that an apprentice can do, but I’d imagine that more labor-intensive repairs should cost more money.”
The highest guess of $150-200 per hour was offered by the IT professional.
After consumers provided their initial responses, they were given a short “training session” on collision repair:
Our vehicles are typically the second largest investment we make, and these days, cars are essentially supercomputers on wheels that can kill the driver, occupants and others on the road if repaired improperly. In addition to at least two years of formal education, technicians participate in ongoing training to keep up with advancing technology and manufacturer requirements, and they provide their own personal tools which can easily accumulate in excess of $100,000. Changing technology also requires shops to constantly invest in tools and equipment, plus shops that participate in various OEM-certification programs may be required to purchase specific items to repair that manufacturer’s vehicles.
Typical startup costs for a small shop run around half a million dollars, and when we talk about Labor Rate, it’s important to remember that this is a business with overhead expenses such as rent, utilities, insurance, taxes…in addition to employee wages and benefits. As a point of comparison, the national average for lawn mower repair is $90/hour,
and auto repair rates on the mechanical side typically range from $85-130.
How did that “education” influence consumers’ initial thoughts?
Well, the household maintenance technician held fast to his belief that shops should charge by the job, and the internet technician insisted he was “pretty close and reasonable at $100, but I assume other people tend to think shops should charge $50 an hour and no one gets to eat?”
When he learned that many shops only collect $50-60 an hour, his exasperation was obvious:
“How’s that supposed to work?! Body shops have to pay more than $10 an hour for the actual labor, plus they have a ton of overhead.”
Other consumers acknowledged that their original guesses were insufficient, but several hesitated to offer a new number.
“I hadn’t considered all of that,” confessed the dental hygienist. “It always seems so expensive when I’m looking at a bill, but I guess it makes sense. So, they should definitely raise their labor rates…but maybe stop jacking up the price of parts so much.”
“Thinking about how much they invest sounds like it’d be a struggle just to break even, and any business needs to do more than just break even,” the caretaker commiserated. “I was not aware of how much they’re constantly spending; it’s ridiculous that they have so many expenses. They should definitely be getting more.”
“Shops should charge more since they’re being heavily impacted with all the new technology which they need to be educated on,” agreed the warehouse coordinator. “They have to spend that time and money learning to repair vehicles the right way to ensure that the technicians are capable of doing their jobs correctly.”
“A half a million for tools? Wow!” exclaimed the front desk clerk. “I didn’t think about it being our second largest investment either. Taking all of that into consideration, it changes my opinion on technicians and body shops. I really respect them for what they do.”
Offering a revised estimate of $100 an hour as a reasonable Labor Rate, the construction worker recognized that he was “only looking at the labor aspect, but now that I realize how much they have to put out to even open their doors, I definitely think a higher number is more realistic. Understanding their investment will probably make me less annoyed the next time I get a bill.”
He was not surprised in the least to learn that insurers often limit reimbursement rates to body shops, but he pondered, “If the shop charges $100 an hour and the insurer only pays $50, do I get charged the rest? Laws need to make sure insurance companies are liable for a certain amount or specific things. Insurance policies cost a lot, but though we rarely need them, they still don’t want to pay for the repair…that should be illegal.”
“Lawn mower repair costs how much?!” the college student gasped. “Shops should definitely be charging closer to $150 then.”
“With all that overhead, I’d say $150 at a minimum,” the professor concurred. “That’s an insane amount of investment, and the fact that it’s an ongoing investment to
keep up with changing technology helps me understand why shops always seem to charge more than my insurer’s initial estimate.”
Although the IT professional originally guessed $150-200, he updated his estimate to $250-300 after learning more about the industry. “I’d say that seems like a fair ballpark for them to recoup their investments.”
While it’s quite clear that some people truly do recognize the value of what body shops do, few can put an appropriate figure next to it. Speaking to consumers of various professions played a role in our research as many used some of their own professional knowledge as a point of comparison, yet most didn’t even come close to recognizing the amount of training and equipment needed, let alone how much cost is involved.
So, what does this mean for repairers? There is certainly a lot of work to do in and out of the shop to educate the consumer.
Education really is key. The more collision repairers educate their consumers, the better they can understand what is happening when they take their vehicle in for repairs so they can fight their insurers for proper compensation. Helping them “get it” can help you collect proper compensation.
How are Minnesota shops instilling this knowledge in customers? Stay tuned to next month’s AASP-MN News for insights into some of the best ways to better educate consumers.
Want more? Check out the June 2022 issue of AASP-MN News!