Does the Consumer Know What You’re Worth?
by Chasidy Rae Sisk & Alana Quartuccio Bonillo
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?
Auto body 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?
New England Automotive Report decided to try our hand at “educating the consumer” to find out if they actually know what you’re worth.
Our 10 consumers from New England states represent various age groups and careers, and they are all 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. 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 those responses, we provided a two-minute lesson on the industry and asked them to re-evaluate their original thoughts. Let’s find out what they had to say!
One recurring trend immediately emerged during these interviews, namely that consumers rarely think about the collision repair industry – until they’re in an accident and need a shop’s services. Common expressions included “I never thought about it before,” “I have no idea” and “No clue.” A freelance writer/editor from Waltham quipped, “I know a lot of details about many things, but this isn’t one of them!”
But what the average consumer thinks they know about this industry varies drastically.
In discussing the amount of training needed to acquire the skills to repair vehicles, responses ranged from “not much” to a guess of seven years.
“Well, I believe they should go through training, but how long do I think they’re actually trained?” a housekeeper from Montpelier, VT asked. “It’s probably along the lines of ‘here’s where everything is at…ready, set, go!’”
Several participants suggested half a year seems like a reasonable amount of time to learn the trade.
“If he’s doing it every day, I’d guess a minimum of six months,” guessed an internet provider technician from Boston. “If not, training probably takes closer to a year.”
“Six months to a year,” agreed the Waltham freelance writer/editor.
“At least two years” was contributed by a personal concierge from Ashland who added, “Cars are all digital now. They used to be about parts and just putting them in, but now it’s all computerized, so I imagine it must be more challenging.”
“I’d think they need a two-year program to get certified,” offered a quality control (QC) specialist in the mortgage industry (Dover, NH). “Maybe four years if they want to be a master technician.”
A childcare provider in Salem gave the question a little extra consideration:
“Overall, I think it takes about three or four years of active hands-on learning with plenty of bookwork to learn that skill. I imagine one has to be able to locate and diagnose problems and issues that may or may not be visible.
Listening is a big part of observing, and for diagnostic purposes alone, it probably takes additional time to perfect that skill.”
Additional guesses included three months, “roughly 1,000 hours” and “possibly five to seven years, depending on the skill level they’re trying to acquire.”
Most consumers acknowledged the need for shops to invest annually in tools, equipment and training with estimates running as high as a quarter million dollars.
“Somewhere around $25,000-$50,000 annually, depending on the size of the shop and quality of the machinery,” the Salem childcare provider surmised.
“Once they are open, I’d say an annual equipment cost of $50,000 seems reasonable,” an occupational therapist from Braintree indicated.
“Maybe $50,000-$75,000?” proposed a college professor from Bridgewater. “It’s probably in the thousands because I know that stuff isn’t cheap.”
“They would need a lot of stuff like sanders, paint and tools, so it’s hard to say,” hedged the personal concierge, offering a guess of $150,000.
“It could vary, but if it’s a small shop of four people, I’d say $100,000,” contributed a Boston construction supply manager.
“I have no idea,” admitted the freelance writer/editor. “I’m sure it’s a lot though. They have multiple employees, overhead, etc. I’d have a hard time thinking it’d be less than $50,000.”
“With tools and stuff, they’ve got to be spending at least $100,000,” the Boston internet technician began, adding, “Actually, thinking of all the things they need, such as the garage, sprayers and tools to mind it, that may be shortchanging them. It’s probably more like $250,000.”
The Vermont housekeeper was the sole dissenter:
“Hmmm. Well, it’s all repetitive work, so once they buy the tools, they shouldn’t have to buy them again. I don’t know the cost of tools or equipment so I don’t really have an answer, but I don’t think it’s much. I mean, it shouldn’t be.”
Questions about the Labor Rate that body shops charge elicited a wide range of guesses ranging from $15 to $250 with an average of $97.
“A little over minimum wage, so they can pay employees and afford their business expenses…I guess around $15 an hour,” the Vermont housekeeper provided the lowest estimate.
“Since they need to pay for overhead and wages and still make a profit, I’d guess $65,” the QC specialist offered an opinion.
“I have no idea,” the freelance writer/editor disclosed. “I’m not even sure what I get charged regularly, so I’m guessing it must be at least $75 an hour these days. Auto body work is just one of those things…I don’t really shop around or negotiate; I just have to pay for it when it’s needed.”
“It’s quite involved between the labor and what they are fixing, so maybe $75 an hour,” suggested the construction supply manager.
“That probably depends on the skill level and amount of years each person has,” the college professor considered the question. “But really, I know nothing about cars; I have complete faith in the people who work on my car, so I assume it takes $100-150 if you’re a master craftsman, but maybe just $75 when you’re first starting out. I’m not entirely certain, but it may also depend on the type of car because I can imagine some models may be more labor-intensive, so it makes sense if they cost more money.”
The internet technician shared a heartening opinion: “I know their time is valuable, so I’m going to assume it’s in the ballpark of $200 an hour. Actually, now that I’m thinking about it, if that’s covering overhead and a solid guy making $30-50 hourly, depending on how good he is, plus rent and materials, $200 is probably a low figure. Those guys have got to eat too, so maybe a minimum of $250.”
“I have my own business, so they probably get around $90-120,” the personal concierge said. “I imagine for auto body businesses, that rate includes parts, office staff, marketing and the people to do the work.”
After consumers provided their initial responses, they were given a short “training session” on collision repair:
Vehicles are typically the second largest investment people 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?
“It doesn’t really change because this isn’t something I think really hard about,” the freelance writer/editor acknowledged. “I’d probably go to a local shop and see what they can do. It’s not really a bill I’m going to argue over. If they tell me it’s double what I expected, I’m still going to get my car repaired.”
“They should obviously be charging a lot more,” said the construction supply manager of his original $75 guess. “At a minimum, I’d say double it.”
“With all that overhead, I can understand why they’d charge more than my estimate, and I wouldn’t be surprised at all if $150/hour was a huge lowball,” stated the college professor. “The initial investment they have to put into the shop is a crazy amount, and it sounds like there’s a lot of ongoing investment for technology changes, not to mention replacing things that break or are outdated.”
“Wow! That impacts my viewpoint drastically,” shared the childcare provider who originally guessed $50-100. “I was completely unaware of the high price value for personal tools. Repair quotes normally cause the average person a great deal of anxiety and stress, due to the amount charged, but that amount actually makes so much more sense now that I’ve gotten this information. I feel that, given all the expenses, time for education and cost of tools, it absolutely justifies any higher charges.”
“Depending on the type of service they’re providing and the difficulty of the repair, they’re probably right on the money charging up to $130,” indicated the QC specialist.
Although the original guess from a hotel manager in New Haven, CT was $110 an hour, she doubled down on that guess after hearing about the industry’s investments.
“I didn’t realize how much equipment costs so that guess seems super low. Maybe more like $200-275 an hour depending on their skill and the complexity of the repair.”
And what about our Vermont housekeeper who initially indicated that collision repair shops should charge $15 hourly?
“Now, I feel bad! With all that investment, shops should definitely be making a lot more than $15 an hour…Maybe they should charge $40 instead to cover their expenses.”
Conversely, several consumers were shocked to learn that Massachusetts shops collect just $40 an hour, the lowest Labor Rate in the country.
“That’s nuts!” exclaimed the college professor. “It’s actually pretty obscene. You don’t want to half-ass car stuff because that’s just not safe. I can’t imagine anyone with that kind of overhead being able to live in this state on $40 an hour; it’s just not feasible.”
“WOW – that’s not okay at all,” lamented the childcare provider. “I feel that is a complete injustice and setback for the repair industry and those who have chosen this career. How unfair!”
“WAIT… WHAT?! HOW?!” exclaimed the hotel manager before being stunned into silence.
“Seriously, $40 an hour?! That’s absurd! How can auto body shops even keep afloat?” the personal concierge asked. “I don’t know how insurance companies get away with what they do.”
“Well, insurers are going to screw you,” the occupational therapist agreed. “I had no idea that they were just as bad [on automotive]. Many consumers pay into their insurance and never use it, so the insurers should definitely be paying more than they are.”
Although it’s quite clear that some 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 just exactly 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.
One way to go about educating the public is to let them know about the work being done to get legislation to protect their rights and their wallets. AASP/MA and its members have been pushing hard to back HB 1111, an act to establish a minimum reimbursement for insurance claims through the legislature. This bill would guarantee consumers have a choice and won’t be limited to the amount an insurer is willing to pay for the repair of their vehicle.
Communication is so important, especially to people outside of the industry. Talk to them about what you go through; at the end of the day, they just might “get it.”
Want more? Check out the April issue of New England Automotive Report!