2002 DIFM Study

Jan. 1, 2020
Technicians mirror the ups and downs of the nation in this year's installment of our DIFM Study.
A lot has happened since we published our 8th annual Do-It-For-Me report last fall. War has been waged in Afghanistan in response to arguably the nation’s worst tragedies. Companies like Enron, WorldCom, Kmart Corporation and others, took financial beatings on Wall Street following bankruptcy filings. And then of course there was the economic recession, spurred on by the former events.

There’s no question Sept. 11, 2001 took a toll on America’s psyche, as well as it’s collective pocketbook. Perhaps the mood of today’s business owners can be summed up in this sentence by one technician responding to this year’s DIFM survey: “Since 9/11, sales have been down all over and tire and gas prices have not helped the small business owners like us,” he said.

NOTE: This year's DIFM study was compiled based on input from 274 service dealers. For complete details regarding our methodology, click here.

It’s hard to say how much impact terrorism has had on the entire aftermarket, but as you might expect, proximity matters. Those technicians closest to New York City and Washington D.C. certainly have been impacted. “We lost a lot of work. We’re 13 miles from the World Trade Center in New York City,” one technician reports.

As with our preceding Do-It-For-Me studies, the collection of responses we received this year showed a mixed bag of those who are doing well and those who are struggling. After all, 48.7 percent of those technicians responding to our survey said the installation and repair industry in their area is “Healthy,” while another 16.2 percent labeled the current conditions “Thriving.” On the flip side, 21.1 percent put the installation and repair industry in a “Stagnant” state, while 14 percent labeled  it “Depressed.”

Of the shops reporting good economic conditions, most base their beliefs on the fact that they themselves are busy. “We’re turning down repair work,” says one technician. “We always have a steady flow of business. I’m not getting rich, but I make a very good living,” says another.” And a third states it simply, “Nobody in the area has had to close down, so I think that’s a good sign.”

Shops currently experiencing a tougher economic environment blame their aches and pains on the slowing economy, lack of consumer spending and business closings. “There’s a ripple effect due to the economy. We rely on farmers, and if their year is bad, so is ours,” says one service dealer. “There is a bad job situation in the area with a major employer who may close,” reports another.

Among those who see a struggling aftermarket, they commonly report losses of between 10 percent and 30 percent. “The past five months have been off 25 percent, but that’s the way it has been across the country,” says one technician.

The next 12 months

In this year’s survey our researchers asked service technicians what they consider to be their most significant challenge over the next 12 months and to explain what they were going to do to rise above the challenge. The four most frequently mentioned challenges are sales, finding qualified technicians, business growth and acquiring technical information.

To increase sales, shops plan to increase advertising and marketing, mail flyers to customers, provide excellent service to existing customers, and have good quality reps.

The issue of qualified technicians is felt strongly. “Our biggest challenge is finding qualified mechanics, good technical data and troubleshooting. We have to study more and try to train personnel for the job,” says one shop owner. One owner reports that he intends to do more recruiting through job fairs, colleges and high schools to bring in technicians.

One important item of note is the number of ASE-certified technicians who are in the bays. Thirty percent of the shops reported not having any ASE-certified technicians, while just over 43 percent have one or two ASE-certified mechanics. If shops are serious about attracting and keeping “qualified technicians” then they need to do a better job through certification. Perhaps this is an area that distributors should focus on as they consider customer support programs. Aiding service dealers with their certification procedures certainly would give you a leg up on competitors.

And when supporting technicians through the ASE-certification process, it helps to know what repair segments are most popular. In Table 3 on page 38, note that 57 percent of the ASE-certified techs gained their credentials in the area of Brakes. Master Technicians came in second at 54 percent, followed by Engine Repair (50 percent), Steering/Front End (49 percent), Suspension (48 percent) and Engine Performance (43 percent).

Another significant challenge for shops is sustained growth, which is different from maintaining sales. In this quest, technicians are researching better management strategies, purchasing their shops (the actual buildings) or moving to larger shops. “Insurance costs keep getting higher and higher. We must get insurance companies to lower costs or we’ll have to raise our prices,” argues one service dealer.

Other frequently mentioned challenges expected for the next 12 months are employee retention, customer retention and curbing overhead costs. Managers consider training to be key in retaining employees.

Through all the economic ups and downs, current customers are key. They need to be looked after and treated fairly, advise several shops. With that in mind, note that one technician believes the industry has a PR problem that needs to be addressed in order for customers to put faith in their local shops. “Our biggest challenge is keeping good employees that you can trust,” he says. “I think many people doubt the industry and we need the customer’s trust to stay in business.” That’s a key point that all members of the supply chain need to recognize.

Overall profile of respondents

Respondents to this study work in six types of auto repair shops. Full-service shops account for 69 percent of the sample. Underhood shops are 6 percent; undercar and specialty shops each account for just more than 5 percent. Service departments in a car dealership and autobody shops each had 3 percent.

Researchers interviewed owners/presidents 66 percent of the time and spoke to managers 17 percent of the time. Service managers responded roughly 6 percent of the time, while 4 percent of these interviews were with technicians. We also spoke with vice presidents, maintenance managers, shop foremen, general managers and salesmen, among others.

In terms of profitability for these shops, 30 percent said they had sales of $250,001-$500,000 in 2001, while 29 percent were in the range of $100,000-$250,000. Another 17 percent made less than $100,000 last year; while 14 percent earned $500,001 to $1 million. Six percent fell between $1 million and $2 million, and only a small percentage (1.6 percent) were over $2 million.

Buying from jobbers and retailers

As expected, the data shows installers buying a substantial amount of their hard parts, chemicals, accessories and tools at jobber stores. Of the people we surveyed, nearly 90 percent said they buy from jobbers on a regular basis and 56 percent use between three and five jobbers. This is good news for the jobber communities, since it shows an openness to using more then one distributor. Nearly 33 percent of our technicians buy from one or two jobbers, while nearly 10 percent use six to 10 jobbers.

The most popular jobber store is NAPA, used by nearly 28 percent of those we surveyed. That number is down, though, from last year’s 40 percent. Next comes CARQUEST, which rose from 12 percent last year to 24 percent in this study. At 6 percent, O’Reilly Auto Parts came in third on our list, but remember they are Auto Value affiliated, which is a member of the Aftermarket Auto Parts Alliance. Other technicians are buying from fellow Alliance members, Bumper to Bumper, Big A and All Pro, as well as other Auto Value jobbers. Federated placed fourth on our list at just over 3 percent, followed by Pronto at 2 percent. Also note that 38.3 percent of the technicians marked “Other,” which means other distribution groups are getting a fair share of business.

Almost all technicians entering jobber stores are buying hard parts. More than 87 percent purchase hard parts, while 62 percent buy chemicals and nearly 60 percent buy accessories. They also buy tools from jobbers 36 percent of the time. These numbers vary somewhat from the types of purchases made at auto parts retail stores.

According to our research, only 37 percent of the technicians buy from auto parts retailers, but this number may be skewed downward. Some of our respondents checked off major retailers like AutoZone, Pep Boys and Kragen as “jobber locations” from which they buy product. Our guess is that the commercial programs from these large retailers have some technicians viewing them as jobbers rather than retailers.

Nonetheless, auto parts retailers used most often are AutoZone (36 percent), Advance Auto (17 percent), Discount (8 percent) and of course “others,” which includes the CSK Auto stores, Pep Boys, O’Reilly and other smaller chains. Remember that Advance bought Discount  last year, so combined Advance actually has 25 percent.

Compared to our results from jobber-based purchases, those who buy among the retailers are less likely to buy hard parts (76 percent), chemicals (51 percent) and tools (25 percent). They are just as likely to buy accessories from a retailer, matching the 60 percent posted by those buying from jobbers.

Buying from warehouse clubs and mass merchandisers

The results from the club and mass merchant buyers, however, is quite different than from those who purchase from jobbers and retailers. Roughly 11 percent of technicians surveyed buy products from mass merchandisers, primarily Wal-Mart (60 percent). And as you might suspect, the key motivator in shopping at a mass merchant is price, followed by availability and location.

These shoppers usually buy chemicals (61 percent) and accessories (55 percent), while hard parts and tools are each at a scant 23 percent.

What is surprising, though, is that the number of installers shopping at warehouse clubs is far greater than those who shop at mass merchants. Club shoppers are near 40 percent, which is respectable even though that number is down from last year’s 57 percent.

And as with mass merchants, key motivators for club shoppers are price, location and availability. Sam’s Club is the warehouse of choice, leading the way at 67 percent. Next is Costco at 25 percent and BJs Wholesale Club at 8 percent.

Shoppers in these stores like to buy office equipment and other supplies, but they also are buying products. Seventy-eight percent of the technicians in our survey said they buy chemicals, while 44 percent purchase accessories. Tools came in third on this list at 35 percent and hard parts was fourth at just over 7 percent.

Brand presence

As has been our practice for the past couple years, we asked technicians about the brands they most frequently install for six categories — brakes, filters, spark plugs, batteries, shocks and clutches. These are common activities to which most installers relate.

Roughly 91 percent of our survey respondents said they install brakes. Of these, 31 percent install Raybestos brand brakes, which is up a bit from the 25 percent recorded last year. Bendix, installed 23 percent of the time, had a 7-percent increase over last year. Others of note were CARQUEST (19 percent), NAPA (18 percent) and ACDelco (15 percent). This segment also generated a lot of responses for various private label brands.

Almost all service technicians install filters, and this year Wix overcame NAPA for the top spot. The Wix brand is installed by 25 percent (twice last year’s results), while NAPA registered a sizeable 20 percent share. Other brands of note include: ACDelco, used by 18 percent, Fram’s 18 percent and CARQUEST’s 15 percent. Roughly 24 percent of our technicians selected “Other” filter brands.

As you might expect, most (86 percent) of the technicians responding to our survey install spark plugs. ACDelco is the most popular brand having a strong usage rate of 45 percent. Autolite and Champion finished second with 25 percent, followed by Bosch at 19 percent, NGK’s 18 percent and Motorcraft’s 16 percent.

Almost all technicians install batteries, and with 44 percent of the vote, Interstate continues to be the most commonly installed battery brand. ACDelco is second receiving 19 percent, and Exide is used by 16 percent of technicians. NAPA received a 10-percent share, while others finished below 3 percent.

Of the 87 percent of technicians who install shocks, the majority selected Monroe as their most common brand. Monroe is used by 52 percent of installers, while Gabriel came in second at 19 percent. NAPA and ACDelco were neck-and-neck with 13 percent and 12 percent, respectively. CARQUEST recorded an 11-percent share, followed by KYB’s 8 percent and Moog’s 7 percent.

Finally, 67 percent of those technicians who completed our survey said they install clutches. Most of the time they install Borg-Warner, 23 percent, or Luk, 18 percent. ACDelco and Beck/Arnley tied with 10 percent. Perfection Hy-Test had a 5-percent share. Roughly 24 percent of our respondents selected “Other” brands: including NAPA, Sachs and CARQUEST.

Conclusion

A slower economy can be an excellent environment for auto repair shops and some of the responses to this year’s survey certainly bear that out. Simply put, business has improved for many as customers prefer to fix rather than buy. Also, opportunities have increased as technicians have more time for training and acquiring technical information and skills that are in high demand.

The best environment for an auto repair shop is one with population growth or influx, no matter the age of the population. This is where repair shops flourish up to the point where demand exceeds supply and then installers complain collectively about an absence of qualified technicians.

Many shop owners are taking an active role in the search for qualified technicians. Some have in-house training programs and others work with colleges and technical schools to try and get more people interested in auto mechanics.

But this study also reveals an emergence of another job duty — explaining to customers the technical complexity of their vehicles. Hopefully the improvements in vehicle technology and increases in complexity will attract newcomers to the auto repair field. They will be attracted by the excitement and challenge of new emerging technologies in automotive manufacturing and repair. As distributors you must remembers, that continuing education and business management skills are essential to the success of your clients and you.

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