Taking a strategic approach to repairing older vehicles

Oct. 27, 2014
Many of my friends who run repair shops refuse to work on vehicles older than 10 years. They feel that the average car is not their bread and butter. I see a potential issue with that way of thinking.

The average age of a vehicle licensed in the United States is approximately 11.5 years old, depending on what source you use. That means that the average potential customer is driving a 2002-2003 vehicle.

According to the U.S. Department of Transportation Federal Highway Administration, the average person drives 13,476 miles per year. That means that the average car is going to have 154,974 miles on the clock when it shows up at your shop.

We all know that there is nothing average about the way people take care of those cars. Some cars are in very good condition at 150K and some are about to gasp their last breath. The number of vehicles in each camp is difficult to say, but there are a lot of vehicles that are not average miles or maintenance and those vehicles are probably very close to retirement.

Many of my friends who run repair shops refuse to work on vehicles older than 10 years. They feel that the average car is not their bread and butter. I see a potential issue with that way of thinking.

Recently we have had financial struggles on the entire world stage. Many people have become more conservative with money. Back in 2001 and 2002 when you could buy a car and the manufacturer would pay the interest on the loan it seemed like a $500 neglected maintenance bill would put a six-year old car on the road to a trade in.

Vehicle owners got themselves upside down in deals involving remaining balances on the previous car and suddenly the song they were singing on the other end of the phone was a lot different. Instead of, “It needs a 90K maintenance? I’m going to trade it.” The song sounds more like, “My 150K mile pickup needs a $6,000 transmission? Well, I gotta do it. Have you seen what new cars cost lately?”

Projections are that a very large number of lease vehicles are about to start coming back into the resale market toward the end of the year. This will almost certainly drive the values of used vehicles down. Is that a good thing or a bad thing? I think you could argue that both ways depending on the place in the vehicle life cycle you work.

For repair professionals and those that support them I think it can be good, because popular models will not be selling so close to the current model’s price. When that happens smart car buyers will buy the new model to get the warranty coverage.

Lower used vehicle prices are bad because the older cars will “total” easier in both mechanical and collision shops. Another reason it can be bad is that dealers will be making less margin on used cars. As we have already seen some will be taking a closer look at competing for more repair and service work.

This cycle has occurred before but I think there are a couple of new twists on it that we need to consider when we are working on our customer retention strategy. One new twist is that many vehicles in use today have vehicle warranties that extend past the traditional 3/36 to as high as 6/60. Emissions warranties in most states are 8/80. When your customer purchases a new car you might not see them for six years. The problem is that the tire store is better positioned to talk with them and so is the dealer with warranty and recall service opportunities.

Another twist is the feature sets of the new cars. As an industry we do an amazing job of diagnosing, repairing and returning vehicles to customers on a largely same-day basis. Try to find any other piece of technology that you use every day that has a support system that’s so efficient. The problem I see with that is that many of these vehicles have so many ways to personalize the way that they function.

When a customer drops off a vehicle a loaner car or rental car is not going to be enough anymore. Our customers are going to be thinking of their vehicles as family members and relying on technology that will not be easy to carry on your iPhone to another vehicle.

So, what do we do? I think a few things are obvious but more are gray. You need ways to tie your customers to you that have nothing to do with what they drive. You may need to ask yourself if you can afford to narrow your scope to cars that are between 5 and 10 years old particularly in light of the lower failure rates and changing maintenance model.

In fact you might need to consider helping them to get their head around a longer maintenance schedule to say 300K. Have you looked at what new cars cost? You might be in need of a perspective adjustment on what you charge for what you do.

Here’s one last story to illustrate that. I was looking at some old repair orders that my dad wrote in 1963 where an engine cost $625 to overhaul. Keep in mind that the new car price of this vehicle was around $2,800. So in round numbers the engine cost was about 22 percent of the value of the new vehicle. Let’s apply that to the average of about $32,000 for a new vehicle today. Our engine costs about $7,040. If the vehicle is 10 years old, has 150K miles and you had been maintaining this vehicle all along would you be telling the customer to total that vehicle? Even if you buy them only three more years of use you will have reduced the raw cost of vehicle from $3,200 per year to $2,346 per year because we all have to do maintenance, right? Plates are cheaper, insurance is cheaper and there is only one problem – you now will have to work on a car older than 10 years.

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