The Best Deal Going
Do you think the current pricing of automotive repairs is reasonable? Do you think the current pricing is too high? How about too low?
I'll guarantee you if you ask consumers, they'll say ''it's too high." If you ask anyone that has a clue about the costs and complexity of this industry, they'll probably say it's too low. Unfortunately, the cold hard facts prove that the price of automotive repair is very, very low.
Would it shock you to know that household appliances costing a fraction of an automobile often have higher repair costs? Yes, you read that correctly. Let's take a comparison of repairs to help paint a better picture of this pricing anomaly. The Internet offers a host of information on repair costs. Here is some average repair cost examples from 2003:
TYPE COSTGarbage Disposal Repair$65 - $130Dishwasher, Gas/Electric Oven, & Built- In Microwave Oven Repair $150 - $425Refrigerator Repair $150 - $375Vacuum Cleaner Repair $85 - $275Heating System Repair $150 - $460Electrical Panel/Breakers Repair $125 - $275Central Air Conditioning System Repair $150-425Water Heater Repair $150-$300Washing Machine/Dryer Repair $125-$350Hot Tub/Spa/Pool Repair $225 - $1,800Well Repair $350 - $2,500Septic Tank Repair $350 - $725Garage Door Opener Repair $135 - $275Home Security System Repair $85 - $325Lawn Tractor Repair $165 - $375Personally, I can vouch for several of these typical costs as I've incurred some of them over the past several years. Stop and think about some of the items around your home that you have paid to have repaired in the last year or so. The scariest part about this comparison to automotive repairs is the ratio between the item's replacement cost to its repair cost. As you read on, you'll see that the ratio is skewed in the opposite direction.
Theoretically, if a new middle-of-the-line refrigerator costs approximately $1,800 and the average repair costs are approximately $150 to $375, then the repair ratio is approximately 8 percent to 21 percent of the refrigerator's value. Likewise, if a middle-of-the-line washing machine costs $700 and the average repair costs $125 to $350, then that repair ratio is 18 percent to 50 percent. Although only examples, you can easily do the math on other appliances by looking up some of their average costs on retail Web sites.
If a middle-of-the-line automobile costs $19,000 and the average front brake or exhaust replacement job costs $180 to $485, that's only 1 to 2.5 percent of the car's value. Now, I've always thought automotive repair costs were very reasonable, but 1 to 2.5 percent of a car's value? I realize it's not only reasonable - it's downright cheap.
How can a product with an engine, transmission, computers and modules be cheaper to repair than an appliance with a much lower replacement cost? The answer has a lot to do with what the automotive service industry perceives as "acceptable repair cost percentages." Most people inside the automotive industry are aware that the repair cost-to-replacement ratio is flip-flopped, but it's just not something that can correct itself overnight. The motoring public still assumes that the average automotive service repair should equate to a very small portion of the car's value.
That said, how and when will this ratio change? The fact is, it is changing - albeit gradually. Auto dealerships are getting within a few dollars of the "three-digit" hourly labor rate. Conscientious shop owners and managers are starting to realize the true operational costs of a profitable and successful service department. These increased labor amounts have caused some of the dealer's customer base to flow back to the somewhat less-expensive independent repair facilities. Unfortunately, for the automotive consumer, the relief is only temporary: Independent service facilities' costs are increasing in the same proportion as in the dealership service departments.
Another item to mention is the high cost of servicing shop equipment. Recently our alignment machine locked up during a four-wheel alignment. The service technician from the alignment company had our machine repaired in just over an hour, and they weren't bashful about charging for it. Road service was $79. Diagnostic time was billed at $89 per hour - higher than our own shop's current labor rate. The cables we needed were $72 each, plus a freight charge. Including an upload of the latest software, the bill totaled just over 450.00. All for a little more than an hour's work. That's either expensive or automobile service is really reasonable. I think the latter.
The end result here is to realize that automotive service has a dynamic value. There's a lot more sophistication in an automobile than there is in a refrigerator. The complexity of automobiles is truly amazing and vehicle owners are becoming more aware of this. When you think about it, everything from voice command systems to rain-activated wipers is truly remarkable technology.
The problem is, all this technology is costly in time, training and equipment. The modern automotive shop owner is now required to purchase more expensive diagnostic tools. These tool costs must be included in the repair charges via a separate fee or a supplementary labor rate.
It's no secret that the automotive service industry has been subsidizing customer repairs for decades. In those same years, many shops gave away too much, and many of those shops are no longer in business. Some of those shop owners did not want to learn the new computerized technology. Other shop owners made an effort to learn but did not charge for the technology, be it in the specialized tools or diagnostic time.
Only those shop owners that understand these costs will continue to serve their communities and operate stable, profitable operations. Automotive repair costs must be both competitive and profitable. Yet, competitive and profitable costs will only coexist when the shop owner understands his shop's true operational expenses.
