Find Efficiency in Fixed Ops

For service departments to maximize profitability, efficiency and productivity must be prioritized, including giving technicians the tools to automate processes when applicable.

Reynolds and Reynolds analyzed effective labor rates, profit per customer-pay repair order (post-warranty jobs), and hours – both total hours sold and per repair order – to determine where service departments can make improvements.

It’s no surprise that effective labor rates were up for every demographic and volume classification. Rates were up between $4 and $7 on average year-over-year depending whether the area is major urban, metro, community or rural, and between $5 and $7 depending on the shop’s volume.

Reynolds’ latest Fixed Operations Golden Metrics report notes that price elasticity remains a concern and that once the market reaches its limit, dealerships won’t be able to keep charging customers more, making efficiency and productivity key.

Profit per customer-pay repair order was up across every demographic except in major urban areas, which saw a $22 decrease. Notably, the report found that with larger populations profits increase, but as volume increases, profits fall.

Rural areas had the greatest surge in average total hours sold, up 6% year-over-year. Major urban areas and communities experienced minor increases, while metros were relatively flat.

Based on the monthly averages from the past two years, Reynolds found a clear trend in consumer behavior patterns: service activity spikes in the fall and spring, in particular September and March. But it held off on citing a cause for the seasonal spikes, saying that there are too many variables at play.

Rural areas had the greatest increase in average hours per repair order, up 13% year-over-year, but larger urban areas sold the most hours per repair order “due to a higher demand for service and opportunity.”

Study results also show that service centers with lower volume were able to sell more hours per repair order “due to availability of time.”

Reynolds found that one of the best ways to maximize efficiency is giving technicians tools to automate certain processes, like determining parts availability and cost. Across all volume classifications, technicians who used automated tools brought an increase in profit per customer-pay repair order, total hours sold, hours per repair order, and effective labor rates.