How to go broke in an auto repair shop.

I got a phone call a while back from a new customer who had spent big money with me setting up a general workshop including a wheel alignment hoist that cost close to $12,000. It was all installed in a busy area where an existing workshop was left after the owner had retired.

They had paid $28,000 for an aligner from my competition. It was state of the art at least according to the price.

These guys although quite young, had bags of experience and a fair bit of money to spend.

The call went like this.

"G'day Ern, do you want to buy out a complete workshop? We've gone broke."

I often buy complete workshops, so In my usual laconic tone I replied "How in hell did you manage that?"

A modern wheel aligner.

HPA wheel aligner

"There's no money left in doing wheel alignments mate, we lost our shirts! You can take the lot. All the new hoists you sold me, the new four post hoist, the lot!"

Some of the 7 hoists were only 3 months old, and I wondered why they were closing so soon after expanding.

It was sad. I don't like to see young mechanics with enough drive to go it alone coming undone like this.

I jumped in the truck and went over to the workshop to put a price on the lot, as he had assured me they were selling up, and had no hope of recovery.

I was very curious as to why they were pulling out so soon after being established when they had a top location and were well equipped.

I walked into the Office and spoke to the owner. He explained that although they had top equipment, a great site and good mechanics, they could not turn a net profit!

The financials were a mess, the business was in debt and their benefactor wanted his money pulled out of the business.

We negotiated a fair price for the whole lot, except the wheel aligner which is a make I neither recommend nor sell. I told him where he could sell it for a reasonable price.

My heavy transport contractors moved all the equipment to my factory to be refurbished and sold again, which is what we do. Buy sell, repair and maintain automotive workshop equipment.

The street where the workshop was has 26 other workshops all feeding off a huge industrial estate full of car sales lots in a big city. The others survived, the market was there, so where did they go wrong?


Used workshop machinery

Some of my used machinery.
Some of my used machinery.

A modern wheel balancer

The workshop itself although operating well, was returning the usual 3 to 4 percent net profit.

Contrary to common belief many workshops make this small margin, and tax census indicate that many operate on less than that.

Even with reasonable turnover, not much has to go wrong when margins are tight. Mechanics and specialists must be paid well, and machinery kept in top condition. It all adds to costs.

A well equipped workshop has a lot for expensive machinery , and some family owned auto shops spend $150,000 on equipment these days. That is a lot of equipment to service, finance and depreciate.

Back to the workshop.

The story they told was that the wheel alignment side of the business cost too much to equip. Alignment machinery servicing and repair dragged the rest of the business down with it.

Since installing the alignment machine they had spent $8,000 dollars on repairs and extra fittings.They had also suffered massive downtime as one of the heads had dumped not only it's motherboard, but the sensor was out as well and it took ages for the replacement part to arrive.

Then it had to be re calibrated with a special calibration bench which cost another fortune.

When someone knocked the wheel aligner over while loading a car on the hoist. That cost another $7,000 for repairs. The supplier provided another machine to keep the alignment side of the business running.

The replacement machine had to be re calibrated after transportation and to suit the workshop as well. Then I came in and repaired the damage to the hoist. A small job which cost $400.

Then things really started to go wrong! The replacement machine was giving false readings, the operator was not familiar with the machine and customers cars were leaving the workshop suffering from bad alignment.

They had to replace components on customers cars damaged by misalignment, and redo a lot of work for free.

all these losses had snuffed a good business out. Lose car sales yards and they don't come back!

Having spent 2 years reconditioning, rebuilding and repairing most popular makes and models of alignment equipment, I have seen the inside of a lot of aligners. I sold many new aligners as well, and have some educated opinions to offer on buying a new aligner that I will eventually include either here or in another article.

Just a cautionary tale to let you have a quick look at the possible downside!

If you are in America and want to look at some good wheel aligners, go take a look here.


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Comments 9 comments

Hello, hello, profile image

Hello, hello, 6 years ago from London, UK

This is a great hub for my son and I will send it to him. Thank you.


agvulpes profile image

agvulpes 6 years ago from Australia

Great Hub. Anyone who is thinking of going into this industry should read this Hub and reconsider. I worked in the industry installing and repairing this type of equipment for 40 years and I certainly noticed the two fold effect of a)the decline in the quality and b) the more delicate some of the gear had become. I could not get out of the industry quick enough.


earnestshub profile image

earnestshub 6 years ago from Melbourne Australia Author

Thanks agvulpes.

I know your history in the auto machinery industry. You are a legend in this business.

The design work you did for one of our major private auto workshop machinery suppliers resulted in a wheel balancer that has kept working for how long? It must be 40 years!

The quality of the engineering in that machine can be compared with the quality of an Ammco brake lathe. Damn near indestructible!

I knew you would understand better than most the importance of owning high quality auto repair shop machinery and equipment.


DaNoblest profile image

DaNoblest 5 years ago from California

While I dont know much in the automotive field I found this article to be quite informative and entertaining. I have always enjoyed learning new technical things like this, especially when the author makes it a smooth read as well. =]


hardlymoving profile image

hardlymoving 4 years ago from Memphis, TN

If I had a shop, I just wouldn't have an alignment machine. Period. Here's why:

1. Initial capital expenditure too high to recoup in the short term.

2. Takes up too much floor space.

3. Very low profit margins, if any. I've seen alignment jobs advertised for only $35.

4. Too much competition (Almost every tire center has one except WalMart and CostCo. Hummm ... I wonder why?

5. Convincing the customer he needs one. Even showing uneven tire wear or the steering wheel being cocked to the side, they just don't want to spend money on the service.


reallylife profile image

reallylife 4 years ago from Summerville, SC

Earnsthub you are correct, it costs a LOT to maintain and run a shop. People have no CLUE as to why it costs so much to have a vehicle repaired. Thank you for shedding some light on this matter, and may I add that not only do shops need up to date and working equipment but with all the computers on vehicles these days a shop also has to invest in a very expensive software program as well.


jack 4 years ago

I own a almost full service shop and I do not offer alignments for the fact the equipment does not cost out to the profit. If somone wants an alignment I can do it the old school way, a piece of string and a level lol. Been in service for 5 years and no complaints about no alignment yet:) although I do suggest a good brake lathe.


TeaMisha 3 years ago

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Vineet 3 years ago

Four suggestions:- Advertising notrewks. A been-there-done-that person who could talk to advertising notrewks that harness the long tail to give the people who are/thinking about launching a community a path to monetizing it. There are a lot of solid notrewks like BackBeat Media, and a lot of bullshit artists. Maybe there's an analyst-grade person out there who can break this down for people/point them in the right directions.- Facebook marketing. Alec Saunders gave a great talk at BarCamp Ottawa a few weeks back on what he's learned about FB after he swung iotum's VOIP tech over to that marketplace as a FB app. Bet he's learning more right now.- Social media's role (or rather, sad lack thereof) in government. I did an interview for a government CIO magazine recently and was shocked to learn that the Government of Canada banned Facebook from civil servant desktops. So cut off the people who have to service us with information from one of the biggest information phenomena on the planet HAHAHA!!! Like the equally idiotic debate the Feds had in the early-90s about banning the Web/surfing. People under 25 commonly send me messages not through IM or email but through Facebook. My son went on his first date via FB contact. So we keep government workers in the dark about the primary mode of communication for 15-25 year-old Canadians? And of course there's the wicked culture clash of hierarchical/command-and-control thinking in government that is antithetical to social networking styles of managing/participating. The Feds are in a HUGE crisis with half of their workers set to retire in the next 10 years. And they're going to attract ANYONE to their tired ranks (remember there's an overall labour shortage looming out there as the boomers mercifully die off or just get out the damn way finally) by banning/staying ignorant about the power of wikis/blogs/social notrewks? HAHAHA!!!- Snag John Chambers, the CEO of Cisco, to give his social networking elevator pitch (which is also a of course a clever thought leadership overlay to selling a lot of Cisco gear). He and his management team decided to embrace social networking/anti-command-and-control a few years ago, and he speaks very well to how and why it worked, up to and including Cisco's 9-figure market cap vs. his main competitors' market caps wallowing in the low 8 figures. We produced a podcast of Chambers doing his thing and you can follow the bloggy path to that .

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