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.
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
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
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.
More by this Author
Learn how to check your own brakes to see when they need repair. Check worn discs and pads yourself so you can be safe between services and avoid being overcharged for repairs.
Troubleshooting the sounds your car suspension makes can save you a small fortune. Before you spend a dime, read this first.
Starting a workshop business or auto repair shop can be very profitable if you get the basics right.