Many dealerships today are finding it difficult to have profitable body shop operations. Costs are soaring in paint and materials as well as environment disposal fees. The future will see these costs building so Managers must have controls in place to minimize costs where we can.

1: Controlling paint and material costs.

  To begin let’s understand body shop supplies must be tracked by Technician. They should have their own supply box near their work area locked and controlled by only them. Your paint vender should be more then happy to supply these at no cost to the dealership.  Then have your vender inventory each station weekly to determine the needed order for next week and given to the Manager for review. Management should look for patterns of abuse and address individual Technicians about concerns. If your dealership is not tracking materials currently doing so will drop this expense 15-20%. Many paint supply vendors have no checks or balances and just look at the dealerships inventory and send in their order. This practice is common yet foolish to have a commission salesperson in charge of your inventory orders without review. Include vendors in your quest to manage costs and explain your goal to not exceed 10% of total gross sales in your paint and material accounts. A reasonable result will find your shop at 35% gross profit on paint and material sales. Your vendor should inventory your total shop supplies at least monthly with adjustments made in accounting to balances. Be aware most Vendors want to keep your inventory high even though they provide no cost delivery service. A good practice is for management to physically look and track inventory to seek proper stocking levels. The goal is to have all needed items on hand without waiting and a maximum depth of 7 days. Some progressive shops have developed Technician spiffs when costs fall below averages to encourage control.

2. Many dealerships do not job cost materials to the repair order. The best practice is to cost all materials used to the repair order and Management reviewing actual gross profit. Insurance Claims should be adjusted to cover the actual costs incurred on the repair. It is never a good policy to be unsure of actual costs on individual repairs!

3. Marketing your body shop is vital to grow your business. Placing an advertisement in the local newspaper is easy yet ends up tomorrow in the bird cage. Management needs to develop relationships with local insurance agent’s staff members explaining the advantages of dealing with them. The best way to do this is to have set times during the week out in the field getting to know staff members in their office. Small gifts like tissues with dealership stickers on them will have them calling when near out. It keeps your dealership’s name in front of them so when they receive calls from clients looking for comfort from the recent crash they send them to you. After a short time Management can will be able to call stating we have space for a quick turn around right now if you have a client in need. Place the focus on what makes your company different and unique. Aggressive suggestions would be to finance deductibles over 6 months with charges to their credit cards with no interest. Provide your favorite Insurance Company several parking spaces at no cost on tow in vehicles. Seek direct repair relationships with as many Insurance Companies as possible and do not be afraid to call looking for assignments.  Develop relationships with local tow company operators asking to receive their tow in vehicles. The service department has a bunch of vehicles going though their department every day that need body shop repairs. Service should walk around every vehicle looking for damage and asking if they would like a no cost estimate for needed repairs. How about checking your used vehicle inventory for needed repairs?

4.  Many dealerships are not staffed correctly to provide quick turn on repairs. Technicians love to see a backlog of cars in the lot waiting to get the privilege of being repaired by them. It is unfortunate that customers and Insurance Companies demand quick repairs. If your shop allows a backlog greater then a week on a consistent basis it is a sure way to lose customers. Good management understands the effort needed to feed the Technicians and keep them busy. They also know and accept the customer is the only reason for them to be there and must focus on their needs to get the car back to them.

5. Insurance companies have a customer satisfaction interest after your repairs. Your customers are questioned on how your shop performed during and after to determine if the needs of their customer were met. Management should perform quality checks on all vehicles looking for concerns before the customer is contacted. Quality repairs must never be compromised and be a source of pride for the entire shop.

The best practice is to use new car delivery techniques after the repairs are made to exceed the customer’s expectations. This involves detailing the car inside and out before the delivery. A delivery area must be set aside with velvet rope to reacquaint the customer with their repaired vehicle. The customer should be given detailed information about the repair while walking around the car.  Protective floor mats should be in place as they enter their repaired car achieving the red carpet treatment our customers deserve. Customer retention will always develop your business now and in the future. Your customers will refer their neighbors and friends to your shop to be smothered in extreme customer care and talk about your shop regularly. 

 These secrets show the way to develop long term body shop profits will always be to develop customer retention and growth while controlling costs. Your effort will show results and place you at the top of your market.