Buying an auto repair shop

[chocolatelab]

Hi guys

Interested in a little advice feedback.

Would you buy an auto repair shop considering todays market conditions?

What sort of things would you have to know?

[speeder]

Really depends on several things, I'd like to hear from the experts myself.

Subscribed.

[widebody911]

#1 - why are they selling?

[Targa Me]

Location is important.
keep accurate records.
Any deviation from the norm, have the customer sign.
If a customer brings in their own part, note it on the paper work.
Sometimes mechanics will steal business from you. "Hey this water pump repair will cost you $300 here, I'll do it at my house for $150."
Advertise, advertise, advertise.
Inexpensive oil changes will generate future work. "Hey look ma'am you're gonna need brakes and shocks."
Understand what it will cost you to be open for business per week and then figure out how much income you need to generate to make a profit.
Don't skimp on safety. Abide by all OSHA rules.
Competition can be tough.
Having a reputation for good and honest practices is priceless.

[asphaltgambler]

Only worse 'investment' in this economy is a restuarant......................seriously. I'm in the business. I know. Bet if you asked a good CPA who knows this business - he would tell you lots of better business / models out there, less upfront capitol and better margins to go with.

[scottmandue]

I know nothing...

But you would think in this economy people would be holding on to their cars longer and thus need more servicing.

Check the regs. for hazardous waste etc., you are in Cali and I hear it is a PITA for auto mechanics to deal with the chemicals necessary to do their business.

YMMV

[Laneco]

We have a very dear friend who has been in the automotive repair business for two decades. This guy has made money hand over fist, until this economy... it is really kicking his butt.

Every expense has gone up from labor, to insurance, to electricity, to parts, but he has had to reduce his shop rate to remain competitive. When a customer is faced with a big bill, they used to fix the car (on a credit card if necessary). Now, if the customer is looking at a big bill, the car goes un repaired. Lots of guys are out of work - including mechanics. They advertise on craigslist, etc., as low cost mobile repair. Customers who would not have dreamed of using these services a few years ago are now having transmissions replaced in their drive-way for $100 cash labor and a used part from a wrecking yard.

Commercial customers (such as car lots, etc) are paying slower than ever and using parts they source to keep costs down. So any markup for parts also disappeared. Speaking of parts, the parts suppliers want their money VERY quick. No letting a shop ride for 45 days, PAY NOW.

I'm not trying to dissuade you from this idea, just pointing out that you had better REALLY do your home work right now...

angela

[rattlsnak]

Been in the business for 20+ years. No way would I buy into now...

[Burnin' oil]

A good friend of mine was in the business for 20+ years. He filed for BK a month ago. He sold all his tools - everything - and never wants to touch a car again. Too much crap to deal with, particularly with customers who think his oil change caused the transmission to go out or his brake job caused the ECU to take a crap.

I think it would be cool to have a clean, top-level shop, but dealing with customers and the State/local regulators is a deal breaker.

[Rick Lee]

Originally Posted by Burnin' oil

A good friend of mine was in the business for 20+ years. He filed for BK a month ago. He sold all his tools - everything - and never wants to touch a car again. Too much crap to deal with, particularly with customers who think his oil change caused the transmission to go out or his brake job caused the ECU to take a crap.

I think it would be cool to have a clean, top-level shop, but dealing with customers and the State/local regulators is a deal breaker.

I know of two very successful shops. Both are owned by billionaires who don't care about making a profit and just like to have a super man cave/toy store to play in on weekends. In fact, I've heard our local BMW bike dealer, which services all local police bikes and is in a pretty well-off area, loses $10k PER DAY. But the owner is the founder of GoDaddy.com and can cover that.

[fastfredracing]

I agree with all the above statements. This biz has made a rapid descent into the bottom of the toilet. The cars are overcomplicated , you have to have a fortune in tools, software and wits. Dealing with the public has become a drag for me as well, almost unbearable.
I have really been hustling on my side biz to try to make an exit strategy for myself. I honestly cannot imagine doing this job in this capacity for the next 10 years.
I have a small shop, and my overhead is low, so I can survive tough times, but It can be hard to make a buck if you have a 3 man or bigger shop. Really tough to find good reliable help, getting parts has become a whole job in itself. Run forest , run!
It is honestly a stressful , physically hard , fast paced way to make a living, and I am sure it has taken a toll on my mental, and physical health over the last 20 years. You would be better off as a Wal Mart greeter, and may even make more money.

[speeder]

Originally Posted by Rick Lee

I know of two very successful shops. Both are owned by billionaires who don't care about making a profit and just like to have a super man cave/toy store to play in on weekends. In fact, I've heard our local BMW bike dealer, which services all local police bikes and is in a pretty well-off area, loses $10k PER DAY. But the owner is the founder of GoDaddy.com and can cover that.

I would believe that he's losing money, but not that amount.

[Rick Lee]

I heard it from a former employee. Don't know, but I do know that place has to cost an insane amount of money. He owns what's basically a whole motorcycle mall in Scottsdale and it's really not that busy.

[M.D. Holloway]

I have a friend who just broke away from a garage he worked at for 10 years to start his own gig - he was focused on Honda's. Needless to say he was struggling. He opened up his market to include Fords, GM's and Dodges. He is doing much better now. Seems as though the Honda's were only coming in for light repairs abd oil changes. The American cras and trucks seem to be providing him a steady stream of business...

[RANDY P]

price, clientele, does the biz show a profit typically, is the owner / staff willing to help you transition ownership?

1-2 years profit + tools for price?

rjp

[krystar]

car repair shop is a frigging nightmare.

tricking out cars is a money ball. whether yer doing stupid lambo doors, hydro/air suspension, crazy latino paintjobs, or selling 24" rims. u know there's going to be a huge market and margins when you make money off of stupid people.

[Zeke]

Originally Posted by Rick Lee

I know of two very successful shops. Both are owned by billionaires who don't care about making a profit and just like to have a super man cave/toy store to play in on weekends. In fact, I've heard our local BMW bike dealer, which services all local police bikes and is in a pretty well-off area, loses $10k PER DAY. But the owner is the founder of GoDaddy.com and can cover that.

Not really germane to anything. If billionaires are involved, it surpasses the norm.

On topic: one would think that people are prone to hang on to older cars and fix them instead of buying new when the economy is sour. As Angela says, not so. They put off repairs unless the car just stops running.

The economy affects just about everything across the board.
However, a well run business will always out perform a poorly run one.

[afterburn 549]

Having owned one...
What I do know, people will gladly pay for their toys to be fixed RV ,Boats, airplanes. When it comes to the daily driver..she is a used whore and no wants to pay.
What NOT to do- NEVER no NEVER offer a customer a band aid fix...as soon as it fails you will be the bad guy.
Throw flat rates away...I dont know too many jobs that are accurate in them..or beatable..good for reference only.

[scottmandue]

Hire supermodel mechanics!

[asphaltgambler]

I used to actually fix broken items and do preventive maintenance..........................now it's nothing but triage and people still b*tch and try to take a shot at you to see if they can get more stuff for free...........................counting the days people. And I DO have an exit strategy