I am going to give you a condensed overall view of how the automotive repair business works. This broad picture will give us a starting point. I will then go into more detail about each item in the free book.
The car repair service business is configured in a way to assure that the shop owner makes money no matter what happens. The following is an example of the flat rate system this is still the most popular method but not the only one.
Using the flat rate system the way the shop charges the customer is based on an hourly rate. This rate is usually set at a very high number, some were between $50- $120 an hour depending on what part of the country your in and economic factors in your area. Car repair prices are also higher at dealerships as opposed to most independent shops.
Parts of New York City and Up scale areas of California are even breaking the $120.00 an hour mark. If you are in a high wage area you can guarantee the auto repair shops hourly rate is near the top of this scale.
Car repair service labor charges assigned to your auto repair are based on this hourly rate. The time charged for any given job are supposed to be obtained from a standardized labor guide. I will get into this later in the book on how this Labor guide works and how the shop can use this against you. Or even worse not follow any standard guide and charge what ever they want. Now lets start out by using $120.00 an hour as a base line measurement.
Car repair billing example: If you need a water pump replaced and the job pays 2.0 hours then the labor charge would be $240.00 plus parts, taxes, shop supplies and disposal fees. You can see how this system is designed to charge you the maximum on any given repair.
Now here is the evil part. The mechanic gets paid on average of only about $20 an hour out of the shops hourly charge. The mechanic works on a method of payment called flat rate. This means that if the job pays 2 hours the mechanic gets $40.00. If the job takes 3 hours to complete the mechanic still gets $40.00 if the job takes 10 minutes he still gets the $40.00.
Mechanics use a popular reference to describe this. Sometimes you eat the bear and sometimes the bear eats you. Explained this means sometimes you beat the flat rate time and win. And sometimes the job takes longer than the labor time allows, due to various reasons like broken bolts and lack of experience and you loose money on the job.
Using the real world example above if the mechanic replaces your water pump and it takes him 20 minutes he still gets paid his $40.00. This motivates him to rush through the job as fast as humanly possible and move on to the next job and do the same thing over and over again.
Rushing like this the mechanic is most likely to take short cuts reducing the quality of the repair. The mechanic is concentrating on the money he can make instead of the cars he can fix.
In some cases mechanics are competing for the next job sitting in the parking lot. The first mechanic done his task gets first crack at the next task. It is very easy to get greedy and push yourself beyond your ability to perform quality repairs.
Sometimes this can result in a comeback were the customer must once again return for a repair often related to the first repair. Again the shop try’s to turn this in their favor by saying the comeback is unrelated to the original repair and charges you a second time.
The auto repair center benefits from this on an accelerated scale. Using this same example the shop made $240.00 in labor and paid the mechanic $40.00 and walked away with just a labor profit of about $200.00 in 20 minutes.
Then they mark up the price of the parts on average of cost plus 30% and tack on shop supplies and disposal fee’s to make there grand total of profit to about $350.00 in 20 minutes. Next they will multiply this by adding more mechanics and repeating the process from open till close. Hence why most shops are open late and run 6 to 7 days a week.
As a side note a car repair service mechanic can make over $100,000 a year and pile up a bunch of poorly done jobs in the process. The top guns of these mechanics apply a technique of their own known as the stick and move.
They chow down on as many jobs as they can for as long as they are able (the stick). Then they reach the saturation point were their comebacks and complaints reach a point that stops them from receiving enough new jobs to pull down the big bucks. Then they move, on to greener pastures. So first they stick the shop owner and customers and they move to another car repair shop and do it again.
