The 21st Century Shop

With information culled from the inaugural Ratchet+Wrench Industry Survey, here's a statistical breakdown that provides a broader overview of the equipment driving profitable shops and how it affects those businesses' numbers. (Note: This is a companion piece to Five Steps to Forming a Tech+Tools Budget.) All survey data used is brought to you by Openbay.

The Return on Diagnostics

Donny Seyfer, executive officer at the National Automotive Service Task Force (NASTF), makes a case for OE factory scan tools, as the rate at which they improve efficiency and effective labor rate outweighs the cost. In the Ratchet+Wrench Industry Survey, we asked shops about diagnostic use in their shops.

Here’s a breakdown of the various questions we asked, and scan tools’ effect on shop profitability. The first chart outlines how scan tools affect profitability overall, and the second and third charts break it down specifically to OEM and aftermarket scan tools.

How many diagnostic scan tools does your shop currently utilize?

None: 0.9%

1–2: 31.3%

3–4: 34.7%

5 or more: 33.1%

1–2 Scan Tools:

Over $1 million in revenue : 20.2%

Average repair order over $400: 42%

Technician efficiency over 100%: 15.2%

Technician productivity over 90%: 23.9%

Effective labor rate over $90: 18.8%

3–4 Scan Tools:

Over $1 million in revenue: 43.2%

Average repair order over $400: 50.4%

Technician efficiency over 100%: 20.3%

Technician productivity over 90%: 29.5

Effective labor rate over $90: 37.3%

5+ Scan Tools:

Over $1 million in revenue: 63%

Average repair order over $400: 63%

Technician efficiency 100%: 27.4%

Technician productivity over 90%: 34.2%

Effective labor rate over $90: 52.1%

How many OEM diagnostic scan tools does your shop currently utilize?

None: 42.9%

1: 19.7%

2: 15.6%

3+: 21.8%

Zero OEM Scan Tools:

Over $1 million in revenue : 27.6%

Average repair order over $400: 40.4%

Technician efficiency over 100%: 16.9%

Technician productivity over 90%: 24.5%

Effective labor rate over $90: 37.3%

1 OEM Scan Tool:

Over $1 million in revenue : 46.5%

Average repair order over $400: 56.3%

Technician efficiency over 100%: 32.0%

Technician productivity over 90%: 34.2%

Effective labor rate over $90: 45.8%

2 OEM Scan Tools:

Over $1 million in revenue: 42.6%

Average repair order over $400: 60.9%

Technician efficiency over 100%: 30.6%

Technician productivity over 90%: 33.9%

Effective labor rate over $90: 48.1%

3+ OEM Scan Tools:

Over $1 million in revenue: 77.4%

Average repair order over $400: 67.7%

Technician efficiency 100%: 31.4%

Technician productivity over 90%: 42.0%

Effective labor rate over $90: 63.9%

How many aftermarket diagnostic scan tools does your shop currently utilize?

None: 4.1%

1: 10.9%

2: 34.0%

3+: 51.0%

1 Aftermarket Scan Tool:

Over $1 million in revenue : 34.7%

Average repair order over $400: 66.7%

Technician efficiency over 100%: 25.7%

Technician productivity over 90%: 25.0%

Effective labor rate over $90: 45.1%

2 Aftermarket Scan Tools:

Over $1 million in revenue: 28.7%

Average repair order over $400: 43.0%

Technician efficiency over 100%: 23.1%

Technician productivity over 90%: 29.9%

Effective labor rate over $90: 31.4%

3+ Aftermarket Scan Tools:

Over $1 million in revenue: 58.4%

Average repair order over $400: 55.0%

Technician efficiency 100%: 25.6%

Technician productivity over 90%: 38.0%

Effective labor rate over $90: 58.4%

Breaking Down Tech+Tool Budgets

In the Ratchet+Wrench Industry Survey, we asked specifically about the budgets shops form for technology and tools. Almost one-quarter of the respondents reported they don’t even craft a budget—and the effect on shop earnings is clear. Here’s a breakdown of the data from our survey.

What percentage of your business’s annual revenue do you allot each year for technology, tools and equipment investments?

Less than 1%: 1.4%

1–5%: 33.3%

6–10%: 27.1%

11–15%: 5.7%

16–20%: 7.1%

21% or more: 1.1%

No specific budget: 24.4%

What’s the right training budget?

No specific budget: 24.4%

Over $1 million in revenue: 38.3%

Average repair order over $400: 45.8%

Double digit net profit: 43.1%

Effective labor rate over $90: 29%

1-5%: 33.3%

Over $1 million in revenue: 50.6%

ARO over $400: 52.7%

Double digit net profit: 55.4%

Effective labor rate over $90: 43.8%

6-10%: 27.1%

Over $1 million in revenue: 47.1%

ARO Over $400: 57.1%

Double digit net profit: 55.4%

Effective labor rate over $90: 38.7%

11-15%: 5.7%

Over $1 million in revenue: 32%

ARO Over $400: 52%

Double digit net profit: 68%

Effective labor rate over $90: 28%

16-20%: 7.1%

Over $1 million in revenue: 25.9%

ARO over $400: 58.1%

Double digit net profit: 71%

Effective labor rate over $90: 25.8%

The Trending Equipment

Like digital inspection software, there are a number of different tools and technologies to choose from, and each have benefitted auto repair shops to varying degrees. From the Ratchet+Wrench Industry Survey, here’s a brief breakdown of some equipment shops are investing in, and the kind of effect that technology has on KPIs.