Opinion: The only thing ‘shocking’ about hourly rates is that they’re too low

Columnist Luke Robinson shares his views on the recent What Car? article

Opinion: The only thing ‘shocking’ about hourly rates is that they’re too low
Image: Bigstock.

After reading the story about shocking labour rates, I decided to dig a little deeper into the original What Car? article, which undermines our industry and the hard work that everyone puts in.

The article surveyed 279 garages across the UK. To put that into perspective, that’s just one garage for every 336 square miles in the UK. In reality there is an independent garage for approximately every two square miles.

Of those garages surveyed, the magazine also requested a quote to compare the price of a 110,000-mile service on a Volkswagen Golf. Not surprisingly, a garage in Belgravia quoted over four times the price quoted by another garage in Edinburgh.

The article goes on to suggest that if you are willing to travel, you could save enough for a night away and dinner out. For reference, that’s an 800-mile round trip and 14 hours of driving; with the price of fuel it’s looking more like a night at a Travelodge and McDonald’s meal.

A postcode is obviously going to have a huge effect on labour rates – it’s simple maths. The overheads of running a garage in Belgravia make me feel nauseous; not only the fixed costs of workshop rents and rates, but also the higher wages required just to live and work in London.

I also wonder if this particular garage may also specialise in more premium marques given it likely has a more affluent customer base. Either way, it’s like comparing house prices in Belgravia to those in Edinburgh – it’s not a relevant comparison.

I was struck by the claim that 77 percent of consumers do not compare labour rates, but this number may actually be a lot higher. How often do customers request the hourly rate? Hardly ever, which suggests that many customers prioritise other factors over hourly rates, namely:

  • Do they trust the garage?
  • How much is the total bill likely to be?
  • Will the garage do a quality job?

So why are we so afraid to raise our labour rates and does it matter when garages charge different rates?

We service and repair what is likely to be the second most expensive purchase a consumer ever makes; we deal with more technology than it took to put a man on the moon. The owners of these vehicles don’t need a cheap hourly rate – they need a quality service from a garage they trust. Cost will be secondary to that (within reason); we all offer something different and this is reflected in our rates.

Prices will always be compared; just look at the price differences available when shopping for your groceries. Some people shop at Lidl, others at Tesco and others at Waitrose. The difference in prices at these supermarkets are not described as ’shocking’ – we just accept the prices and choose where we shop.

Supermarkets base their prices on their overheads and expected margins; the discounted supermarkets are cheaper because they have a smaller range, smaller stores, fewer big brands and a more ‘no frills’ approach.

Our businesses are much the same and there is a place for everyone. We sell similar products and services, but the customer experience will be different from garage to garage. Technicians aren’t robots!

A garage’s labour rate has to cover several overheads, including technician and front-of-house wages, rents, loans, mortgages, pensions, taxes, business rates, training, computers, ramps, tools, diagnostic equipment, utilities, technical data and ongoing subscriptions… the list goes on.

If you haven’t done it, it’s worth identifying every cost to your business. Once it’s on paper, it really demonstrates the need to charge correctly for each hour we can sell. With every one of us paying different rates and rents, utilities and wages, we should all have different labour rates to cover these costs.

We’re in a unique and interesting position in our industry, where demand outstrips supply. There are more vehicles on the road than the independent aftermarket can maintain. An ageing car parc fuelled by slow supply of new vehicles, higher interest rates and high inflation have caused many customers to keep older vehicles for longer.

Add the current lack of skilled labour, and our workshops are in higher demand than ever, with every other garage looking for technicians. Maybe that labour rate will also need to cover ever increasing wage bills.

The only thing shocking about garage hourly rates is how low they are.

You’ll find Luke Robinson at Marchwood Motor Engineers in Folkestone, Kent.

5 Comments

  1. As an independent garage owner of over 40 years I can attest to the rising costs and ridiculous earning potential. We used to be purely tyres and earned a good living. Now we do practically everything, have tens of thousands of pounds in equipment and are barely surviving. I can’t help but blame the internet in some ways, there are many companies out there now that only care about the customer and are doing everything possible to force supermarket philosophy on an industry that doesn’t have that many products in comparison. I could go on and on and on but that would just cause my hair to grey even more, not to mention the state of my knees, shoulders and hearing.

    Reply
  2. agree
    we are trading with garages that have no idea what and how to charge correctly
    good mechanics but bad at business

    Reply
  3. Well said I couldn’t agree more.

    Reply
  4. Excellent reply Luke totally agree with you for far too long our industry and the people working in it have been undervalued the expertise that is now required to maintain and service the modern vehicle must be recognised if we are to attract new people into the trade .

    Reply
  5. great

    Reply

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