Operator Survey Water Cooler Talk
This time of year is always exciting around the NOLN water cooler. By August, the data has come in from the annual operator survey, and Tammy is inputting the data. The chatter around the water cooler is always about wishing we could get more operators to participate. Don’t get me wrong — I think we get a good sampling of the industry, but as in every survey, it is only as good as the information received. I know back when I was on the street trying to make decisions that would affect our oil change operation, I would refer to the annual survey as a reference guide for the shops I was a part of. An interesting tidbit about surveys in general is that rarely do the same people participate every year, and this year’s operator survey results are no different. To prepare myself for the upcoming phone calls about the survey, I started digging into the last 10 years of our industry, which led me to research some data points in other areas of daily life.
First of all, the state of the industry from my perspective is positive. I get asked all the time when I am at various industry events or working in shops what my opinion is of our industry and if it is still viable. I always answer that our industry is stronger than we have ever been with better-trained technicians and quality support from helpful vendors who supply our shops with top-tier products. Our shops are much better facilities, which are better equipped with the tools and equipment to allow us to better serve our customers. It is also my opinion that a main factor in why vehicles last longer and perform at higher efficiencies is because of the availability of quality vehicle service from our industry. Are we still viable as an industry? Absolutely! Quick automotive maintenance is more important today than it has ever been. As an example, just look at the influx over the last several years of capital investment firms that have been buying shops at breathtaking speeds. Most indicators of this trend point to vehicle service as a good investment, and this trend is expected to continue over the next few years.
The Way I See It: 2007-2017I have spent several days doing research for this article. I have gone back over the last 10 years of NOLN Operator Surveys to look at what I think are some interesting data points within our industry. As I collected data, my hardest decision was what to write about and what to leave out. Knowing that the two key factors for being profitable in this business are controlling inventory cost and controlling labor cost, I naturally started with these statistics.
Over the last 10 years, we have seen our inventory cost increase by an estimated 34 percent. During this same period of time, we have only increased our price for a basic conventional oil change by 22 percent. But don’t panic yet. As an industry, we have also increased our ticket average by 62 percent to $76.46 per vehicle (2017) from $47.18 in 2007, all while continuing to maintain an estimated 35 cars serviced per day. Obviously, we have become much better at providing additional services.
On the employment/labor side of my research, a typical manager position has continued to trend upwards in both pay rate and length of employment, which is an outstanding statement on the health of our industry. Also, the pay rate of technicians has increased; however, the length of employment has basically remained the same over the past ten years. Business advisors and employment research firms would contribute this to the nature of the position. In many cases, a technician in a quick oil and lube is an entry-level position into the general automotive service sector. Some of this is good for the quick maintenance industry, because we serve as a pipeline for the entire automotive service industry; however, there are red flags being raised, because there is a concern that not as many people are pursuing automotive service as a career choice as they have in the past.
Probably the most controversial statistic is the whole hubbub over the miles driven between oil changes. In 2017, we actually saw a decrease of 174 miles as compared to 2007. According to the data you sent NOLN over the last 10 years, our customers drove an average of 4,516 miles between oil changes. In fact, according to the 2000 NOLN Operator Survey, our customers drove 4,397 miles between oil changes. If there was ever a need for an episode of “Myth Busters” in the quick maintenance industry, it would cover this one misconception. Our customers are still servicing their vehicles at the same intervals they always have, regardless of what we have heard from the blogosphere and others looking for excuses of why they are not servicing as many vehicles. The drivers of today’s vehicles are still servicing their vehicles at regular and consistent intervals.
Compared to the Rest of Life Since 2007Analyzing data is a tricky business. In most cases, data can be manipulated to prove whatever viewpoint the analyzer wants to prove, and the NOLN operator survey is no different. However, it is interesting to look at other key aspects of life to see how those elements have changed. In 2007, a gallon of milk cost an average of $3.80 a gallon, as compared to $3.17 in 2017. Hard to believe. When everything seems like it has gone up, milk has seen a decrease of 63 cents. But milk is an agricultural product that has government subsidies attached to it and market conditions unique to the dairy industry, so maybe that’s not a good one to consider — except to say, not everything always goes up. Maybe a better statistic is that in 2007 a trip to the grocery store would cost an average of $54.11, whereas in 2017 that same trip would cost you $72.64. For those of us who still enjoy going to the movies and seeing the latest blockbuster on the big screen, we now hand over $3.50 more than we did in 2007 and the popcorn at that same movie house is a whopping $2.75 more.
An interesting trend in the major movie houses is that they have changed their business model to rely on concessions sales to increase profitability and now use the price of entry as a means to cover the fixed costs. In other words, a movie theater makes very little profit on a customer who just buys a ticket to the movie and doesn’t purchase a soda and bag of popcorn. Seem familiar? In the quick maintenance industry, most shops don’t make any money just performing an oil change. We need to sell other products and services to remain profitable. Most industries have trended this way. What used to create a substantial profit is now used as a means of getting customers into the business, and then additional services and products can increase the profitability of the business.
As a point of training, this is why it is important to show and tell our customers what the OEM recommendations are. More importantly, we need to tell them because our customers are expecting us to do a thorough job servicing their vehicles. Informing them of needed or required services is an important part of the service.
Since 2007, vehicle prices have risen by 21 percent to an average cost of $33,560, with several luxury vehicles scratching six figures. Today’s vehicles are engineering marvels that perform at levels we never thought possible, and sticking to the OEM recommended services is critical for continued performance of these vehicles.
I often have this discussion whenever I have the opportunity to work in the shops: Properly servicing today’s vehicles is a huge responsibility. The quick maintenance shops that perform these services correctly are a valuable asset to the community they serve. The shops that choose to cut corners or choose not to invest in training and proper instruction are an ugly stain on the reputation of the majority of the industry.
Take a minute to read the 2018 Operator Survey and see how it compares to your operation.
P.S. Parts two and three of the 2018 Operator Survey will be published in the October and November issues — if you you completed the Operator Survey questionnaire; then the full results should already be in your email inbox!