Independent garages undervaluing their service
Wednesday, November 11, 2020
A new study by the Independent Garage Association (IGA) in the UK, has shown that independent garages provide consumers with outstanding value for money, unrivalled by any other sector in the automotive aftermarket. However, the report has also found that many workshops may be seriously undervaluing their service.
The UK Independent Garage Labour Rate Study has been carried out by the IGA during the past twelve months to provide its members with a reference tool to establish whether their labour rate is comparable with other garages in their vicinity. The IGA has also developed a labour rate calculator to accompany the study, which helps members to review their costs and work out an approximate breakeven hourly rate.
Stuart James, IGA Chief Executive, said, “The study clearly shows that in many cases, independent garages have been absorbing the rising costs involved with running a garage business, rather than passing those increases on to their customers. While this is great news for their customers, it is impacting on garage profit margins year-on-year, which in the long-term is not sustainable. In these difficult times, it is more important than ever for garages to build all ongoing costs into charging structures to future-proof their businesses.”
Stuart added, “A significant number of members have taken part in this study and feedback indicates that they will use this to review their charge out rates, so they can make a sustainable margin and continue to provide their vital services to local communities.”
The study of over 3000 garages found the national average hourly rate in the UK this year is £47.47. Regional differences mean that the London area had the highest charges with Northern Ireland the lowest at £40.55.
Compared to figures from 2012 the study found that labour rates were almost 7% lower than annual inflation over the period, meaning that garages are failing to keep pace with rises in overheads such as rent, fuel and energy, meaning reducing profits every year.
The findings of the study are also likely to reflect the picture in the Republic of Ireland aftermarket and highlight the need for garages to set realistic labour rates that value their skills and expertise and adequately cover costs rather than basing rates on perceived competition and an often unrealistic perception of what customers will pay.