In the auto repair industry, success is often measured by profitability and productivity. But what truly separates the top 10% of shops from the bottom 10%? In this final part of our 2024 Benchmark Report series, we’re going to look at hard data from hundreds of shops and analyze what the top performers do differently.

Whether you own a small independent shop or are managing multiple locations, understanding the key factors that drive productivity and profit will help you improve operations, increase margins, and avoid common pitfalls.

1. The Power of Productivity

One of the biggest takeaways from the 2024 report is that productivity is the strongest indicator of profitability. While average sales, labor rate, and car count are important, none of these metrics are as closely linked to profit as productivity is. Shops that achieve high levels of productivity, on average, generate around 20% higher profits than those that don’t.

In simple terms, productivity is about getting more done with the resources you already have. Whether it’s technicians producing more billable hours or service advisors selling more efficiently, the shops that manage to optimize this aspect of their business stand out.

 

One of the biggest takeaways from the 2024 report is that productivity is the strongest indicator of profitability.

2. Profitability Is Not Just About Sales

Another key point from the report is that high sales don’t always equal high profits. Some of the least profitable shops had impressive sales numbers but were burdened with excessive overhead or inefficiencies. As I often say, working harder isn’t the same as working smarter.

For example, a shop with $1 million in sales and three employees will likely be more profitable than a shop with $1 million in sales and eight employees. Every additional person on the payroll cuts into the bottom line, and more bodies mean higher operating costs.

Takeaway: Don’t fall into the trap of thinking more sales automatically translate into better profits. Focus on reducing overhead and improving efficiency instead.

3. Understaffing vs. Overstaffing: A Balancing Act

If you want to maximize profit, running your shop understaffed might be the way to go. But be careful—this approach can create a high-pressure, unsustainable work environment over time. On the other hand, running overstaffed makes managing day-to-day operations easier but can eat into your profits.

The trick is finding that sweet spot where your team is lean enough to keep expenses down, but not so lean that you burn out or leave potential revenue on the table. It’s about balance. As you grow, you might want to bring in a general manager or even hire a coach to help streamline your operations without losing profitability.

4. Efficiency Is Key

Efficiency isn’t just about the number of hours technicians are billing; it’s also about how effectively they are working. Shops with high profitability tend to have systems in place that support technicians and service advisors in maximizing their output. This could mean better dispatching systems, more focused training, or improved communication between departments.

If your team is constantly running into bottlenecks or your advisors aren’t selling the full potential of the labor that technicians can deliver, you’re leaving money on the table.

high sales don’t always equal high profits.

5. Management Matters

The common thread between top-performing shops isn’t necessarily the best technicians or the most advanced equipment—it’s good management. Strong leaders are able to keep their teams productive, engaged, and efficient. As a shop owner, your ability to lead your team effectively will have a direct impact on profitability.

Being a good manager means knowing how to motivate your team, how to manage labor effectively, and how to create a positive shop culture. When you have the right people in place, and they’re all working toward the same goal, your productivity and profitability will naturally increase.

Final Thoughts

If you want to take your shop from good to great, it’s crucial to focus on productivity, balance staffing carefully, and lead your team with a clear vision. The 2024 Benchmark Report makes it clear that top shops prioritize efficiency over sheer sales volume, and they invest in both their people and their processes.

So, take a close look at your operations. Are you running as efficiently as you could be? Are your people set up for success? Answering these questions will help you climb to the top tier of auto repair shops in the coming year.