Rising business energy costs: Running to stand still?
Martin looks at how you can afford to run your business with rising energy costs
Published: 14 February, 2023
The rise in energy prices is an issue that is not just affecting homeowners it is also causing problems for garage businesses, including bodyshops. It is leading to owners having to think if they can afford to run the business due to the increasing cost of gas and electricity eating into the already tight margins the business runs on. However, it is not all doom and gloom. There are many ways businesses can deal with rising energy costs alongside some new trends designed to respond to this issue.
Tools
Tools are the life blood of a garage or bodyshop and a fair few of the tools used on jobs are powered by rechargeable batteries, which need to be charged regularly. With the charging, the cost of electricity during the day is significantly more expensive, so businesses should look to charge them overnight, which comes under off peak times, when the energy price is cheaper. However, businesses should be reminded to only charge tools at night as long as they do not pose a fire risk.
Conservation
Do not waste electricity. Most of the wastage comes from items not being switched off, so it is important to remind technicians on the workshop floor that when they are not in use they should be turned off. This is especially important to remember when closing in the evening.
Heaters used on the workshop floor to keep staff warm are comfort items to have but they are expensive to run. In addition, they do not work well when processes like welding require heavy ventilation. This means that the heat produced from them will be sucked out of the workshop before it has had a chance to warm anyone up.
Ramps such as a three-phase electric ramp are expensive pieces of kit and are a key cog in the workshop. These ramps use quite a bit of energy however, reducing their energy consumption is pretty simple. It is achieved by ensuring the ramp is correctly maintained and is regularly oiled and serviced. In addition, technicians on the workshop floor should ensure the right ramp is being used for the car that is being serviced.
Price increases?
To combat the rise in prices we are seeing businesses, no matter their size, increasing the prices of jobs that require a lot of energy such as re-spraying and heating ovens to ensure the job is not loss-making. The price increases that are being seen now are here to stay for the foreseeable future, and it is something that the customer will have to be made aware of.
Going green?
Another avenue businesses are going down to cut costs is the use of green parts. Green parts are made up of undamaged and reusable parts from end-of-life and written-off vehicles, which does bring costs down. But they can cause issues once installed. This is highlighted by the fact that the part might have an electric module in it that is programmed for a specific vehicle or chassis. This means that if it is installed on a new vehicle, there is the possibility it may stop the vehicle from starting and it can also be difficult to code, which adds time to the overall job.
- Calibrations: All about live data
Live data ensures calibrations are done correctly, but what we are seeing is a growth in the collection of the data from vehicles, whether they are single or multi-site operations. The data is accessed via the SRS module and once it has been harvested it becomes an asset to the business. The reason it is an asset is simple. It is because the data helps the business reduce key-to-key times for calibrations, while also enabling them to identify systems that need calibrating after a collision.
An example of this is when a technician uses the live data from a vehicle on the workshop floor to see the forces put on the car pre-and-post-collision. Once this data is reviewed, it enables the technician to understand where the forces have gone through the car easily. The next stage of the process is for the technician to check and carry out specific calibrations such as the radar at the front of the vehicle alongside any calibrations that are required at the rear to complete the job.
Live data also provides the technician with a safety blanket to ensure that the areas of the vehicle that have been worked on are checked and calibrated correctly before the vehicle goes back on the road.
So, live data helps on the workshop floor, but there are also other potential uses for it by insurers, who would use the data differently from the way the technicians on the workshop floor use it. Insurers would want to read and review the live data straight away from the vehicle that had a collision. Once this has been done and based on what they have seen, they could potentially write off the vehicle there and then rather than having a vehicle assessment done. This would be a cost-saving measure for them as they would not have to pay out for any work done.
We know live data is here to stay because ADAS systems are becoming common place on the newer models of car that are coming off the production line. This means that it is important that the people reading and reviewing the live data have the necessary knowledge and training to understand what they are looking at and the ways the data can help them complete jobs more efficiently and benefit their business.
- Additive advantage
For any garage, finding new revenue streams is a key priority. Being able to increase your profit per vehicle makes business sense. But with so many products out there, how does a workshop owner know which way to turn? Which product is a genuine business opportunity that works for both your garage and your customers and which could turn out to be a waste of money, or worse?
According to Fortune Business Insights, the global fuel additives market is set to reach $12,117.8 million by 2028. Fuel additives can help vehicles perform better, reduce carbon emissions and increase fuel efficiency. Oil additives can help to reduce friction and wear within the vehicle, as well well as keep engines clean by flushing through deposits such as sludge. Both types of additives and cleaners can also create a valuable additional revenue stream for garages. What motorist wouldn’t want to give their vehicle a deep clean from the inside out, leaving it in tip-top condition and delivering improved fuel economy?
But according to Andrew Goddard, Chairman of the independent trade body for lubricants, the Verification of Lubricant Specifications (VLS), it’s not quite that simple. Andrew urges caution when it comes to oil additives: “The latest generation of highly sophisticated lubricants is formulated with advanced chemistry, using the latest synthetic technology. They strike a delicate balance of meeting manufacturer specifications within exacting tolerances. The tiniest change in a formulation can have a real impact on the performance of the finished product. “Aftermarket additives could mean that the performance of the lubricant to cool, clean or protect moving parts is not as effective as it was, as well as causing an unnecessary expense to consumers.”
That’s certainly an outcome no garage owner would want. Andrew continues: “Lubricants are working harder than ever before, catering to the strive for reduced emissions, demand for greater performance and better fuel economy. Smaller engines are running at higher temperatures to maximise efficiency, power output and fuel economy. Longer oil drain intervals, taken together with smaller sumps, have created the need for less viscous, synthetic oils to provide the lubrication required in these challenging conditions while meeting customer’s demands for performance and economy. Added to that, lubricants must be able to cope with temperature changes, increased bio-content in fuels, hybrid vehicle technology, challenges like start-stop functionality and overcoming problems arising from LSPI.”
So it sounds like it pays to do your homework when it comes to additives. Garage owners should make sure they really research any stand-alone additive packages they are recommending or using, and understand how they might impact the consumables already in customers’ vehicles. That way, you can be confident that you are making the right choices for your business and your customers in both the short and long term, balancing short term profit with long term business sense.
- Connecting to tomorrow’s lean workshop
In a previous article, I had written about the fourth industrial revolution, but I suspect that this may not have been the most threatening topic that you were thinking about concerning your day-to-day workshop business – the business of diagnosing and repairing cars, using a range of workshop equipment and agreeing ‘partnership’ relationships for the technical data and replacement spare parts.
The way that you work may have evolved over the years, mainly due to the increasing vehicle technology, but the basic principle has remained the same. You have customers who choose to come to you due to the good service and competitive pricing that you provide. However, the world of vehicle repair is changing and if you do not adapt, you will die. Unlike previous industrial revolutions, the pace of change is now much faster. So how is this going to impact the aftermarket?
Approach
The ‘internet of things’ (IOT) will change the approach to diagnostics, service and repair of vehicles, but also the way that the workshop equipment will be connected, the way that you handle your customers’ data and the way that you exchange data outside of the workshop, both as a consumer of data, but also as a data provider in data trading eco systems. All this will change the way that you do business. This might all sound like some science fiction concept, but this is already happening today with many vehicle manufacturers and their associated main dealer workshops. If the aftermarket does not start to develop the same approach and service offers, then it will not be able to compete.
However, to understand this better, let’s start with today’s ‘classical business model’ and then see what will change. Today it all starts with your ability to directly communicate with both your customer and with their vehicle and (for the more difficult jobs once that vehicle is in the workshop) your ability to offer a competitive quotation.
Once the vehicle is in your workshop, the diagnostic work or the replacement parts are identified, the parts ordered and the ‘complete repair process’ is conducted. However, there are three fundamental aspects to ensure that this process can be fulfilled – firstly, being in direct contact with the customer, secondly, being able to directly access their vehicle via the OBD plug and subsequently its data and thirdly, using that information to conduct
the complete repair process in the workshop.
Internet of things
So, what is changing and how will the ‘IOT’ help to implement new and ‘lean’ business models to remain competitive? It will still all start with the ‘repair process’, but this will no longer be with the customer initially calling you or coming into the workshop with a question of ‘can you fix my car?’, but it will be through remote monitoring of the ‘thing’ – the vehicle (via OBD plug-in devices or in-vehicle telematics platforms) to conduct remote diagnostics, prognostics and predictive maintenance services. This will inform you when the vehicle needs work and should lead into being able to contact the customer and offer a competitive quotation for the work needed that ultimately should still result in the vehicle coming into the workshop.
When the vehicle does arrive, you will already know the details of the vehicle and the necessary work, so can configure the workshop resources (which ramp, what workshop equipment, what technical data, what replacement parts etc.), before the vehicle arrives.
You can also ensure that the various ‘external data’ that may be needed for the job is pre-arranged and can be downloaded into the specific workshop equipment which is needed as part of the repair process. This can be a ‘just in time’ download of the technical data, the diagnostic test routine, the replacement part fitment method and so on. All this can easily reduce the workshop time needed to complete the repair process by 50%.
Captured
This may already sound like a great move forward to be lean, more profitable and more competitive, but there is even more! You also now have new ways to use the data that you have captured. Not only will you know the faults of the specific make and model of vehicle, which in turn, you will store in your database (non-personal, machine generated data), but you will also be able to use this data to exchange or trade data with your existing suppliers or other (new) partners to reduce both your costs and theirs. Welcome to the world of data trading – and get used to it, because it will be your future. The internet of things, means linking to the ‘thing’ (e.g. the vehicle and workshop equipment) and then handling the data created, by using it in new ways to make the whole workshop and vehicle repair process more efficient, as well as supporting new business models beyond just what you can do today in the workshop. However, let’s also take a step back and look at workshop equipment as part of ‘the internet of things’. It already starts with a new range of ‘connected’ workshop equipment that will not only be able to be remotely monitored by the equipment manufacturer to ensure better reliability, together with faster and cheaper repairs, but will also be the basis for ensuring that the technical information you require for the job ‘in hand’ is supplied not only ‘just in time’, but also charged for on a new competitive bidding basis from a range of suppliers and charged on an individual job basis. Going a stage further, you may be able to exchange data with your equipment suppliers so that they can collect ‘big data’ from all their customers and use it for their own new data trading business models and in turn, use this to offset supplying data or services to you at
a lower cost. This may also apply with your parts suppliers to provide them with better forecasting and trend analysis.
Data centric
The classic business model of today that is ‘customer centric’ will change to become ‘data centric’ that creates added value to the consumer’s experience, but also to the service provider – you!
This change of accessing the vehicle, your customer and use of the vehicle-generated data is a disruptive evolution that will drive (no pun intended) a revolution in the aftermarket. However, the key issue will be the ability to access the vehicle, its data and in-vehicle displays to offer your services when the vehicle needs work and that is likely to be a legislative issue as the vehicle manufacturers try to use their technological advantage to dominate and control tomorrow’s repair and maintenance business. It’s up to you to fight not only for your ‘right to do business’, but for your ability to evolve your current business models into those of tomorrow.
- GSF Car Parts parent company bought by LKQ Corporation
GSF Car Parts’ Canadian parent company Uni-Select Inc has been bought by U.S-based LKQ Corporation, the owners of LKQ Euro Car Parts.
- Digital systems can take garages to the next level
Advances in technology mean that the day-to-day jobs of technicians are evolving constantly. It is easy to see how technological skills, understanding and equipment are needed to meet the requirements of increasingly connected vehicles. However, there is a lot going on behind the scenes as well.
Technology is fundamentally changing the way garages do business, from bringing in customers, to scheduling jobs and ordering parts, and taking payment once work has been completed.
Boosting customer experience with digital tools
Digital tools like garage management systems (GMS) provide a simple and cost-effective way for garage owners to streamline their business operations and enhance the customer experience they offer. GMS have been proven to have a positive impact all the way along the value chain. They help garages deliver a service that’s slick and professional, build customer trust and loyalty, and maximise technicians’ billable time by reducing the amount of admin on their plate.
LKQ Euro Car Parts customers benefit from exclusive access to CarSys, a cloud-based GMS application. There’s no installation required and it’s available on both desktop and mobile, meaning it’s accessible anywhere, anytime, as long as there’s an internet connection. This includes a dedicated app, free to access for CarSys customers. Simple to use and available on both iOS and Android, it features mobile and digital job cards, integrated HaynesPro data, job clocking, quick quoting, parts ordering and much more. Garages benefit from an extra layer of efficiency at their fingertips, able to streamline processes and move towards becoming a truly paperless workshop.
Why CarSys?
Seamless online bookings: Garages’ online booking systems are supported by the CarSys workshop agenda. This means that whenever a driver books an appointment, it integrates with the workshop diary. The workshop schedule is automatically updated once a booking is made, and the driver receives email confirmation. This helps to reduce the number of no-shows, prevent double bookings, and make the process as seamless as possible for everyone.
Ongoing customer communications: CarSys is specifically designed to help reduce the managerial burden on garage owners and support their customer relationships. It stores customer and supplier records in an integrated customer relationship management (CRM) system, meaning that garages can easily send automatic email reminders whenever services are due – and even special birthday offers – helping to drive revenues.
Accurate scheduling: Built-in access to Haynes Pro data means technicians can quote for work confidently and accurately every time – and plan it in once they have got the go ahead. Using the Haynes Pro technical data bank, garages can view service schedules, average repair times, and key product information such as oil grades, fluid capacities and torque settings.
Professional accounting: Stay on top of your accounting with customer and supplier invoices, sales, reporting and VAT returns, all via the CarSys platform, in tandem with existing Sage, QuickBooks and Xero packages. This functionality also includes the option for the garage and the driver to view a job payment breakdown, along with a record of which payments have been taken and what is still owed, delivering all-important transparency and building trust. It might sound simple, but this is an easy way for garages to impress customers, by offering an experience that rivals the dealerships’ and that encourages drivers to come back again and again.
Inventory management and orders: CarSys can help garages manage their stock in the most efficient way, providing a real-time overview of stock levels for accurate re-ordering, meaning they only ever have essential stock on the shelf.
When it comes to ordering the parts themselves, using CarSys provides integrated access to the market-leading LKQ Euro Car Parts catalogue and online ordering platform. This gives them access to exclusive deals and promotions, as well as priority service, which ensures that all Omnipart deliveries are first on the van from the nearest branch. This functionality is more important than ever in the current economic climate.
Easy onboarding: From day one, the in-house CarSys support team will support garages with their GMS journey. With access to full, bespoke training and consultation, users can get to grips with the system and have it configured to meet the specific needs of their garage. Unlimited ongoing support is available for garages until they are totally comfortable with the platform and achieving the engagement levels they want from it. As the aftermarket evolves, it is key that technicians and garage owners change with it – and those with tools such as GMS at their fingertips are at an instant advantage.
Testimonial: Atlanta Garage
Atlanta Garage is a family-run workshop based in Portsmouth, offering a full range of MOT, diagnostic and repair services. Since April, the team has used CarSys to drive a series of efficiencies across the workshop.
Nik Buck explained: “We use CarSys for so many things day-to-day – everything from bookings, allocating and prioritising jobs, and tracking accounts. For us, it has really helped to streamline our work. Our team has expanded from two to five in the last few months, so keeping track of where everyone is up to, and what they’d be working on a particular day has helped us to stay organised as we grow. We use it for managing our finances. It helps us track profit and loss, and we use it to prepare customer invoices. This also helps to drive cost savings, as we no longer need to rely on an external bookmaker for support. Instead, all of the information we need is at our fingertips.
“Most of all, CarSys helps to support our customer experience. The ability to share booking reminders for servicing and MOTs is helping us to generate more business than ever before. When customers arrive at the garage, the process of checking them in is completely seamless. A great feature for us is the ability to leave notes on a customer file, which means that even if someone else served them on their last visit we can handle any queries up front. It also helps to support upselling. If we left an advisory message after their last service, for example, we can remind them and explain why it would be beneficial to invest in a new part.”
Nik added: “Moving forward, we’ll also be tapping into some of the additional functionality that CarSys offers, such as running reports and analysing servicing trends. We’d really encourage every garage to invest in CarSys if they can. It’s been a fantastic tool for us already, and we know it will help us make even more improvements over the coming weeks and months.”
Riding the MOT wave
The pandemic turned the traditional MOT demand curve on its head. Nearly three quarters of MOTs due in the early months of the UK’s first national lockdown were deferred until the autumn, meaning they will once again be due in the coming weeks, on top of those that have always fallen later in the year. This means it’s critical for garages to prepare now, and this is where slick customer communications come into play. Getting ahead of the curve now lets garages manage demand effectively, while also maximising revenue.
Planning ahead: The first step must be getting in touch with customers who you know have tests coming up. This means you can plan resource in the best way, as well as get more tests booked in overall. And don’t forget that vehicles due an MOT can be serviced up to a month in advance – you can start to tick vehicles off early to avoid a glut. The benefit of systems like CarSys is that drivers will be reminded of their bookings, through either SMS or email, helping to minimise no-shows and helping garages keep on top of exactly what will be coming through their garage doors, and when.
Technology plays a key role in helping to map out demand. Tools like HaynesPro let you accurately estimate labour costs and identify the right parts, making it easier to manage capacity and cashflow during times of high demand. CarSys is fully integrated with HaynesPro, and has stock management, parts ordering and quoting and invoicing features to streamline processes throughout the garage and enhance the overall customer experience. Top-notch business management and customer service are as crucial to ensuring existing customers keep coming back as they are to bringing in new ones.
Upskilling: Keeping on top of training and skills requirements is also an easy way to win customer loyalty and trust. Sharing product knowledge and recommendations following an MOT can help customers to avoid repeat problems in the future, or stop small issues from becoming serious, and generates opportunities to upsell.
We are committed to helping technicians maintain outstanding levels of service with the IMI-approved MOT training we offer through the LKQ Academy. Garages can opt for either the full annual CPD programme, due by 31 March each year, or routine refresher courses, which can be accessed online or in our classroom-based sessions.
