Calculating the Cost of Repeat Repairs
Automotive Service Departments consider repeat repairs or comebacks as a part of doing business. However, many times they are not able to actually see how this is affecting their bottom line. If the service center is profitable, then they are not realizing the thousands, or tens of thousands of dollars being lost every year!
This form is designed to assist an automotive repair center to get an idea of how much money is being lost yearly to repeat repairs or comebacks. This is not designed to establish why the service department is having repeat repair problems.
I have included examples to assist in how to organize your numbers.
Employee Costs Per Repeat
Repair -
Figure these numbers once as an average and apply to
each repeat repair situation.
Not all service departments will have all of the employees listed,
base your numbers
on your staffing.
|
Employee |
Time Spend on RR |
Hourly Wages |
Total Cost |
|
Service Advisor |
|
|
|
|
Cashier |
|
|
|
|
Dispatcher |
|
|
|
|
Shop Forman |
|
|
|
|
Service Manger |
|
|
|
|
Parts Person |
|
|
|
|
Warranty Adm |
|
|
|
|
Total Cost |
N/A |
N/A |
|
Example, your shop may not use all of these employees:
|
Employee |
Time Spend on RR |
Hourly Wages |
Cost |
|
Service Advisor |
20 min |
$15 |
$5 |
|
Cashier |
5 min |
$7 |
$.80 |
|
Dispatcher |
5 min |
$15 |
$1.25 |
|
Shop Forman |
20 min |
$20 |
$6.50 |
|
Service Manger |
10 min |
$25 |
$4 |
|
Parts Person |
10 min |
$8 |
$1.25 |
|
Warranty Adm |
10 min |
$10 |
$1.60 |
|
Total Cost |
N/A |
N/A |
$20.40 |
Weekly Employee Costs
|
# of Repeat Repairs |
Cost per Repeat Repair |
Total Cost |
|
|
|
|
Example using 10 repeat repairs per week:
|
# of Repeat Repairs |
Cost per Repeat Repair |
Total Cost |
|
10 |
$20.40 |
$204.00 |
Weekly Lost Labor Hours and Costs
|
# of Labor Hours for Repeat Repairs for Week |
Labor Rate, use average if warranty and customer pay labor rates are different |
Total |
|
|
|
|
Example: If Average Labor Hours to do a Repeat Repair is 1.5.
|
# of Labor Hours for Repeat Repairs for Week |
Labor Rate/hr, use average if warranty and customer pay labor rates are different |
Total |
|
15 |
$75.00 |
$1,125.00 |
Lost Weekly Labor Rate Income from Repeat Repairs
|
# of Labor Income Hours Lost to Repeat Repairs for Week, number is same as Weekly Labor Rate Costs for Repeat Repairs |
Labor Rate/hr, use average if warranty and customer pay labor rates are different |
Total |
|
|
|
|
Example:
|
# of Labor Income Hours Lost to Repeat Repairs for Week, number is same as Weekly Labor Rate Costs for Repeat Repairs |
Labor Rate/hr, use average if warranty and customer pay labor rates are different |
Total |
|
15 |
$75 |
$1,125.00 |
Note, these numbers will always match the numbers
from the chart - Weekly Labor Rate Costs of Repeat Repairs.
Weekly Customer Compensation
Costs for Inconvenience
These would include rental cars, free services, discounts
on service, etc.
|
# of Repeat Repairs |
Average spent per incident on Customer Compensation |
Total |
|
|
|
|
Example: If Average Labor Hours to do a Repeat Repair is 1.5.
|
# of Repeat Repairs |
Average spent per incident on Customer Compensationt |
Total |
|
10 |
$35.00 |
$350.00 |
Total Weekly Cost of Repeat Repairs
|
Item |
Totals |
|
Employee Costs |
$ |
|
Weekly Labor Rate Costs |
$ |
|
Weekly Lost Income Costs |
$ |
|
Special Customer Compensation Costs for week - rental cars, special free services |
$ |
|
Total Cost per Week for Repeat Repairs |
|
Example:
|
Item |
Totals |
|
Employee Costs |
$204.00 |
|
Weekly Labor Rate Costs |
$1,125.00 |
|
Weekly Lost Income Costs |
$1,125.00 |
|
Special Customer Compensation Costs for week - rental cars, special free services |
$350.00 |
|
Total Cost per Week for Repeat Repairs |
$2,804.00 |
Yearly Cost of Repeat Repairs
|
Weeks Open a Year |
Weekly Costs |
Total |
|
52 |
$2804.00 |
$145,808 |
I hope you are astounded by this example. This is almost pure profit. I can't think of a service manager who wouldn't want to see that kind of improvement on their bottom line.
Unfortunately this does not include the hidden lost income from unsatisfied customers never returning and the people the customer tells about repeat repair that will never come to the service department or use that dealership for any type of car purchase.