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Re: Maintenance Costs 9-5
Posted by David - Abbott America (more from David - Abbott America) on Thu, 1 Nov 2001 10:17:32
In Reply to: Maintenance Costs 9-5, Tony & Barb Thompson, Tue, 30 Oct 2001 20:18:30 
Some of Erin Epps comments regarding SAAB service/labor charges need comment.
As the owner of Abbott America Auto Tuning, I am very close to the SAAB repair
business although Abbott America does not do installations or routine service.
However, I have been a co-owner of a SAAB repair shop in the past.  The
implication that $30.00 is an exorbitant rate, much less $50.00 or $60.00,
ought to be considered in light of the following.

1) A modern car is not a simple machine.  It has many complex systems. ABS
brakes, traction control, electronic throttle, computer controlled engine
management and (sometimes) transmission, climate control, airbags, etc.  Many
of these systems must operate very precisely to meet safety and emissions
standards.  All of them require extensive and detailed knowledge to understand,
diagnose and fix and most of them require expensive and complex tools for
analysis, diagnosis and repair.

2) A good automotive technician must be highly trained and highly skilled in
order to work on a modern car.  A good tech. has extensive training and
continues to update this training in order to get and maintain certification
either by ASE or a major manufacturer.

3) You trust your tech. not only with keeping your car going from point A to
point B but also in doing so safely.  You literally trust him or her with your
life.  Misdiagnosis or incorrect repair can put you, your family and/or
passengers as well as other cars at great risk.

4) Techs however see only a portion of the labor rate you pay.  Much of this
rate goes to the shop.  Most of this goes to 'overhead'.  Shop costs are very
high.  In addition to the cost of buying or renting the building, there are
major expenses for shop tools and equipment, insurance, recycling, business
licenses and taxes, office and records keeping, and for compliance with zoning
and environmental regulations.  The days of independent shop working out of a
barn or corner gas station with a few simple hand tools, dumping oil and other
waste in a field without a care for environmental regulations are long gone.  A
modern shop has an investment of minimally $100.000.00 in equipment.  Computer
diagnostic machines, engine analyzers, AC machines, emissions testing
equipment, recycling machines, approved collection methods for oil, gasoline
and shop waste, special tools for specific vehicles, workshop manuals, online
workshop information and service updates in addition to lifts, tire machines,
brake machines, etc. all cost money.

As an example of some SAAB specific items: Tech 2, the computer diagnostic
tool, runs about $4000.00.  It must be updated with new programs 2 or 3 times a
year at a cost of $300.00 or $400.00 each for an independent shop.  Workshop
Manuals on CD run about $600.00 per car model and also must be updated
regularly.  CD parts catalogues also run $600.00 and also require regular
updates.  General online information from services such as AllData charge the
shop a monthly fee for updated information as do online parts catalogues.

Then there is the big stuff: an A/C machine, required by law to do any work on
your SAABs climate controlled system, costs about $15,000.00.  Emissions
testing equipment can run $60,000.00.  Computerized engine analyzers can cost
well over $15,000.00.  Recycling and waste disposal is a major expense.  Oil,
antifreeze, gasoline, cleaning solvents, even shop rags all have to handled
correctly by specialized waste/recycling companies, all of which charge the
shop for their services.  Shop insurance is necessary.  In addition to standard
property insurance there is shop liability insurance. Correct records have to
be kept as required by Federal, Local and State laws.  In addition to usual
business and tax records, records must be kept documenting compliance with
safety, environmental regulations, proper waste disposal/recycling and handling
of many parts. For example records for catalytic converters must be kept for 3
years.  All of this costs the shop money.

Given these considerations, 'labor' rates of $50.00 to $60.00 per hour are far
from exorbitant.  In fact, rates of $60.00 to $80.00 are common in the
Washington, DC area.  Seems like allot?  What do you pay your doctor or lawyer
for similar crucially important expertise?  (My doctor gets $80.00 for a 10 to
15 minute office visit, my lawyer charges $225.00 per hour.)  What for that
matter do you charge per hour for your expertise Mr. Epp?

Regarding parts prices: keep in mind that most of the parts for a modern car
are highly specialized and built to meet very stringent specifications.  Costs
for designing, developing and testing these parts are high.  Cataloguing,
warehousing and shipping costs add to the expense.  Many parts must meet strict
safety standards and governmental safety and environmental standards.  To meet
these standards, extensive independent testing is required, again a big
expense.  It is true that it may cost only a few dollars or even less per item
to mass produce an individual part but to this must be added the other costs
mentioned.  Parts costs for SAABs are generally in line with parts costs for
other new cars.  Sometimes aftermarket suppliers can be a savings.  However,
there is a wide variation in aftermarket parts.  A cheap part that fails ends
up being no savings, especially if the failure of that parts causes additional
damage to other components.

Shops and parts distributors are in general not, as seems to be common
perception, marking parts up exorbitantly.  Standard markups generally run 20
to 40%.  Against this must be deducted costs of shipping, warehousing, as well
as credit card costs.  Net margin is actually quite low.

David Whiteside
Abbott America Auto Tuning
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