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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. Note that this only looks at the employee labor in dealing with a repeat repair and does not include any parts that may need to be added to the mix.

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 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


Unfortunately this does not include the policiy dollars spent to save customers with various services, rent cars and the like. Nor can this formula 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.

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.

Copyright, 2001, J. Daniel Emmanuel


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