Tony Talks Business
How Car Mechanics Make Money
Your car goes in for brakes. The bill says two hours of labour at 150 dollars an hour, so 300 dollars for the time. The technician who did the work finished in about seventy minutes, and he was paid 70 dollars of that 300. Neither of those numbers is a mistake. Auto repair in America is an 89 billion dollar business spread across roughly 300,000 shops, and what it actually sells is not repairs. It sells hours, and the hours are set by a book instead of a clock.
This is how mechanics make money, and why the gap between the hours on your invoice and the hours spent under your car is where nearly all of it lives.
Chapters
- 0:00Intro
- 0:25An $89 billion business that sells hours, not repairs
- 1:11Book time: Mitchell, Alldata and the labour guide
- 1:35The hours you pay for aren't the hours that happen
- 1:57The tech is paid on the same book: $70 of your $300
- 2:20Effective labour rate: posted $150, real number closer to $250
- 2:51The parts matrix: $140 of pads billed at $252
- 3:40Shop supplies: $18 for rags and brake cleaner
- 4:05The whole invoice: $615.60, and $360 of gross profit
- 4:27What's the highest quote you've ever been given?
- 5:05Where that $360 actually goes
- 6:04Every empty bay is paid for and sold to nobody
- 6:24The free inspection is not an inspection
- 6:52The $39.99 oil change buys access to your car
- 7:16The digital inspection and the photo that changed everything
- 8:52Dealerships: 13% of the revenue, half the gross profit
- 9:55Dealers losing service share to independents
- 10:20Right to repair: who is allowed to talk to your car
- 11:32Flat rate pay punishes the hardest work
- 12:4520,000 technicians short every year
- 13:0812.8 years old: the ageing fleet under the whole industry
- 13:46EVs cost half as much per mile to keep running
- 14:35Rarer visits, much bigger bills
- 15:10So, where the money actually is
