In September we launched our eBook, Small Changes, Big Differences in the Bodyshop, looking at how marginal gains can improve the bottom line of modern vehicle repair businesses. In this third blog in our ‘small changes’ series, we look at how bodyshop managers can get smart with parts, and the impact this can have on their bottom line.
The systems and materials now used to power newly manufactured vehicles are becoming more sophisticated by the day. The global autonomous vehicle market is set to reach $36 billion by 2025 (1) and Advanced Driver Assistance Systems (ADAS) are now featuring in over 66% of new cars (2), forcing the next generation of vehicle repairs upon a sector grappling with change. The cost of parts needed to complete more complex jobs will inevitably hike as a result, as your suppliers fight to remain competitive on price as repairs evolve with modern vehicle standards.
Naturally, parts account for a large portion of all costs on each repair job. To mitigate against the rising costs and protect their bottom line, owners should not only prioritise improving repair cycle times, but consider the incremental gains which can be made on the parts and materials that they are using everyday. For example, it is easy for bodyshops to overlook common lesser value materials, such as bulbs and coolant, on the final invoice. When missed regularly, these small costs cause a sizeable addition to a total bill of materials – impacting the bottom line with unnecessary costs which could be easily avoided through greater attention to detail.
This level of care must also go into ensuring that the parts and materials used for a repair are the most suitable for that particular vehicle. If a bodyshop makes an error with the paint colour, or quality control is poor and an unsatisfied customer returns, the additional costs of paint, labour and time almost certainly means that the job will be completed at a loss once the vehicle returns to the shop floor. This also damages the chances of repeat business from a customer.
Small yet effective gains can also be made on vehicle parts. While the margins to be made on more substantial parts largely depend on the contracts with suppliers, decision makers can adopt ‘better buying’ practices and find ways to purchase parts at a lower price point than retail cost.
For original parts sourced from vehicle manufacturers, it is then simply a matter of negotiating the best deal possible. There are various factors which impact suppliers here. For example, the physical location of vehicle manufacturers might impact the availability of specific parts. If demand is high, these parts will inevitably increase in price and cost a bodyshop more to purchase from a supplier.
Can you tap into your relationships with longstanding industry partners, or utilise work provider discounts to negotiate a better deal? Does your bodyshop management system allow you to check prices and discounts between suppliers quickly and easily? If so, trying this approach can be hugely valuable for securing an enhanced buy price and improving the bottom line in the long term.
For other ideas on how small changes can make a big difference in the Bodyshop read our full eBook here: https://www.audatex.co.uk/news/small-changes