How to Increase Profit Margin for an Automobile Repair Shop

Mark Alfred
5 min readAug 28, 2019


An automobile garage shop is a tough work to handle. It is one of the most challenging industry domain to retain customers in, and your service has to be top-notch. The business also requires technically qualified and experienced mechanics, who can spot a problem and work on it swiftly. If you are a business capable of doing all of this efficiently, you deserve to take home a profit that is worth all the hard work.

Yet that may not always be the case. Automobile garage shops sometimes run into specific management issues that hinder their overall profitability and that’s the reason you should know how to make your auto repair profitable. In order to increase the net profit margin of an auto repair shop, there are very particular changes that can transform your business. As with more customers or more cars don’t necessarily mean your business is flourishing.

However, your automobile repair shop can gain profits with customer satisfaction and this can be better achieved with an auto repair software that can both enable your clients with timely services and even trim down your labor costs.

Importance of customer loyalty

Consumer behavior in the auto repair sector can be summed up in one word — Trust! Once a shop manages to solve a problem on time, thoroughly, and with civil service, they gain a customer for life. Price may not matter as much anymore to such a consumer, as several car owners have bad experiences with inattentive service and sloppy work. Repeat customers are the lifeblood of the net profit margin of your auto repair shop and are especially essential to increase the average profit margin for auto body shops.

If you are not able to retain customers, it often happens that word about sloppy service spreads easily in the neighborhood & this will hurt your auto repair shop profit margin drastically. It is important to take heed of customer response to the business.

Schedule appointments for each customer’s task

Appropriate scheduling ensures that the job can be worked on effectively by the employees and be delivered precisely to customers. This is undoubtedly one of the most potent ways to increase your garage shop profit margin. Analyze past work and determine the required repair timings.

Once specific tasks are assigned to your workers, you can ensure that work is being done as efficiently as possible. And you can thus deliver the serviced product to the customer without high waiting times. This approach is a sure-fire method to increase your auto repair shop profit margin.

Invest in the right automobile software

The world runs on computers now, and for a good reason. Our tasks have become far simpler and result in more efficient with the right software. Research and invest in software to track and organize your sales, and help with accounting and bookkeeping activities. If you want to explore how to make your auto repair shop profitable, the right software in finance can give you the answers you seek, and exponentially profit your mechanic shop.

5iQ automobile software offers the best way to digitally connect and communicate with your automobile repair shop clients. It lends a hand by reducing overall labor costs, helps in inspecting vehicles, and assists in boosting profit margins for automobile garage shops.

It further enables swift notifications, current promo discounts, automated text messaging, and conveys real-time status to customers right through the software app. Now, you can try a free trial which offers you 14 days to test 5iQ software out and get a better experience for how it works for your automobile repair business.

Reducing the labor costs

This is one part of the process that requires a lot of careful thought and planning. It is a tremendous step toward changing the way things work around your shop and increasing your auto repair shop profit margin.

The best way to trim down labor costs is to break down the problem with each car into several specific tasks and assign them to the proper number of staff members. Remember to take the complexity of the task into consideration. Conduct workshops on how to deal with the more complex tasks, and train your employees to work efficiently. Consider purchasing certain tools and technologies and reduce manual effort, while factoring in the cost of that machinery.

According to recent studies of the auto sector, the profit margins of labor can be 50% to 65%, as opposed to profit margins on auto parts, which is 20 to 28%. If you are looking for ways to increase your garage shop profit margin, there is irrefutable evidence that servicing is a genuine money-maker. And further, it is an effective business model. When labor service happens to be your major product offered, intelligent management of it will profit your mechanic shop.

However, this advice is also applicable to increase the average profit margin for auto body shops, as reducing labor costs involved in inventory control and logistics can be a massive boost to your net profit margin. Training employees, investing in transport, organizational and maintenance technology, and intelligent labor-management (expressly when dealing with suppliers) can make all the difference.

Rigorous vehicle inspection

We have all had the scenario or experience of a car breaking down just a few days after servicing. And it can be the most irritating feeling in the world. Also, it is a tough time as that the shop absolutely loses that customer’s patronage.

As an owner looking at ways to increase your auto repair shop profit margin, you must ensure that a vehicle is properly inspected for other potential problems before being delivered. You may explain to the customer if necessary, and increase the time allotted to that car, but it is essential that a car be perfectly operational when it leaves your shop.

It is advisable that you invest in an effective software that can perform digital inspections. And help in sharing the report with the customers to keep them happy at the transparency and prioritization of customer satisfaction of your business. You may sell this as an extra service to your customers, and give them the understanding to make informed decisions.

Digital vehicle inspections offered as an up-sell can be fruitful to increase the average profit margin for auto body shops too, as these often reveal deeply concealed issues that may require replacement products.

Assessing current expenses

Expenses can be dispersed among several operations big and small without your express notice as part of a routine. And this scenario will hurt your auto repair shop profit margin. Identify areas in which you are spending money gratuitously. For example, if you are located in a rural area, spending money on online marketing may not be as effective as, say, a referral program that offers discounts to referees. If you are located in a metropolitan area, maintaining an online presence, promoting through local celebrities and advertising on hoardings or websites frequented by the city denizens can help you establish yourself as a prominent business.

Analyze carefully and quickly cut off ineffective expenditure. Cutting expenses can also increase your auto repair shop profit margin.


Take your time and strategize, now that you have a grasp of the innumerable and various ways to increase your garage shop profit margin. You can truly transform your business with a few concrete and clear-cut decisions!



Mark Alfred

Mark Alfred is the Founder & CEO of 5iQ, cloud-based automotive software for the auto industry. We at 5iQ, love sharing and discussing mechanical industry news.