How to do Accident Claim?
August 4, 2023
People don’t really question us like that, they’ll more likely bargain, haggle or in some cases just walk away without even a word of gratitude but this are the biggest questions in their minds when they leave our shop or any other car repair shop.
These are questions worth asking, especially if you’ve been given a repair quote that runs into the hundreds or even thousands of dollars. After all, it’s your hard earned money so we’ll try to answer this ‘phenomenon’ once and for all, we hope.
There are three main criteria used in pricing any given auto repair.
The first is the labour rate, or what the shop charges for the time and expertise that goes into repairing your vehicle.
The second is for the parts themselves, and whatever other shop support materials that are used in the process of the repair.
The third area to consider are the fixed costs or overhead that the repair shop has to cover, but that doesn’t get reflected on your bill/invoice..
Understanding Labour Charges
When you see a line item for “labour” on your repair estimate/bill or invoice, there are two factors that go into it. The first is the shop’s own per-hour labour rate. The second is “book time.”
A shop’s labour rate is the hourly rate it charges for work. The term “book time” refers to the average amount of time it takes to perform a particular automotive repair or maintenance job. This is a number that’s set based on how long it takes a factory mechanic (or “technician,” as is the common industry parlance) to do the job, but with a modifier applied in order to establish a more realistic time that a less trained technician might take. It’s the automotive tech’s responsibility to complete the job within that “book time” window, though sometimes repairs take longer or can be performed quicker depending on a number of factors or unforseen circumstances.
Shop labour rates vary and are very competitive nationwide. A shop that specializes in a particular area usually charges higher labour rates for their service than a general service shop. While a specialist may charge more, this type of shop can often wind up being cheaper in the long run. A specialist is more likely to diagnose and repair a problem in laser-like fashion, fixing the vehicle in less time and using fewer new parts. Shops unfamiliar with a type of problem can end up muddling around, wasting the customer’s money on unnecessary parts and long hours of labour just trying to find a solution.
Parts And Supplies
Yes, auto repair shops mark up the price of parts. These guys have to make a profit to stay in business. Most people will understand, especially if they themselves run a business too. Keep in mind that this markup also means that reputable shops can provide a warranty for their repairs.
With the trend now in buying your own parts online, is this a ripoff? No, it’s not.
This question usually pops up in our line of work when someone goes over a job order or quotation with a fine-toothed comb and then “checks” the prices they were charged for parts against prices on the internet. $249 for an alternator? You can buy one on Amazon/Ebay/TaoBao for $86!
A markup on retail items—car parts or otherwise—is part of any business. And comparing internet prices to anything retail is misleading.
Why is this? Among other things, Amazon/Ebay/TaoBao does not run a local retail location with a person standing at a counter who can answer your questions.
But the parts question has a few more components. The part you get online might not be the same quality or have the same warranty as one from the local shop.
And let’s face it: If you want that cheapo price on that car part, you have to buy it and install it yourself. Or get charged a little more than usual to pay for someone to install that online purchased part for you.
The ease of installation (it doesn’t require you to get your hands dirty!) and the expertise. Most people would rather have the part installed by an expert who has done the installation many times before than try and do it themselves.
And that installation quite likely comes with a warranty. The alternator dies the next day? Take it back to the shop if they installed it. You installed it? Pop the hood and start troubleshooting, Chief. Is the part defective or did you installed it wrong? If the part’s defective, go get Amazon/Ebay/TaoBao to troubleshoot for you.
Parts markups can vary from shop to shop and from dealer to dealer. Generally though, there are industry standards. What you are buying is the expertise of the shop and helping them keep the lights on and the doors open.
The type of parts used for auto repair directly affects the bottom-line price. Original Equipment Manufacturer (OEM) parts tend to be the highest priced, followed by aftermarket parts. There are typically two to three tiers of aftermarket parts. Different tiers are defined by quality.
Finally, used parts also vary in price depending on the mileage and/or demand of the part. A used part can render an effective repair, depending on its condition.
“Shop support” can be defined as any products or services used to complete the repair. During the course of any auto repair certain stuff gets used, supplies like brake cleaning solution, shop rags, and replacement fluids. There are other ancillary services that you might encounter, like recycling and disposal fees for oil and other fluids. Costs of this nature are often passed onto the consumer.
Would there be a markup that was too high? Of course: If they charged you $2490 for the $249 alternator, that would be a price “grossly in excess of the value of the goods.” In Singapore, that would make it wrong. But notice the phrase “grossly in excess . . .”
Keeping The Lights On
What’s not often passed onto the consumer are the costs of running a shop, which in this modern age, can be very pricey. Regardless of size, a shop has expenses that have to be paid by the work generated. There are the obvious ones, like the rent, electricity and other utilities.
But there are also substantial costs for equipment and technology. In order to work on today’s cars, a shop must have state-of-the-art scanners, diagnostic software, and lab scopes to analyze vehicular datastreams in an effort to extract critical information for accurate vehicle repair. Without such info, techs cannot deliver accurate repairs. Other equipment such as vehicle lifts, floor jacks, lubrication equipment and the likes are necessary to operate a shop efficiently and effectively.
Good trained service personnel costs money, period. Usually techs are classified as Apprentice, Skilled or Unskilled, Chief or Head etc and the more high-grade techs in a shop, the more it costs to pay them. In order to attract a high-grade technician these days, shops have to pay a good hourly rate, weekly or monthly salary. In addition, insurance and other benefits often go into the package to attract the class “A” technician.
These technicians have to go to school on a regular basis to keep up with new automotive technology. Without this training, techs cannot repair vehicles in the “book time” allotted for a particular service operation. (Not to mention the occasional “headache” job that comes along that every tech in town has had his/her hands on without success.) A repair shop usually pays for this training.
Many shops carry their own parts inventory. Big or small. Given the number of different years, makes, and models of vehicles on the road, this inventory must be broad or substantial. Sitting on this inventory is not cheap, so some may have support from nearby spare parts shops.
As you can see, there’s a lot more that goes into auto repair pricing than parts and labour.
So, before you freak out when you see the price difference between the shop price and Amazon/Ebay/TaoBao, remember that the comparison is not fair. Mechanics have to feed their kids too. And if you want the cheap price, you’re going to be doing the work yourself.