Planning for the future can be challenging, especially when an economic slowdown may occur. But opportunities for the automotive industry can appear when there’s market instability.
As drivers pull back on spending, they may become more likely to maintain and repair than buy a new vehicle. This shift offers auto repair shops the chance to grow their customer base.
It’s possible for your shop to not only make it through an economic slowdown, but also thrive! Let’s cover how.Â
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Each recession is unique
A banking and lending crisis resulted in the housing market crash of 2008. The United States economy suffered greatly during this period. Fast forward to 2020, and the COVID-19 pandemic also caused economic struggles for many Americans.Â
Rapid inflation spikes and rising fuel costs can lead to consumers holding back on major purchases. One of those significant investments is a new car, which may fall down priority lists.
What happens to auto sales during a financial crisis?
The mere thought of a looming recession prompts people to save money and spend less.
Consumers won’t have the disposable income they need to buy a new car if they want one since times are tough. As a result, they will keep their vehicles for longer. With an aging vehicle, they will then need more maintenance and repairs.
Other factors contribute to drivers holding onto their vehicles. The demand for new and used cars outpaces manufacturer and dealership inventories.Â
Shop strategies during an economic downturn
Let’s look at some strategies that auto repair shop owners can use during a slow period.Â
Learn the factors influencing your local economy
The success of your shop’s strategy will depend on how well you prepare for local effects of the economic slowdown.Â
Monitor the following factors:
- The social environment
- State and local driving statisticsÂ
- Auto repair trends by generation (aging baby boomers, younger Gen Z drivers, etc.)
Focus on local automotive trends since the news will concentrate on broader economic effects. Recognize the impact of the local economy on industrial and commercial factors, as well as the job and housing markets.
Study your local policies
Your legislation is what impacts your local regulation and taxation. Your local government may reduce spending if sales tax revenue declines.
The same applies for local, state, and federal governments; forecasting what’s coming gives you time to plan.
Double down on training (and hiring)
Difficulties in your auto repair shop can worsen when an economic slowdown occurs. To recruit qualified individuals, your repair shop must understand and implement best practices.Â
Check out our eBook on addressing the technician shortage, which covers:Â
- Best practices for training and developmentÂ
- Providing a healthy work/life balance for employeesÂ
- Preventing team burnoutÂ
- Improving your job postingsÂ
- And much more!
Training is so important for the success and longevity of your auto repair shop. Thoughtful planning in this area separates the successful businesses from the failing ones. Â
You need to understand which employee communication and training is effective. Move away from ineffective training practices that increase costs with minimal benefit. Focus on crisis management and the details that every member of your team needs to be sharp on.Â
Provide a superior shopping experience
So what matters when it comes to knowing your customers? Excellent service and repairs!
Maintaining this consistency in your business matters even more during rough economic periods. It might mean the difference between survival and success.
Use the right technology, especially a cloud-based shop management system, to maintain and expand on your success. This software provides access to all types of relevant shop data. And better information means better decision-making!
When you become more efficient with each repair order, you can accept more work without adding new bays or growing the team. In other words, you will grow while reducing key expenses.
Here is where the training is useful. Instead of abandoning the program after you invested a lot of money, your employees should learn how to maximize it.
Understand your customers and their needs
Like your shop, customers will evolve and adapt! Economic trends are one factor that influence when they decide to schedule maintenance and repairs.
knowing how to analyze this information and refine you communicate with your customers is key! Your service advisors and technicians should study what customers want from their shop experience.Â
Customers want reliable performance and a trustworthy partnership with your business. Spend extra time getting to know your customers and understanding the full extent of their needs. This way, you can tailor your service and deliver results!
Pay off current debt
Debt threatens to bankrupt you as soon as your income starts to decline. It can hang over your auto repair business like an ominous cloud.
Get rid of this burden as soon as you can because repayment responsibilities will endure regardless of what happens to your income.Â
Use a profits & cash flow system to address these concerns. Make regular payments on your debt.
Why prepare your auto repair shop for a future recession?
There are two pain points for unpleasant experiences: the unpleasant event and our brain’s frantic reaction to it.
The same is true of recessions! Our inherent survival instincts are triggered by the economic shock, which puts us into “avoiding disaster mode.”Â
As a shop owner, you can feel like a drastic move is the only way forward. That may result in cuts to your team and putting your growth ideas on the back burner.Â
But overcorrection is a risk, just like in real life. Develop your shop’s economic slowdown strategies to prepare for the unexpected. This can help to reduce risk, create breathing room for your team, and ensure a bright future for the shop.
» Looking to transform your shop? Discover how AutoLeap can help.
Wrapping up
Don’t rely on your shop’s budget-cutting strategies from the past when economic uncertainty arrives! A thoughtful management approach using the tips in this blog post can position your shop for success even when downtowns occur.Â
FAQs:
Yes, a recession can affect the automotive industry. This is why it’s essential to prepare a business plan and strategies to combat economic slowdowns.Â
The cost of fuel has gone up. Interest rates and inflation have also been on the rise. Without a comparable wage rise, these two factors can have a detrimental effect on the automotive industry.
