Diversifying your revenue stream can help you build a more stable and profitable business. The US auto repair industry was valued at $78.4 billion in 2022, according to IBISWorld. This number is growing steadily. New revenue streams can help you get a bigger share of the pie.Â
Schedule a free demo today!
Boost your shop sales
Simplify shop management
Empower your technicians
This blog post will teach you why it’s important to diversify your shop’s revenue portfolio, the benefits you can gain, and the new streams you can consider creating.Â
How can I make my auto repair shop more profitable?
The first step is often ensuring whether you have the right profit margins set up for your business. Ideally, every auto repair shop should be aiming for a 50 to 60% profit margin. If you’re already doing this, the next step is to diversify your revenue channels and introduce new services to increase profitability.Â
Why you need multiple revenue streams
The two primary reasons are the need for boosting profit and reducing dependency on repairs and inspections. These benefits translate to several others once you expand your service offerings.Â
Let’s break each down.Â
1. Increased stability
Having a single source of income can make your business vulnerable to external factors. Market fluctuations, seasonal changes, and new tech advancements are tough to predict and have the potential to nosedive sales. Remember the uptick in do-it-yourself repairs during the pandemic? Grim times for the auto repair industry.
Multiple revenue streams can offer protection from downturns in a particular service. Thus, building a more resilient shop.Â
2. More customers & greater loyalty
Several shop owners ask how they can get more customers to their shops. Businesses that offer a variety of services attract more customers. These services also make it easier to upsell and increase revenue per customer.Â
If you think about it, many customers might not know that you offer more than just repair and inspections. And it’s always convenient to get multiple services from the same place.
Additionally, you make your customers happier when you’re solving multiple needs. This builds stronger relationships and leads to repeat business and positive word-of-mouth referrals.
3. Competitive advantage
Multi-service shops also stand out from competitors that offer limited services. This makes it easy to attract customers who value convenience and a one-stop-shop experience.
4. Boost in revenue
Each revenue stream has its unique pricing and profit margins. That means if some of your services aren’t as profitable, you can make up for them by introducing new services with greater profit margins.Â
Multiple revenue streams create opportunities for additional income. You’re able to sell more, and often by utilizing existing resources such as your infrastructure, staff, and even parts. That means more profit with low additional investment.Â
5. Adaptable to market shifts (& decreased dependence on one service)
The automotive industry is constantly evolving, with new technologies and trends emerging regularly. When you’re involved in multiple services, you remain relevant and agile in response to market shifts. You also decrease your dependability in one area of the business to do well. Such shop owners also keep a pulse on emerging opportunities for further expansion.
6. Business growth
A strong foundation of multiple revenue streams can position your auto repair shop for future growth and expansion. This makes way for new partnerships, franchising opportunities, and even multi-locations.Â
6 revenue streams to diversify your shop
Now that we know why it’s important, let’s see how we can start building out new income streams for our shop.Â
1. Expand your existing services
It’s always good to start small and get into the mindset of service expansion. You can do this by identifying new repair and inspection services that you aren’t already offering.Â
For instance, many shops still aren’t offering maintenance for electric vehicles. Considering that they’re shooting up in popularity, this is a missed opportunity. Here are a few ways you can expand your existing services:
- Make sure you’re offering all the profitable auto repair services at your shop, such as diagnostics, oil change, suspension, and A/C service Â
- Introduce electric vehicle workshops to cater to the expanding electric vehicle market
- Start offering preventive maintenance and scheduling recurring bookings in advance
- Add self-healing materials such as polyurethane coating and regenerative battery cells
- Offer mobile repairs. You can charge a premium for traveling to customers
2. Offer online parts sales
The DIY auto repair trends showed us that a lot of people are willing to get their hands dirty and fix their vehicles themselves. There’s a sharp increase in parts demand amongst car owners.Â
This presents an interesting opportunity: You’re already selling parts to customers with your maintenance services. Why not sell them on their own?Â
Add your parts catalog to your shop website and promote it via social media and paid marketing. Let car owners view your website, add parts to the cart, and place an order. Then, arrange these from your parts dealerships and have them shipped to the customer. This will also allow you to build partnerships with reliable parts suppliers and build long-term beneficial relationships.Â
3. Fleet maintenance contracts
Fleet maintenance contracts offer steady income for businesses. These are often long term and continue to bring in a fixed amount of revenue every month. Additionally, you can target both commercial clients and businesses with vehicle fleets.Â
Here are a few tips to get started with fleet maintenance:
- Create an attractive pricing strategy which is affordable for your clients and still profitable for you
- Draft up detailed contracts to ensure a conflict free relationship with your clients
- Designate employees to fleet jobs and make sure they’re well-versed in their maintenance
- Prioritize these customers and offer them special care
4. Vehicle customization and upgrades
Car upgrades are also a popular service that you can consider adding to your revenue channels. Several car owners wish to upgrade their vehicles with custom parts and accessories.Â
In order to venture into this field, collaborate with local automotive enthusiasts and clubs. Learn about popular customizations and promote them in these clubs and on your website.Â
5. Car detailing services
Car detailing services are a form of vehicle customization and improvement. You’re able to work on car interiors and exteriors and help improve the aesthetics.Â
In order to offer car detailing services, invest in high-quality detailing equipment and products. Make sure you market to both individual and commercial customers.Â
6. Used car sales
Used car sales are also a great option for auto repair shops. Your average customer has a car that’s old and needs periodic maintenance. But many of these might also want to sell these for an upgrade (often when they see how expensive that engine swap might be costing them!).Â
In addition to buying off vehicles from car owners, you can also get in touch with reliable used car vendors. Promote these vehicles along with your repair services.
Just make sure to inspect each vehicle before you purchase it and be aware of any issues that it might have. It’s good to be completely transparent with your customers in order to build trust and loyalty.Â
» Looking to transform your shop? Schedule a demo today.
Final thoughts
In conclusion, having multiple revenue streams is a great strategy for building a sustainable and profitable business. You’re able to increase stability, strengthen customer loyalty, and quickly adapt to market changes. And the extra revenue is always great to have!Â
Experiment with these revenue streams and continue to track auto trends that might present with additional opportunities. Expanding your revenue channels is an ongoing process, not a one time thing.Â
Demo
