How's Business?...Gas Prices Aren't Helping

How’s Business?…Gas Prices Aren’t Helping

After a robust 2004, optimism among repair shop owners was extremely high when we surveyed readers in January 2005. Three months later, with gas prices consistently above $2 per gallon, the mood is changing.

During the first week of April, we faxed a survey to 3,000 automotive service and repair shop owners across the country to gauge their business performance for the first quarter of 2005. The following information allows you to compare your shop’s figures to this nationally representative sample.

The first quarter 2005 results are not very good compared to the first quarter of 2004. Thirty-eight percent of repair shop owners reported revenue to be below the levels of 2004, 27% said business was flat and only 35% reported an increase. While business in the second quarter is usually better than the first quarter, 16% still feel business will be worse than the first quarter (only 8% felt this way in the first quarter of 2004).

Looking toward the full year of 2005, 47% of shop owners feel business will be better than it was in 2004 (compared to 66% just three months ago), 27% feel it will be the same and 26% think it will be worse than 2004. Could high gas prices be putting a damper on the optimism that was felt three months ago?

To get the answer, we asked shop owners:

“With gas prices in excess of $2 per gallon, do you think this will change your customers’ driving habits and have an impact on your business revenue?” To answer this question, we asked them to check one of the following statements that represented their thoughts on the situation. Here are the results.

9% – It will not have any affect on my revenue.

30% – Higher gas prices will make drivers more aware of the operating condition of their vehicle and this will help increase service work.

34% – My customers will still drive the same amount, but have less money for service work.

22% – My customers will drive less and this will reduce the need for service work.

5% – This was our “Other” write-in category and the majority of these respondents feel that the higher prices will hurt their business revenue.

Combining the final three responses, roughly 60% of respondents feel that higher gas prices will have a negative impact on their revenue.

I must say I was happy to see that 30% of respondents see the silver lining in this matter. These are the shop owners that think the higher gas prices will make drivers more aware of the operating condition of their vehicles. I would bet these shops are the ones that religiously conduct vehicle inspections and take the extra time to educate their customers about the benefits of regular maintenance. In fact, 57% of these optimistic respondents reported their business in the first quarter of 2005 was up over last year’s first quarter (compared to 35% for the total sample). I’ll bet they even sell lemonade.

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