THE BUSINESS OF ... Auto Repair
Auto repair shop runs like a well-oiled machine
MARKETING IS KEY: Former backyard mechanic keeps up with technology, competes for clients
Ilana DeBare, Chronicle Staff Writer
Sunday, September 23, 2007
There's a 3-foot-wide bookshelf in Marty Kaliski's auto repair shop that holds repair manuals for dozens of models of cars from 1964 to 1978.
Today the documentation for one model alone - for just one year - would fill that entire shelf.
So Kaliski, owner of Marty's Motors in El Cerrito, no longer buys printed manuals for new cars. Instead he subscribes to three online information services that offer millions of pages of diagnostic information.
There are computers with Internet access at each service bay so his technicians can find the information they need. The service bays also are stocked with other high-tech diagnostic tools such as $3,500 handheld scanners, $2,000 flushing machines and a $5,000 exhaust gas analyzer.
Kaliski, 61, has changed a lot since opening his business 32 years ago - from counterculture radical to Rotary Club member, from solo backyard mechanic to a storefront operation with four employees and more than $100,000 in equipment.
His evolution mirrors many of the changes in the auto repair business over the past couple of decades. His current challenges are ones shared by countless other mom-and-pop auto repair shops: Keeping up with technology. Hiring good employees from a dwindling pool of skilled mechanics. And competing for customers in an era when cars last longer and need fewer repairs than in the past.
"If you are trying to open your doors, you'd be hard-pressed to do it today for less than $100,000, and that's the bare minimum," said Stephen Small, an automotive technology instructor at Chabot College and president of the East Bay chapter of the Automotive Service Council.
Marty's Motors is one of about 82,000 general auto repair businesses in the United States, not counting body shops, gas stations or car dealerships. Together they service 238 million vehicles each year for a total of $37 billion in sales, according to the Automotive Service Association.
While giant chains have come to dominate many other industries, auto repair remains a bastion of small independent businesses like Marty's Motors. The 50 largest auto repair companies hold less than 10 percent of the U.S. market, according to First Research Inc. The average auto repair shop employs just four people, according to the ASA.
But small auto shops are facing an increasingly competitive environment. For one thing, cars are generally being built better so they require fewer repairs. For another, auto dealerships have started going after the maintenance and repair market more aggressively than ever.
"What keeps the independents awake at night is that cars are being built so well that they need to get out of the repair business and into the maintenance business," said Bob Cooper, president of Elite Worldwide, a Southern California firm that consults with auto dealerships and repair shops. "They need to start reminding customers about scheduled service and telling them why they need to bring their car in for service. And dealers are trying to get these guys, too, as customers."
This means small auto repair shops are having to become masters of marketing. Kaliski, for one, has become something of a marketing maniac.
He mails out a monthly newsletter to 1,400 customers. He runs free car-care clinics for women and offers a car-care club that provides free oil changes. He hands out promotional gifts such as sunglass holders, tool kits, cookies and chocolate truffles.
He recently sponsored a blackjack promotion where customers got 10 percent off their labor charges if they could beat his service manager in a hand of the card game.
"Unless you really want to do marketing, this is not a business you want to go into these days," Kaliski said.
It's something he never would have predicted when he started repairing cars in the 1970s.
Cabbie job gateway to repair
As a boy growing up in New York, Kaliski originally wanted to be a nuclear engineer. But when he went to college, he discovered that engineering math didn't agree with him, and ended up studying literature and political science.
He moved to the Bay Area in the thick of the Vietnam-era counterculture, timing his arrival so he could attend the infamous 1969 Altamont rock concert.
Kaliski worked as an organizer for the Berkeley Tenants Union for $125 a month, and then $80 as the group ran out of money. He became a cabdriver for a hippie taxicab collective with psychedelic cabs.
The cabbie job was his gateway into auto repair. Kaliski started fixing his own cab because the company had trouble finding mechanics.
"Being a collective, we believed everyone should be paid equally, but no one wanted to be under the cars when for the same money they could be sitting inside and dispatching," he recalled.
At one point, Kaliski fixed the clutch on his girlfriend's car. She paid him $150 - five times what he would have earned for that same amount of time driving a cab.
"I realized that being a mechanic let me play with machines, make more money than I made before, and do some good by helping people with their problems," he said.
Kaliski read up on auto repair, took tuneup classes at Laney College, and worked on cars in the driveway of his Berkeley home until a neighbor turned him in for doing commercial work in a residential neighborhood.
At that point, in 1975, he rented his first business space - a "funky corrugated metal" shop in back of another business on San Pablo Avenue in Berkeley. The space was so limited that Kaliski did his repair work outside, rain or shine.
Ten years later, facing tendonitis and foot pain, he decided it was time to become a manager. He hired his first employee. But between working in the rain and his own inexperience as an employer, he had trouble keeping workers.
"The classes I took were all about mechanics," he said. "I didn't understand anything about management."
Kaliski spent years looking for a new site in Berkeley but was stymied by zoning rules and city limits on new auto repair businesses.
Finally, in 1999, he moved to his current location in El Cerrito and added a second employee. But the change nearly killed his business. Kaliski went into debt paying for more than $50,000 worth of remodeling for the new shop.
His overhead was three times as high as before. But few of his Berkeley customers were willing to follow him to the new site. And a string of shoddy work by his mechanics was alienating new customers.
Close call with bankruptcy
"I came very close to going bankrupt," Kaliski said. "I was far enough in debt that I didn't even want to look at my numbers, which is always a mistake. ... I didn't know how to get customers into the shop.
"I also didn't know how to manage employees. It's very hard to get good mechanics. At that time, there was a shortage of more than 50,000 mechanics nationally. If my mechanic had a higher comeback (mistake) rate than I wanted, I couldn't fire them - I didn't think I could replace them."
Kaliski signed up for management classes and eventually learned to fire incompetent employees. He shifted to a pay system that rewards his technicians for getting work done well and quickly.
But what really turned things around, he said, was marketing.
You might even say hyperactive marketing.
Kaliski now attends four out-of-town marketing seminars each year and pays for a 15-minute individual marketing consultation every other month. Along with his newsletter, car-care club and frequent special offers, he buys ads in a local coupon book and in the Yellow Pages.
He does direct mailings to targeted groups such as female homeowners in El Cerrito with incomes of $60,000 or more. He hands out wooden nickels worth a $20 discount to new customers. He recently started offering a "million-mile warranty" on repair work. One year, he offered free chair massages to anyone who brought in a car on income tax day.
The massage promotion didn't do so well: He had only three or four takers.
"Some things I do, I just don't understand why they don't work, and that was one of them," he said.
Because cars often last 200,000 or more miles these days, Kaliski's goal is to bring customers in the door for routine service visits rather than wait for them to have a repair crisis.
"The pie is shrinking as cars require less and less maintenance," Kaliski said. "Back in the '70s, cars required regular tuneups. Today, we don't even use the word 'tuneup.' Spark plugs now last 30,000 or 60,000 miles, when they used to last 15,000.
"You used to have to reset the timing, but now the computer resets the timing. A lot of the parts that used to wear out don't even exist on cars today."
Keeping up with technology
Beyond marketing, Kaliski's challenges include keeping up with technology in an era when the typical new car has 10 or more computers controlling everything from antilock brakes to the transmission.
"Your car has more technology on board than collectively was used to put the first man on the moon," Cooper said.
"You spend $20,000 (on diagnostic technology) every year, and the next year it's obsolete," said Luis Gomez, owner of Alameda Auto Lab, an independent repair shop in Alameda. "You buy one little scanner, and it's $8,000."
The high-tech nature of modern cars requires shops to spend more on training, along with tools. Kaliski spent $5,000 on training last year, including 100 hours of continuing education for his main technician, Leonisio Cortez.
Expert technicians like Cortez - they're not called "mechanics" anymore - are harder than ever to find.
Many vocational schools that used to turn out auto mechanics shifted their focus to computer-related careers. Meanwhile, repairing cars requires higher and higher levels of skill.
Experienced auto technicians in the Bay Area now command salaries of $60,000 or more - sometimes even more than $100,000.
"It used to be the troubled kids at high school got funneled into auto or wood shop," Smith said. "That was fine prior to the 1980s. But now cars are so sophisticated that technicians need a lot of training. You can't walk out of high school and expect to get a job at an auto shop."
Juggling diagnoses, deliveries
The high cost of diagnostic tools and training means that small repair shops like Marty's Motors have less cash to spend on inventory than in the past.
So although Marty's Motors has a parts room, it is about the size of a bedroom closet and is not very full. He stocks only the most commonly needed items such as oil filters and orders other parts from local distributors who deliver up to four times a day.
Kaliski needs to place orders with his main supplier by 9:15 a.m., 11:15 a.m., 12:45 p.m. or 2:15 p.m. to make one of the four daily deliveries. Other sources deliver less often. Kaliski needs to call his Volkswagen supplier by 8 a.m. or 10 a.m. for delivery by 1 p.m. or 3 p.m.
So ordering parts on time - and finding a supplier who fills those orders accurately - can make the difference between a happy and unhappy customer.
"That's why I like to get people in early in the morning," Kaliski said. "If I miss that 11 a.m. truck, you're not going to see your car until tomorrow. I like to get them in as early as possible, spend the morning diagnosing, and then in the afternoon fix and test-drive them."
New channels for activism
Since that brush with near-bankruptcy, Kaliski's business has gradually improved. Last year his revenue grew by 20 percent. He turned a profit of $62,000, which he used to pay himself and pay off some of his lingering debts. He hopes to be debt free within the next three years.
Meanwhile, he has become involved in the business community through groups like the El Cerrito Chamber of Commerce and the Rotary Club.
Kaliski remains left of center and gets furious at the Democratic Party for not being sufficiently radical. But he now channels his activism into things like a Rotary Club drive to provide artificial hands to disabled children.
"In Rotary, I'm working with people whose politics go from extreme conservatives to moderate liberals, but we have projects we can all support," he said.
Kaliski himself rarely repairs a car these days. He is typically in the shop's office - filling in for his service manager, talking with customers or (surprise!) coming up with marketing initiatives.
"My job is managing the business, making sure clients are happy, they don't forget me, and new clients are coming in the door," he said.
Would he be able to start Marty's Motors again today as a self-taught mechanic in his 20s, working in a driveway? Probably not.
"I don't know how you could buy the equipment if you were doing less than $200,000 a year in business," Kaliski said.
"The combination of complexity of vehicles, specialized skills you need, and the equipment investment makes it impractical. You'd be over your head all the time."
Businesses at a glance
-- 82,000 independent general auto repair businesses in the United States.*
-- $37 billion in sales - average sales of $450,000 per business
-- 238 million vehicles serviced
-- 330,210 employees
-- 88% have Internet access in their office
-- 64% have Internet access in their service bays
-- Average ticket price is $317, of which 48% is parts and 51% is labor (figures are rounded)
-- Average salary for entry-level technician: $30,779**
-- Average salary for experienced technician: $45,092
*This does not include auto dealerships, body shops or gas stations.
**Salary and ticket price data are collected nationally; salaries are typically higher in the Bay Area than the national average.
Source: Automotive Service Association, 2006 survey of members. See links.sfgate.com/ZWL.
Where Americans get their cars fixed
- Service stations, garages
- Car dealerships
- Repair specialists*
- Foreign car specialists
- Tire stores
- Discount stores and mass merchandisers
*Such as oil change specialists or transmission specialists.
Note: Figures refer to dollar value
of repair parts installed by mechanics in 2007.
Source: Lang Marketing Resources, Wyckoff N.J.
E-mail Ilana DeBare at [email protected]
This article appeared on page F - 1 of the San Francisco Chronicle