From the Magazine: Navigating economic challenges

In the ever-evolving landscape of the automotive industry in Canada, shop owners are facing a myriad of challenges that require strategic navigation.

From high interest rates and slowing economic activity to labour shortages and the impact of hybrid electric vehicles (HEVs) on repair dynamics, the road ahead is riddled with obstacles. However, within this uncertain environment, there are silver linings that savvy shop owners can leverage to not only survive but thrive.

Economic Headwinds

High interest rates and slowing economic activity: As interest rates climb and economic activity decelerates, consumers are feeling the pinch. The increase in mortgage costs has led to a reduction in consumer spending, creating a ripple effect across various industries, including automotive. The macro-output in Canada is becoming increasingly contentious, adding to the challenges faced by automotive businesses.

Contentious macro-output and labour shortages: The macro-output in the automotive sector is becoming more contentious, adding an extra layer of uncertainty. Coupled with labour shortages within the industry, finding skilled professionals has become a significant challenge for shop owners.

Impact of HEVs on repair outlook: The rise of HEVs is revolutionizing the automotive landscape. While environmentally friendly, HEVs pose a unique challenge to repair shops. Traditional maintenance practices are evolving, and technicians need to adapt to the changing repair outlook.

The rise of HEVs is revolutionizing the automotive landscape. While environmentally friendly, HEVs pose a unique challenge to repair shops.

Silver linings for shop owners

Labour is more profitable than selling parts: Amidst these challenges, shop owners can find solace in the fact that labour is often more profitable than selling parts. By focusing on enhancing the customer experience and boosting labour sales, automotive businesses can weather the storm more effectively. This could involve investing in training programs for technicians to keep them abreast of the latest technologies and trends.

Preparing your shop for improved customer experience: Enhancing the customer experience can lead to increased customer loyalty and positive word-of-mouth. Simple strategies such as transparent communication, streamlined service processes and a customer-centric approach can make a significant difference.

EV preventative maintenance: With the growing popularity of electric vehicles (EVs) and HEVs, shops can explore opportunities in EV preventative maintenance. Offering specialized services for these vehicles not only meets the changing needs of consumers but also positions the shop as a forward-thinking and adaptive business.

Expanding service categories: To diversify revenue streams and remain resilient in the face of economic uncertainties, shop owners can consider expanding service categories.

ADAS calibration and glass service: Advanced Driver Assistance Systems (ADAS) calibration is becoming increasingly crucial with the integration of technology in modern vehicles. Shops can capitalize on this trend by offering ADAS calibration services. Additionally, venturing into glass service, including repairs and replacements, can be a lucrative avenue for expansion.

While the automotive industry in Canada faces formidable challenges, astute shop owners can turn adversity into opportunity. By adapting to the evolving landscape, focusing on customer-centric strategies and diversifying service offerings, automotive businesses can not only weather the economic storms but emerge stronger on the other side.

The road ahead may be challenging, but with the right strategies, the destination is one of sustained success and profitability.

Zakari Krieger is the Fix Network, Canadian vice president of Prime CarCare, responsible for the Canadian retail business, encompassing the Speedy Auto Service and Novus Auto Glass business lines

This article originally appeared in the December 2023 issue of CARS magazine