Keeping Good Techs Is Great For Business

By John Fuhrman

Today having a nice looking car is not nearly enough to make for a profitable business. Customers expect the car to be in top shape and able to last at least for the term of the loan they have. All to often a car gets sold and fingers get crossed or we commit to “handle” problems as they arise.

Yet, a top-level service department can actually sell more cars at a much higher profit than any of today’s “Sales Systems.” In addition, quality cars are actually easier to sell extended service plans, which also can generate revenue while actually making customers happier. That’s because problems are handled at little or no cost to the customer and the service department earns a profit. That’s a real win-win.

Eliminating or reducing policy work can add thousands to any bottom line. Doing so requires that cars are as right as they can be before they are put out on the front line. It is also important that the staff believes in the service team at the dealership. Keeping top service talent is another of today’s great challenges. Yet, there is a little known benefit program available to any dealer who requires that technicians bring in their own tools.

This “tool pay” program basically places a value on the technician’s labor as well as on the value of that same technician’s tools. Just for using their own tools, there is a tax benefit that can increase their take home pay. In addition, the dealership increases their bottom line profit because the employment taxes are reduced or eliminated on the tool portion of the pay.

For example. Let’s say that you currently pay a dollar to your tech. That entire dollar is subject to applicable taxes. But suppose you said that $.65 was allocated to labor cost. That entire amount would be subject to tax. The remaining $.35 would be all or partially exempt from certain taxes. When you combine the two, the technician sees more take-home pay. But, the real benefit is the dealership is also saving the employment tax portion of the tool pay. That money goes straight to the bottom line profit of the dealership.

Imagine recruiting new techs or retaining top talent by allowing them to increase their take-home pay while at the same time, increase your bottom line profits. (For a list of things to look for in a top tool pay program, email me at jfuhrman@igotmycar.com and write “Tool Pay” on the subject line. Be sure to include the name of the dealership and your contact info.) The only requirement is that the technicians own and use their own tools on the job. It even works if they had previously depreciated all of their tools.

The dealer benefits from the ability to attract and retain top talent, but the real benefit is, the technicians are better able to continue to invest in the necessary tools to keep pace with what’s being sold today by continuing to invest in the needed tools. Ultimately, the customer and your average gross really benefit by reducing policy work and keeping customers happy.

John Fuhrman has been training and consulting dealers since 1992. He is now concentrating his efforts in North and South Carolina. His programs, F&I consulting, and products are increasing profits while reducing liability for many franchise and independent dealers. His company offers seminars and in store training and free evaluations. You can contact him at dealerprofitsnow@aol.com.