How To Start An Auto Repair Shop/ Business | May 2021

Despite the fact that the competition among car services is very high, Neither the crisis nor the general solvency of the population in the region can affect the relevance of the services of the auto repair shop, because the number of motorists is only growing and the consumer is always looking for a better service. 

For this reason, opening your own service station offers more options for business development in any season and in any economic situation in the country.

How To Open An Auto Repair Shop From Scratch?

The purchase of the necessary equipment and the choice of location are, of course, one of the most important tasks before opening an auto repair shop, but far from being paramount. The future business owner will have to think over the phased development of his service even before the moment when he begins to perform specific improvement actions.
This implies that it is necessary to designate not only the minimum list of everything necessary for customer service, but also to build a strategy to attract a constant and additional flow of new consumers.

The list of what you need to open an auto repair shop from scratch includes:

  • Analyzing the target audience, drawing up a price list with a price category available for most average residents of a given region
  • Choosing a car service specialization, the main services that bring the greatest profit
  • Registration of an individual entrepreneur or LLC
  • Passage of sanitary epidemiological and fire safety inspections
  • Registration in the tax office
  • Selection of premises, registration of a lease or purchase of property
  • Seeking initial funding and additional funds to expand the business
  • Improvement of repair and client areas
  • Ensuring the work of utilities, timely disposal of garbage, etc.
  • Finding qualified, experienced craftsmen on whom the success of the business (as well as administrative staff) will rely
  • Registration and development of a single design recognizable by customers
  • Purchase of equipment and search for the most profitable offers
  • Search for trusted suppliers who can promptly deliver spare parts and provide a flexible system of discounts
  • Accounting department
  • Advertising

Each of these points will inevitably entail financial investments. With a competent analysis of all proposals, you can significantly save money, but the minimum capital required to open your own car service will be 1,000,000 – 1,500,000 rubles. 

This amount will be enough for a workshop with limited functionality without a long-term well-thought-out campaign to attract new customers. 

Thinking about how much money is needed to open a car service that is well-promoted and equipped to provide a wide range of services, depending on the region, it will take about 3,000,000 – 5,000,000 Dollars

BUSINESS POTENTIAL

Despite the fact that auto repair is considered a seasonal business, in reality this is not always the case. In spring and autumn, tire fitting and wheel balancing are especially in demand; repairs of any complexity are required year-round. With the arrival of heat, bodywork and tuning become more relevant, because painting defects and dents after an accident are not so noticeable when there is snow and slush outside. 

So, you can identify the statistics of the most demanded services for a specific period. Specializing in several types of services, you can guarantee a year-round flow of customers.

Depending on which workshop specialization has been chosen, further efficient expansion can be planned, bringing high profits. In total, there are several different concepts, according to which multi-profile car services offer their services: 

  • Tire fitting 
  • Renovation work 
  • Bodywork 
  • Electrical repair 
  • Diagnostics and maintenance 
  • Tuning and art painting 
  • Car wash
To open your own auto repair shop from scratch, it is enough to choose only 1-3 positions from this list and subsequently, as the business develops, offer more possible jobs. When choosing only 1 direction, you should pay attention to the implementation of only repair work, because this offer is always relevant at any time of the year and brings a sufficient amount of profit to pay back the investment and pay a decent salary to the employee and the business owner. 
 
Opening only a car wash or only a tire service is not entirely profitable from the point of view that such services are relevant either in the warm season or in the off-season. These establishments do not bring constant profit, which gives development to the business. 
 
The best option is to combine repair, tire fitting and car wash services at the start and gradually add other body painting jobs, etc. This offer guarantees a constant influx of visitors and their increase in the long term.
 
To increase the total profit, you can also develop your network of auto repair shops or sell a franchise: in this regard, it is impossible to reach the “ceiling”, because in each city you can open several branches, while controlling their work only remotely.
 

Depending on the choice of the concept, the development strategy will also differ:

1. Service stations that service individual brands or countries of origin

The services of such workshops can be in great demand, especially if this niche is not occupied by anyone in the region. For example, it is ideal for sparsely populated cities of the Far East, where many service stations are not open at all. However, it is much more difficult to develop in such a business, because the activities of the establishment are controlled by official dealerships and other authorities. Nevertheless, the influx of clients is ensured, because not all car owners can afford to contact the remote official dealerships of their brands, especially when their price tag is 20-40% too high compared to the local center.

2. Networked auto repair shops

At the moment, in the there are not many universally recognizable auto repair shops with branches in the most densely populated cities. Objectively, the market needs such a network business, because when they find breakdowns, customers are always looking for new car services, trying to find the quality guaranteed by the company’s brand. 

Potentially opening your own car service and recommending it as a quality benchmark is quite realistic, at least at the regional level. The most important thing is that car owners need a recognizable company that is really well-known in a city or region.

3. Single service stations (1-2 branches)

Despite the fact that this small business is difficult to start, it is in very high demand, because the prices for private entrepreneurs are much lower than anywhere else. An urgent question in the modern market is insufficiently high quality. 

If you try and find experienced craftsmen and earn the fame of a high-quality auto center in your district, you can get a profit of several million a month (for example, a business owner will personally receive 100,000 – 400,000 Dollars / month).

Service stations specializing in specific types of services

If the owner does not know where to start a car service, how to organize the work in practice, then he can gain experience by opening a small center offering a specific type of service: oil change, tire fitting, etc. This version of the strategy assumes a gradual expansion and increase in supply.

It may not be as profitable as the ones mentioned above, but it does not require such a large amount of investment (it is enough to limit yourself to capital up to 250,000 Dollars and expand and improve the service at the expense of profit).
Choosing a specific type of service station and how to open a car service from scratch depends on the specific region (the potential audience and its requests determine the offer) and the owner’s ambitions, his willingness to take up the idea thoroughly and confidently conduct business. The most successful thing about opening a car repair shop is that business is not afraid of the crisis and the economic situation in the country.

A decrease in the real earnings of the population from one point of view will even stimulate the operation of the service station, because budgetary promotions and other proposals for the loyalty program will become an outlet for car owners, especially those who have already bought a supported car, which in one way or another constantly requires repair.

How Profitable Are Auto Repair Shops?

According to statistics, an average car service opened from scratch pays for itself within 12-15 months from the date of opening. After this time, operating as usual without additional costs for the purchase of additional equipment and other improvements, it can potentially bring 15-20% of the profit from the total monthly turnover. 

A greenfield car service business, which is gradually turning into a network of auto repair shops, can bring the owner a profit equal to 15-20% of the proceeds multiplied by the number of branches opened.

WHERE TO BEGIN?

Organization of a car service from scratch involves solving many issues.

1. Finding funding

Due to the fact that opening a car service requires a large amount of money (from 700,000 to 5,000,000 rubles) at once, and the future owner has nowhere to take such funds, it makes sense to think about applying for a loan to a small business. This solution turns out to be much simpler than selling an apartment, etc. 

Taking into account the fact that almost all banks lend to businessmen for a period of 5-10 years, the proceeds will be enough to prematurely pay off the debt and have decent earnings after the return on investment.

2. Launch planning

After the entrepreneur begins to carry out the first organizational actions, and before the auto repair shop starts work, it will take about 4-6 months. Despite the fact that this period does not seem so long, it will turn out to be very stressful. 

In order to start work on time, the owner needs to competently organize a plan of his actions and leave a margin of time for incidental situations and their solution.

3. Advertising

This point turns out to be the most important, since in the absence of advertising, there are no customers. Opening a car service in the city center does not guarantee a flow of motorists and a quick payback. 

Promotion in social networks and on the Internet are the main components of modern business, working with users who have already applied to search engines on this issue. People who will already come to pay for repairs to a car service are already prepared clients.

CHOOSING A ROOM FOR A CAR SERVICE

The biggest problem for those who want to start a car workshop from scratch is the issue of buying or renting premises. Even in the area, renting a suitable premises will not be cheap. If the monthly payment does not seem so expensive, then it is worth comparing it with the cost of purchasing the same non-residential property. Acquisition of ownership is always more profitable, because the launch of the car service is planned at least 10-15 years in advance.

A situation often occurs that there are no suitable properties in the city either for sale or for rent. In this case, you only have to build construction. How cost-effective it is should be assessed by the owner himself in accordance with his ambitions and plans for potential revenue.

Even if the premises are rented or bought from the owner, this does not mean that it automatically complies with the GOST standards adopted by the SES and firefighters. When choosing several sites, you need to be guided by how much repair will be required and whether there are gross violations of standards that will have to be corrected at your own expense to open a car workshop. 

The main requirements for premises for Auto Repair Services include:

  • The presence of a detached building (location in residential buildings or shopping centers is not permissible) 
  • Distance from residential buildings and social facilities 15 and 50 m, respectively 
  • Heating during the cold season 
  • The presence of a source of natural light 
  • Water supply and sewerage Total area of at least 250-300 square meters 
  • Ceiling height 4.5 m 
  • The working area of each employee is at least 5 square meters 
  • The presence of a client area (at least 10 square meters)
 

EQUIPMENT AND INVENTORY FOR SERVICE STATIONS

According to statistics, 40% of the costs when opening a service station from scratch is the purchase of equipment. On average, at least 600,000 rubles are spent on these purposes. It is possible to save on this budget item, but it is difficult. Selling cheap and knowingly low-quality equipment is a doomed investment to collapse. For this reason, it will take a long time to search for reliable suppliers, and then builders who will perform high-quality installation. 

The list of everything you need for a car service includes:

  • Lifting special equipment – lifts. 
  • Equipment for wheel alignment: stand, rack-mount funicular. 
  • Tire-fitting special equipment: electric ballasting stand, tire-changer electric station, electric stations for the purpose of flanging tires into a drive, an electric compressor for pumping tires, containers for washing tires, dynamic lever, consumables 
  • Diagnostic special equipment. 
  • Washing special equipment: washers for cleaning the body and cleaning elements. 
  • Refueling special equipment. 
  • Auto tool: instrument carts with lodgments.
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