Making Money on Performance

By Tom Langer
Business Editor

Toward the latter part of 2015 we shared articles on addressing the high-performance market. We talked about marketing, owner profiles and how to prepare for the work.


This month we take the next step, which is to learn how to make money with high-performance services. After all, high-performance work is enjoyable as a rule, and we sure all like the vehicles. However, we can’t operate as charities for very long and keep our businesses afloat.

If you look back to our discussion last year, we compared the different types of collector vehicles and their owners.

• “Tuners”: This group is dominated by later-model subcompact and compact vehicles, many of Asian design, DIY high, dollars low.
• Collector vehicles: This group has vehicles older than the 1980s, are almost overwhelmingly domestic, and include groups such as muscle cars, classics, antiques and specialty. In general the owners are 45-50+, DIY higher in muscle, lower in others, big dollars generally to leave in your shop.
• “Survivor” vehicles: Really a subset of specialty, they are currently all the rage. These are vehicles that are all or mostly original. Repairs are done only to preserve and possibly address drivability issues. Older owners, some DIY, big dollars.

When the dust settled you may remember the article’s assumption, that working with muscle, antiques, customs and, if we can handle it and deal with them, specialty applications. Bigger dollars, motivated owners with little time on their hands, and a reasonably sized DIY contingent make for a strong market opportunity.

Launching new service
The initial step is to continue studying your market. Check out local drive-ins, car shows and car clubs, and begin talking to owners and sharing the word of your expanded offerings. While you are there, make note of the type, predominant makes, models and years of the vehicles you see. This will assist in pulling together what is needed to launch your new service.

As an aside, all classic and antique cars are rated by quality from 4 to 1. For our purposes, we really only care about three “ratings,” 10-footer, 20-footer and show.

The typical 20-footer looks great from a distance, but the blemishes become apparent quickly as you get closer. As you may imagine, the 10-footer just holds its luster for a few more feet. These are great targets for the simple reason that they tend to be owned by people with a lot to do besides work on their vehicle, have the dollars to pay the bill and own the vehicle to relive a teenager’s memory or the car they always wanted. Beyond tinkering, DIY activity tends to be lowest in this group. However, this group is by far the biggest of all high-performance groups.

And, as stated in the earlier article, high-performance vehicle owners own lots of non-high performance vehicles. Get any one and you’ll probably get them all! As stated by one shop, doing HiPo work is a bit like being well paid to market for more work.

Show-vehicle owners are a different breed. They are looking to create a grade 1 vehicle and may very well be hunting a concourse trophy. Frequently these are “trailer queens” acquired more as an investment than for driving. Spend a few minutes watching the televised auctions this winter, and you are looking at this group. As a shop owner, you may not want to deal with someone’s $500,000 vehicle in your shop. For starters, you’ll want to talk with your insurance agent because your $60,000 garage keeper’s liability for vehicles in the shop won’t come close to what you’ll need.

Oh, and as an FYI, once you get a reputation for doing great work on the high-performance vehicles, a number of customers will come to you with some pretty tough questions. As a result, you’ll want to be ready:
• What kind of vehicle should I buy?
• Where do I find a vehicle like this?
• Do you know of any for sale?
• Will you look at the car I am checking out and make sure it’s OK?
• Should I convert from drum brakes to disc (or many similar substitutions which may be great for adding safety and/or drivability, realizing they will lose originality)?

The bottom line is that your customers will look to you as a source of information and guidance. As a result, make a point of hitting the car corrals at the swap meets, reading industry publications dealing with high performance and collector cars, and talking to enthusiasts.

One thing you may be asked is to remove air pumps if equipped and make other modifications to emission’s related parts. I once heard a customer all but beg a shop owner to use a converter replacement pipe. To his credit the shop owner offered what I feel is the best response, “I am prohibited by law to make any change to the emission controls appropriate to your vehicle. I realize I cannot control what an owner or someone else might do or may have done, but as for me and my shop, it just isn’t an option.” In a word, don’t!

The next discussion would be to help the customer prioritize, budget and schedule the process. You can imagine, safety items first, then handling, then performance. Don’t want the last until you have the first two.

Let’s move on to letting the public know of your new services and getting your first customers, such as owners of local car-club 20-footers. The following is a short list of ideas. You are limited only by your own creativity and budget.

• Host or sponsor a car show or one of the many weekly cruise-ins.
• Host a tech clinic on subjects of importance that may include car detailing, brake work, etc.
• Have some fun, get your own car, hit the many car shows and put out some brochures.
• Throw a coupon in the car show goody bags handed out at registration.
• Write (or have written) an article for one of the dozens of car club newsletters.
• Offer some product that is a specialty option for your customers such as special motor oils for older vehicles, “water wetting” fluids for cooling, fuel additives, etc.
• One local shop that gets many of the area’s high-performance owners (and their regular vehicles) by offering high-octane fuel (be sure to follow all appropriate laws and regs on handling this stuff)
• Get your crew together and develop ideas with them.

Operational needs
We’ll wrap up with a quick discussion of the operational needs to make money in high performance. Here is a summary:

Storage: If you have people’s pride and joy in your shop, chances are it may be for a few days at a time. If you want to have a customer lose faith, call with a report of vandalism while the vehicle sat outside, or have them drive by the shop and see their pride and joy in the unprotected lot open to vandalism, theft, damage from collision and more. In the strongest terms possible, if you are unable to keep the vehicles in the shop overnight, find a nearby storage site that is indoor. Otherwise, at the very least, keep the vehicle covered and within a secured and monitored fenced area. Remove any special audio remote faceplates or heads and anything else that looks like an accessory that could easily walk or waves a red flag that there’s a good reason to break into the vehicle.

Payments: In construction and building, they are known as progress payments. In other words, the customer is asked to make periodic payments towards labor and parts to date should the project require many days, weeks or possibly months. No one will be surprised or offended, this is simply good business practice. If they are jumpy, you may want to reconsider your involvement altogether.
Document the work: This is both to protect you and it’s a great value added service for your customer since many like to construct scrapbooks of what’s been done to their vehicle. A quick, uploaded image of the job from a basic smartphone is all that is required. We used to take pictures of any body, interior or mechanical damage along with the customer when the vehicle first arrives. Then, a shot of the assembly to be repaired prior to work, when fully disassembled and when completed.

Never let the customer say you should just “toss the parts.” Bag any parts you remove after documentation with photos, and place them in the truck along with a note to the invoice.
Are you thinking I may have gotten paranoid in my old age? I don’t think so. Pay to repair a scratch you had nothing to do with in some $15,000 paint job just once, and you’ll see what I mean. Again, it protects you and adds value to your work for the customer. If you really want to wow your customer, if you’ll have the vehicle for a while, email the owner progress pictures. I will bet money you’ll get paid for your progress invoices without as much grumbling this way.

Have a method of tracking shop supplies beyond the typical “2% rule” or whatever you use. For some reason, in my experience and that of others, these vehicles always seem to take more supplies than a newer version. Things like weather strip adhesive, special lubes, gas for the torches, and more are all possibilities.

Labor rate: Establish a separate (higher, much higher) labor rate for these vehicles. Looking around shops for this article, they post rates of 20% higher to as much as double the rate. You think tracking down a problem with a CPU analyzer can be a hassle, wait until you are using watt meters and chasing down 50-year-old wiring. It takes a lot of extra time. Get paid for it!
Estimates: Establish a fair and realistic estimate up front, assuming everything in the world will go wrong. People all like to pay less than they thought the bill would be, rarely are they thrilled with an actual bill that exceeds the estimate. Be sure your staff knows that if they will exceed the estimate, just like every other vehicle, you must get the owner’s permission first. I always add the time, date and contact name for a paper trail.

Owner sign-off: Finally, the job is done. In my opinion, it is mission critical to have the owner along for a test drive (who drives is likely controlled by your insurance) and have the owner sign off that the work was done as promised and is complete and satisfactory. The reason is fairly simple. The high-performance vehicle owner is far more engaged in the process of vehicle repairs and upgrades than the typical owner. As a result, they may often be overly critical. Cover your bases up front and you will avoid many problems later.

All this said, working high performance is not as daunting as it may appear here. Moreover, it can, and often is, a very profitable part of a shop’s business if it’s done correctly. Be sure to plan it all up front, interview others doing this kind of work, consult insurance, legal and tax people, and it’s all yours.
 
Thomas M. Langer Jr. has a career spanning a lifetime in the industry and is combining his experience with new information to provide readers of Undercar Digest with information you need to build a better business.