The New Economics of Auto Repair: Rising Rates, Fewer Cars, Higher Profits [RR 1080]
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About this episode
Thanks to our Partners, NAPA Auto Care and NAPA TRACS Watch Full Video Episode In this episode, Carm Capriotto speaks with Tom Ham about the rising labor rates shaping the automotive repair industry. Drawing from the Labor Rate Tracker tool on the Automotive Management Network, Tom explains how shops across the country are steadily increasing rates, with many approaching the $200 per hour threshold. Geographic trends reveal higher rates in regions like the San Francisco Bay Area and Connecticut, and Tom recommends gradual monthly increases of $1 to $2 to maintain profitability without alarming customers. They also discuss shifting business realities, including rising repair order values driven by vehicle complexity, higher parts costs, and increased technician compensation, even as car counts may level off. Many shops are also setting vehicle age limits to improve efficiency and reduce liability. Looking ahead, Tom highlights how artificial intelligence will enhance diagnostics and workflow, supporting the rise of a highly skilled mechanical specialist working alongside AI. The episode offers a forward looking view of an industry evolving through smarter pricing, cultural alignment, and advanced technology. https://laborratetracker.com/ Timestamps (00:00:00) Introduction & Industry Updates (00:02:30) Tom Ham discusses the "Labor Rate Tracker" and how shops are breaking through psychological pricing barriers as they approach $200 per hour. (00:05:00) Geographic Heat Maps: A breakdown of where rates are highest (Bay Area, Connecticut) and lowest (Midwest, South), and the use of heat maps to visualize the data. (00:08:15) The Incremental Increase Strategy: Tom advises shop owners on how to raise labor rates by small amounts (1–2) to overcome the fear of price adjustments. (00:10:45) Rates by Shop & Vehicle Type: Analysis of which shops command the highest rates (RVs, Diesels) versus the lowest (Collision, Tire Stores), and vehicle makes (Euro vs. Powersports). (00:13:30) Drawing the Line on Vehicle Age: A discussion on why shops are increasingly setting age limits (15–20 years) on the vehicles they accept to reduce comebacks and improve reviews. (00:17:15) The Future of Profitability: Predictions on rising Repair Order (RO) amounts and the shift toward "10k mile oil changes" resulting in fewer annual shop visits. (00:19:45) Technology Costs & ADAS: Tom shares a story about diagnostic equipment dropping $1,000 in price over 8 years and discusses the polarized adoption of ADAS calibration in shops. (00:32:00) The "Good News" Segment (Car Thefts): Tom presents data showing a projected 43% drop in vehicle thefts by 2025 due to advanced vehicle technology Tom Ham, Automotive Management Network. Tom’s previous episodes HERE. Thanks to our Partners, NAPA Auto Care and NAPA TRACS Learn more about NAPA Auto Care and the benefits of being part of the NAPA family by visiting https://www.napaonline.com/en/auto-care NAPA TRACS will move your shop into the SMS fast lane with onsite training and six days a week of support and local representation. 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