What Should Your Hours Per Repair Order Be?

This is a common question but also a commonly misunderstood measurement. All Service Departments are not created equal. Several factors within each Service Department can play a major role in this number. Some of these factors are:

  • Additional Service Requests ASR (and process)
  • Average mileage of vehicle
  • Multi-Point Inspections (and process)
  • Menus in place (and process)
  • Work mix – repair/maintenance/competitive
  • Express Service

Any of these factors mentioned above will not only affect your Hours Per R/O but also will affect your ELR (Effective Labor Rate) and Dollars per R/O. Let’s do a quick example of how one of these factors will influence our numbers.

This Dealership’s Service Department has no Express Service in place and only performs about 2 Oil Changes per day.

This example shows this Service Department has

  • $100,000 Monthly Sales
  •  $74,000 Monthly Gross
  •    400 Repair Orders
  •   $250 Dollars per R/O
  •   $95.00 ELR
  •  2.63 Hours per R/O
  •  1052.6 Total Hours

 
By the numbers, this looks like a healthy Service Department, so let’s add one factor to this Department.

We have added an Express Service that is up and running within the Service Department. We have separated the Express numbers from the main shop to compare.

  • $20,000 Monthly Sales
  • $7,000 Monthly Gross
  • 350 Repair Orders
  • $35 Dollars per R/O
  • $40.00 ELR
  • .88 Hours per R/O
  • 500 Total Hours

 
Since we know this is an Express Service Department we can understand why these numbers are not as strong are the first example of a Repair Shop that did not have an Express Service.

Now let’s combine the two departments which is very common when looking at Service Departments

  • $120,000 Monthly Sales
  • $81,000 Monthly Gross
  • 750 Repair Orders
  • $160 Dollars per R/O
  • $77.29 ELR
  •  2.07 Hours per R/O
  • 1552.6 Total Hours

 
With having raised the number in some areas and lowered it in others, let’s take a closer look.

In this Change example, we can see increases in

  • $20,000 Monthly Sales
  • $7,000 Monthly Gross
  • 350 Repair Orders
  • 500 Hours

We also have decreases in

  • -$90.00 Dollars per R/O
  • -$17.71 ELR
  • -0.56 Hours per R/O

 

By taking just this one factor you can see the drastic change it can make in your numbers. Work Mix should always be analyzed when evaluating these numbers. You need to know what percent of Repair/ Maintenance and Competitive work you have in your department. If a Service Department is doing a great job in Express, it will also increase their Maintenance and Repair and Customer Retention.

Another thought, we all understand that to keep customers coming back we need to be Convenient, Trusting and Competitive. In most cases, we cannot be convenient for a customer to get their oil changed today without some kind of Express Service. If a Service Consultant’s Pay Plan is partly based on Hours per R/O, what will that Consultant do when they see an Oil Change Customer coming? That customer in many cases will get ignored.

The answer to the original question “What should your Hours per R/O be?” is, that will depend on your Work Mix, MPI Process and Advisor ASR Process.

But the simple answer is MORE.

Written by Bill Durham

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