Cover Story: Heading Into Emissions Testing – How to Inject Business and Avoid Getting Burned

Would you consider there is a connection between oil changes and emissions testing? There is. How about a connection between the quality of the jobber’s relationship with his key trade customers and their success within an emissions program? This too is inescapable.

Whether you’re a part of the Drive Clean Phase 3 area, which expands the program to virtually the entire remaining areas of considerable population in the province, or considering the impact of a future emissions program on your business, recognize its evolutionary nature. The impact on your business leading up to the launch of a program, its impact in year one, and its effect in subsequent years, is not a straight line.

Dave Elliot, owner of Walker Automotive in Chatham, Ont., is part of the Phase 3 area. He’s in the early stages of an active Drive Clean program that has been affected by a strike of government workers. Consequently, notices to consumers have not been going out as they should otherwise be.

“We’re not really seeing Drive Clean-related business yet,” he said in mid-May, “because basically the guys aren’t really doing much testing at this time. The guys who have decided to go with test equipment have it in and are just getting accredited and ready to go, but with the Ontario strike, it was a little bit of a challenge to get their approval done and get their machines hooked up.” Despite some delays, however, the approvals and accreditation has moved ahead. The strike by the Ontario Public Service Employees Union also had the effect of keeping the computer systems for the Ministry of Transportation offline, so license renewals required consumers to bring the paper copy of their emissions test results with them. The delays, however, have left Elliot wondering about the true impact.

“In our area I don’t think it’s going to go like when it first let loose in Toronto. Our customers have had some experience in Toronto and London and Windsor to work from. So hopefully anyone who has test equipment, they have a business case.”

He says that he brought seven of his customers to see a Toronto business.

“We were able to look at his business and the flow of business. I was just trying to give my guys some guidance as far as what to expect. The guys in Toronto didn’t know that only 15% of cars would fail. By knowing that going in, you will make a different business decision.”

He has worked hard to ensure that his customers have made the right decision for each of their businesses.

“A lot of the guys that I deal with have been doing training for a long time. So, they’re good technically. Most of them have also taken E.K. Williams training. All we’re coaching them on is to make a good business decision.”

He says that, as a result, many of his customers have decided to sign on as Repair Only centers, which does not require the testing dynamometer or the accompanying investment, but does allow them to perform repairs under the Repair Cost Limit program. That program limits the cost to consumers whose cars fail a test to $200 in repairs during the first two years of the Drive Clean program, rising to $450 subsequently.

The consumer pays $30 per test, with the test facility keeping $20.

“You have to make a strong business case for the kind of investment [to be a Test and Repair center] so you have to understand the income stream.” He said that most of the Test and Repair locations in the community of 45,000 are working hard to market that service.

“And they’re four-square committed to it. They’ve got all the equipment, they’re training all their guys, and they have professional advertising going out to the public informing them they are ready to test their cars.

“If you just put the equipment in and wait for people to knock on your door, that would be a dumb-ass decision.”

Adrian Gordon, owner of Gorwood Automotive in Woodstock, Ont. has been living with the impact of Drive Clean since before Phase 2 testing began in October 2000. Reflecting back on his initial exposure brings back some unpleasant memories.

“It was an experience,” he says wryly. He tells of efforts to get a number of garages to work together, to coordinate their testing and investment by setting up a central, shared testing site. Gordon even went so far as to form a group to listen to a service provider who had done just that in a Phase 1 area. Gordon says he tried, but failed, to build a consensus for this approach. It was, he says now, an error.

“If we had done it like our training center, with two or three solid guys, it would have worked because the rest of the guys would have come along.” Gordon says it taught him to follow the lead of the best shops, and to not expect that the others will ever agree in advance.

“One of our best clients was very interested in the consortium, but when it didn’t move ahead, he went ahead with the idea that it would strictly be an added service rather than a money-making venture,” says Gordon.

He still believes in the possibility of shared resources, even if he couldn’t get it coordinated in his market.

“I thought it was just brilliant. Shops may be too far apart in Phase 3, but they will typically have lower rental cost, too.” He warns others not to fall into the same trap he did, trying to get the full agreement of all customers.

“The biggest barrier was personalities and naysayers. All the paranoia–and it’s understandable, but we tended to listen to too much of that in the past.

“It has been interesting, and the best thing that any jobber could do is to sit down with the guys in a de facto repair association. The whole focus is that this is not a big money maker.”

Non-participation by service providers is a danger for jobbers in Drive Clean areas or other jurisdictions that are looking at the same kind of decentralized program. It is a danger not shared by British Columbia’s AirCare program, which uses centralized testing-only centers run by a single government-selected contractor.

In Ontario, most of the repairs that arise after a car fails a test will end up being performed at the point of testing.

“That could be because those guys are larger, better equipped shops,” says Gordon. Nevertheless, it would follow that if a jobber had too many of his customers going the Repair Only route, or not participating at all, he may never see the full bloom of the opportunity in parts sales.

“The neat thing is that the ones that are handling it well are taking their clients first and starting a booking program–sort of automotive triage. Done well, it is a good thing, but as a moneymaker, it’s not, period. It’s up to the jobber to listen, and stop and listen again, and participate not from whatever his program is, but what he or she knows about the industry.”

The true opportunity for both the jobber and the service provider is the capture of neglected work, said Robert Blair, president of Carquest Canada, at a Town Hall discussion during the Automotive Industries Association’s recent convention in Toronto. Emissions testing provides an opportunity for the aftermarket “not just because of the emissions repair, but also because it drives people back into the bays.”

Rob Addie has been seeing Drive Clean do just that ever since it bowed into the Phase 1 area in 1999. He owns RPG Supply, located in Oshawa, Ont., and has seen a distinct evolution in the program’s effect on business over the past few years.

One of the first items he saw was the rush for universal catalytic converters, and their reduced acquisition price. “Everybody looked for the quick buck, and then did a 180 because it wasn’t worth the trouble.” He says that technicians learned quickly that time spent to fit a universal “cat” meant the effort didn’t necessarily pan out in the profit column. “At first it didn’t matter if it took four hours to make it fit. As time has gone by, the direct fit has kind of prevailed.”

Exhaust is a huge opportunity, he says.

“You can’t put anything on a machine without a proper exhaust. We found that exhaust sales were first and foremost and have hung in there.”

Gas caps were another early mover. “I’d almost
say that just about every car got a gas cap, because they were all old. It was a $5.95 sale so it was easy.” He says some customers still stock a couple of dozen GM models because they are such a common failure.

“Tune-up parts took off because that was simple. Most people had 100,000 kilometers on the car and had never had a tune-up.”

Oxygen sensors were often considered a prime culprit in an emissions failure, a close second early on to catalytic converters. Short cuts in diagnostics created some problems.

“Truthfully, I don’t think anybody has figured out the proper diagnostic, but they all seem to make enough of a change to get them into a pass mode. We had some problems with converters, and the fight from the get go was ‘you picked the wrong thing to fix.’” Some service providers reportedly have developed bad feelings for some aftermarket sensors. “It’s a tough one. Did the parts get a bad rap? In some cases, they did, but it was because they were replacing the wrong part.

“I think it’s been a by-guess and by-golly approach. I think now, where the cars are going back through the second time, it’s getting tougher.”

He says that, above all, jobbers need to be prepared to invest and watch stock levels carefully. Many of the initial benefits are fleeting, and changing.

“It was a very unknown area that everyone went into. For a jobber with it coming down the pipe, he’s looking at extra inventory and space. A lot of guys are carrying 10 numbers in converters. They should be carrying 200 numbers, but that’s not for everybody. It started out a lot stronger in the beginning. Most of the jobbers didn’t stock cats. Then all of a sudden it becomes a day-to-day item. It becomes costly, plus you have to have the space, but because of the nature of the fix, it becomes an availability issue.”

The same is true of oxygen sensors. Once a seldom-sold part, it’s now selling at a rate of five or six a day. “And naturally that’s brought in price competition,” says Addie.

He says, too, that while the emission repair and tune-up business started out strongly slanted to the Test and Repair sites, he has seen it slowly bleed back into balance. “Over time the repair guys have figured out the areas that fail; you can have a pretty safe guess. I know a lot of guys would do the obvious repairs and then throw in the chemical just to be safe. You don’t want that phone call later.”

It is interesting to note that there is still so much uncertainty in a region that has been coping with a program for three years.

Addie says, though, that much has been learned that can benefit jobbers and service providers still feeling their way through the program. “The good thing is that the suppliers can help the guys immensely because they have been through it in other areas.”

Ultimately, the service provider will bear the brunt of the programs. They have to make the right decisions about the level of investment they need to make; they are the ones who have to deal with the consumer. Helping them on both fronts is a key role for the jobber.

“My first advice would be to get the good operators together and/or a group together and go at it from a group perspective and for the jobber to listen very carefully,” says Adrian Gordon. “Be involved and not be looking for a sale out of it. Be a facilitator. I think that’s what we should be doing. It is a challenge for these guys and if we are going to fulfil our part of the bargain it is to bring that kind of reasoning to the table.”

EMISSIONS AND THE OIL CHANGE

While evidence from oil companies regarding emissions benefits are not forthcoming, there seems ample empirical evidence that an oil change prior to testing can providing marginal vehicles with a passing emissions level.

“The only connection is that some people are afraid to do the test without getting one,” says Ed Andrade, owner of Beverly Automotive in Cambridge, Ont. “People want that extra bit of insurance. If you do have a clean crankcase, you do have a better chance of passing. A clean PCV valve, a clean air filter, and clean oil will make the engine run a few percentage points better than without.”

Andrade says that this is most often a help on poorly maintained vehicles already suffering from poor combustion.

“Contaminated oil in the crankcase will drive your hydrocarbons up. If you’re very borderline, sometimes an oil change will do the trick.

“I wouldn’t suggest that everybody going out with an oil change will pass. But all things being equal, the car with fresh oil, a clean PCV and a clean air filter will perform better.”

Other feedback on the subject indicates that emissions testing tends to cause people to break out of their normal service interval, choosing perhaps to get an oil change done a bit early and at the time of a test, rather than separately.