Auto Service World
Feature   September 1, 2009   by Bob Greenwood

Survey Reveals Opportunity Ahead

Jobbers Play Key Role in Industry's Evolution

A ccording to the results of the Automotive Industries Association of Canada 2009 Jobber Survey, change is in the wind for the aftermarket in Canada.

With a significant number of experienced but aging jobber owners across the country, the transition to the next generation of jobbers provides an opportunity never seen before in our industry, if owners clearly define a sustainable vision for their business.

Future Strategy Lacking For Many

The average jobber in the 2009 survey has 1.7 locations (of which 51% own their own building), and has 22 years’ experience in the business, as they move into an average age bracket in the 50s.

Unfortunately, the survey results indicate that the average jobber does not have a formal succession plan in place. While 38% of respondents are “hoping to somehow sell to a family member,” a full 30% just don’t know what they will do.

These facts are disturbing, because it will affect the business on many fronts. If the business itself has no clear direction or transition plan, how content will the employees be, let alone the customers? How will these two important groups buy into a long-term relationship with that jobber store?

Consider that the main customer base for the jobbers in the survey is the service and repair shop, providing 80% of the store’s sales, with industrial businesses coming in second, followed by collision and repair, and finally, dealerships. Shops are investing in technology, but are their suppliers?

The aftermarket jobber has largely not embraced technology, as 91% of sales are made over the telephone and only 9% are made online. This results in a huge cost and inefficiency to the jobber business that must be aggressively addressed if profitability and return on investment is to flourish.

As well, if the jobber business is going to be sold to the next generation, it must be acknowledged that the next generation lives for technology, which is the world they were raised in. The average shop owner is facing the same pressures. Will jobber stores be ready, as their customers demand online ordering? Today’s jobbers must ask, “What value is my business, with its old-style practices?”

Number Crunching Reveals Potential

With an average of 1.7 stores, the average jobber business realized 2008 sales of $2,346,301, averaging $195,525 per month with 1.2 outside sales representatives. This equates to $162,710 monthly sales, or $1,952,520 in annual sales, per representative.

But there are other opportunities to consider.

Assuming the shop is working on a 40% parts margin and averaging a 1:04 parts to labour ratio, as was reported in the shop survey, then the current monthly aftermarket parts purchase potential is $12,642.45 per shop. Some 58% of shop owners average 2.5 jobbers to source their parts, meaning the average jobber is realizing only $5,056.98 per month in purchases. Some jobbers might think that a shop with that level of purchases is darn good, but if the jobber was to slow down, focus on key shop clientele, and secure first-call loyalty, the potential for growth is 60% (an additional $7,585.47 per month at 100%).

However, if the jobber were to obtain even 85% of aftermarket purchases available, then that would represent an additional increase in purchases of $5,689.10 per month. This would mean absolute business relationships would have to be in place.

The Partnership Approach

Now if the jobber, in combination with the industry, could help the shop owner develop his business by guiding the total shop efficiency to 80%, then using similar facts, the potential for monthly aftermarket purchases increases to $20,685.39. That would mean a purchase increase potential of 76% ($15,628.41 more per month at 100%) or $12,525.60 in additional purchases per month at 85% loyalty.

Is the industry prepared to go after this opportunity?

The math does not lie. The average jobber must consider absolute first-call loyalty and develop each shop client to its highest potential. The sales representatives of the jobber business play a very important role in developing shop/jobber relationships by utilizing key information on each shop client. It is not giveaways that retain a shop’s business; it is the business relationship itself and how the jobber can help the shop owner move his business forward.

Hard Numbers to Swallow

According to survey results, the average store is carrying $241,581 in accounts receivable, and it takes on average 41 days to get paid. In turn the average store was consistently using $188,000 of its approved bank line of credit of $277,000 during the full year.

The average jobber in the survey carries an inventory value of $637,000 and realizes an average inventory turn of 4.3 times per year. This number of annual turns would be considered quite decent years ago; however, when 10.5% of all sales are returned and the average total store gross profit is averaging only 33.3%, the true cost and investment should be clearly analyzed.

Jobbers should consider implementing a turn/earn index measurement of 150 into their store lines to maximize the store’s return on investment (ROI). For example, if a line produces 40% gross profit (GP), then 150 divided by 40 is equal to 3.75 turns, which is acceptable from that line. But if a line produces a 25% GP, then 150 divided by 25 is equal to 6.0 turns, which would now be the benchmark. Gross profit percentages will fluctuate dramatically as the industry moves forward. This means the correct inventory levels, by line, will require a clear management mandate.

Following the math that was reported in the survey, if you take the total sales multiplied by the average GP percentage and subtract operating expenses, you discover the average jobber business is netting 4.3% of sales. This number should be in the 6% to 7% range, suggesting the average jobber is having a profitability issue with the business. Management must get more aggressive with training as there is no better way to ensure that up-to-date methods are embraced and put into place throughout the business.

Delivery Issues

One issue affecting the profitability of many jobber businesses is deliveries. The jobbers participating in the survey average 4.1 deliveries per day to each service shop customer. This business issue should be addressed, as it clearly reveals that the shop owner could have non-stocking issues and operational issues with his own shop, which in turn cost the jobber money. Also, 90% of the survey participants do not have a delivery fuel surcharge. Yet they are delivering, on average, to a market area of 30.5 kilometres from the store, with the furthest area being 40.5 kilometres away. At a 33.3% margin and 10% sales return rate, turning a profit becomes increasingly difficult as our industry continues to change.

Purchase Motivators

When jobbers are seeking additional benefits from their suppliers, the clear focus (81%) is on additional parts discounts and labour warranty for defective parts (72%). The parts issue shows the aftermarket must continue to strive for fit, form, and function, while the labour issue is clearly becoming a contentious issue in the jobber/shop owner business relationship.

Consider that since 67% of survey participants are in an associate/shareholder/member relationship, there is a great opportunity to explore how these affiliations can support jobber stores and move them to a sustainable and decent profitability level.

Without clear communication among the jobber, WD, and manufacturer, it is hard to see these opportunities being taken advantage of; where it does exist, however, the sky’s the limit.

Opportunity is here, and with the changing of the guard–that is, the shift as older members of the industry move into retirement–now is the time to come together to ensure those already in the business as well as the next generation in the aftermarket industry
all have the opportunity to excel.

Growth and improvement come not from stagnation but from change. The industry must invest in itself and redefine how it should do business.

This survey points out and confirms the issues which the industry must recognize, but jobbers must also embrace the opportunities in front of them. Technology, communication, business acumen, and operational efficiencies are the road to success. The question is, who will take the same old path and who will take the detour to success?

AIA members can obtain a free copy of the survey by calling the AIA offices at 1-800-808-2920. Non-members can purchase a copy for $74.99 online at the AIA e-Store (


Aftermarket Benchmark Survey

The 2009 Canadian Jobber Survey, conducted by the Automotive Industries Association of Canada, is part of the first annual Canadian Aftermarket Benchmarking Survey, which also covers the independent repair and collision repair markets. The survey analysis was conducted by Bob Greenwood, president and CEO, Automotive Aftermarket E-Learning Centre. He can be contacted at,or through

This project was conducted in partnership with The Automotive Group of the Business Information Group, publishers of SSGM, Jobber News Magazine, Bodyshop Magazine, and l’Automobile. Official jobber survey results and analysis appear exclusively in Jobber News, shop survey in Service Station and Garage Management, and collision repair sector analysis in Bodyshop Magazine. For copies, e-mail


More Interesting Facts

Nearly 50 questions were asked in the survey, some of them multipart, so it is impossible to reveal all the answers here (the survey is available from the AIA), but there are a few interesting bits of data that we can include. Average days accounts receivable is outstanding: Median, 40.0; Mean, 41.2. Total value of your inventory on hand: Median, $395,000.00; Mean, $637,120.32. Average annual inventory turns: Median, 3.2; Mean, 4.3. Percentage of sales returned: Median, 10.5; Mean 10.5.


Motivating Factors: A Disconnect?

In the Jobber Survey and the concurrently conducted Shop Survey, the loyalty offerings mentioned most often as motivating factors differed little– discounts and technical training topped the list for both–though jobbers ranked hats and clothing among the top three, in contrast to shops. Notably, though, jobbers only mentioned business training courses just more than half as often as shops (44%); while gift cards were noted by 42% of jobbers as a motivator, only 23% of shops said so, possibly pointing to a disconnect between how jobbers and shops view purchase incentives.

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