Final Report Shop Capabilities & Service Offerings

Final Report Shop Capabilities & Service Offerings March 16, 2016 D E T R O I T • C H I C A G O • F R A N K F U R T • S H A N G H A I • B E I J I N G The Martec GroupConfidential

Objectives/Methodology Shop Demographics Services Offered – by Type of Service Services Performed – by Vehicle Brand Capabilities Summary of Findings The Martec GroupConfidential 2

Research Objectives • Primary Objective: Learn what services are offered by shops and which of those services are performed by in-house technicians, outsourced technicians, or sending the vehicle to a different shop. We would also like to learn which services your customers ask you for that you currently turn down, and why. • Report data on the following: • Demographics and current environment • Type and brands of vehicles repaired • Services offered and performed • Most common jobs/services “turned away” • Outsourcing behavior • Data segmented by EMI versus MOTOR and PTEN and by Type of Shop

Methodology • Sponsor: Equipment Tool Institute • Survey Instrument: Email format with a total of 20 questions • Incentive: Drawing for Apple iPad Air or a Samsung Galaxy Note 10.1 • Client provided respondent list Respondent Sample

Shop Profile Q1: Which of the following best describes your shop? Independent Repair Shop Franchise Repair Shop New Car Dealer Fleet n=298

Breakdown By Region Q2: In what zip code is your shop located? West South Midwest n=253 Northeast

Primary Service Offered Q3: What is the primary service offered by your shop (pick only one)? n=298

Number of Technicians Employed Q6: How many technicians do you have at your shop? 1-2 Technicians 3-5 Technicians 11+ Technicians n=298 6-10 Technicians

Vehicles Worked on Monthly Q7: What is the approximate volume of vehicle services or repair orders written per month by your shop? 41-60 Vehicles 21-40 Vehicles 60-100 Vehicles 1-20 Vehicles n=295 100+ Vehicles

Monthly Revenue Q8: What is your shop’s estimated gross monthly revenue from all jobs? $40,000 - $100,00 $20,001 - $40,000 $0 - $20,000 $100,00 - $250,000 $250,000 - $500,000 n=282 $500,000+

Types of Services Offered Q10: Which of the following services does your shop offer? High Incidence Services Medium Incidence Services Low Incidence Services Very Low Incidence Services n=298

Service Methods – General Repair High Incidence Services Q10a: For each service picked, select the ways you perform these services? n=282

Service Methods – Suspension and Drivability High Incidence Services Q10a: For each service picked, select the ways you perform these services? n=273

Service Methods – Check Engine/Emissions Repair High Incidence Services Q10a: For each service picked, select the ways you perform these services? n=272

Service Methods – Oil Changes High Incidence Services Q10a: For each service picked, select the ways you perform these services? n=271

Service Methods – Advanced OBD Diagnostics Medium Incidence Services Q10a: For each service picked, select the ways you perform these services? n=259

Service Methods – Air Conditioning Service Medium Incidence Services Q10a: For each service picked, select the ways you perform these services? n=251

Service Methods – Engine Repair Medium Incidence Services Q10a: For each service picked, select the ways you perform these services? n=249

Service Methods – Fluid Flushes Medium Incidence Services Q10a: For each service picked, select the ways you perform these services? n=228

Service Methods – Exhaust Repair and Replacement Medium Incidence Services Q10a: For each service picked, select the ways you perform these services? n=218

Service Methods – Tire Sales and Installation Low Incidence Services Q10a: For each service picked, select the ways you perform these services? n=180

Service Methods – Transmission Repair Low Incidence Services Q10a: For each service picked, select the ways you perform these services? n=166

Service Methods – Alignments Low Incidence Services Q10a: For each service picked, select the ways you perform these services? n=152

Service Methods – Reprogramming Low Incidence Services Q10a: For each service picked, select the ways you perform these services? n=147

Service Methods – Collision Repair Very Low Incidence Services Q10a: For each service picked, select the ways you perform these services? n=27

Service Methods – Vehicle Painting Very Low Incidence Services Q10a: For each service picked, select the ways you perform these services? n=25

Brands of Vehicles Repaired Q11: What types of vehicles has your business service on? Check all that apply. n=176

Most Common Year Range of Vehicles Being Serviced Q12: What is the most common year range of the vehicles you service? n=298

Range of Years for Vehicles Being Serviced Q13: What is the range of years of the vehicles you service? n=298

Jobs Turned Away Q14: What percentage of jobs do you turn away? n=298

Types of Jobs (Services) Turned Away Q15: Which jobs are you most commonly turning away? n=244

Turned Away Jobs – Collision Repair Q15a: For each service picked, select the ways you perform these services? n=191

Turned Away Jobs – Vehicle Painting Q15a: For each service picked, select the ways you perform these services? n=185

Turned Away Jobs – Reprogramming Q15a: For each service picked, select the ways you perform these services? n=124

Turned Away Jobs – Transmission Repair Q15a: For each service picked, select the ways you perform these services? N=116

Turned Away Jobs – Alignments Q15a: For each service picked, select the ways you perform these services? n=109

Outsourcing Reasons Q17: Why do you outsource jobs? Other reasons include – “don’t want this type of work” as well as limited space and time considerations. n=241

Shop Redesign Q18: Have you redesigned your shop to accommodate jobs? No Yes n=298

Shop Redesign Reasons Q19: Why have you redesigned your shop? n=136 Other reasons include – easier flow, fire concerns vehicles are stored inside, smooth out work flow/ergonomics of techs, streamline operations, to take on more detailed work, updated Layout

Shop Redesign Plans Q20: Do you have any plans to redesign your shop or reallocate space…? No Yes n=162

Summary of Findings • Demographics/Current Environment • Most respondents from this study were either business owners (79%) or managers (14%). The vast majority of respondents (90%) were from independent repair shops. • The shops represent a mix of regions, with the highest percentages in the Midwest (33%) and Northeast (34%) • The lowest in the West and South (17%) • Nearly 85% of respondents are 45 or older • Nearly 90% of the respondents have 1-5 technicians working in their shop • Split fairly evenly – 43% have 1 – 2 technicians and 46% have 3 – 5 technicians • Over 90% of the respondents report average revenue per job of less than $1,000 • Approximately half (49%) work on more than 100 vehicles per month. • Vast majority of respondents primarily perform general repair services (84%), with a much smaller percentage (6%) providing other services: Only 6% list Diagnostic Specialist as their primary service; 3% Collision Repair

Summary of Findings (Cont’d) • Types of Vehicles Repaired • Over 90% of respondents have performed repairs on GM and Ford vehicles • At least 80% of respondents repair Honda-Acura, Toyota-Lexus, Nissan-Infiniti, Mazda, Subaru • Less than 70% have repaired Suzuki, Saab, Land Rover, Jaguar, Porsche • Most common model years being repaired are between 2003 – 2009 (72%) followed by 1996 – 2002(13%) and newer vehicles in the 2010 – 2015 MY range (11%) • 62% of respondents indicate they have “no limit” when it comes to model years they service/repair

Summary of Findings (Cont’d) • Services Offered • Besides General Repair services (95%), the leading services provided include Suspension & Drivability (92%), Check Engine Light/Emissions Repair (91%) and Oil Changes (91%). • Diagnostics, AC Service and Engine Repair also are offered by most shops (over 80%) • Fluid Flushes and Exhaust Repair are offered by a high percentage as well (over 70%) • The least offered services are Collision Repair (9%) and Vehicle Painting (8%) • Only approximately half of shops surveyed are offering Alignments (51%), Reprogramming (49%) and Transmission Repair (56%) • For those shops that provide services, over 90% utilize In-house Tools & Technicians to complete the job. • Approximately 5% of shops are sending work to a Non-Affiliated 3rd Party Shop to complete the job • Only 2% are outsourcing any services and 91% of shops report that they outsource less than 10% of their jobs

Summary of Findings (Cont’d) • Work Turned Away • A vast majority of shops turn away less than 10% of their repair jobs (85%). • 11% of shops are turning away slightly higher amount - 10 to 25% of jobs • Only 4% of shops turn away more than 25% of jobs • A high percentage of shops (over 75%%) report turning away “collision repair” jobs (Collision and Vehicle Painting) – mostly due to now “wanting to perform this type of work”. • Other jobs that are turned away at fairly high rates include Reprogramming (51%), Transmission Repair (48%) and Alignments (45%) – however these are primarily turned away due to having a “Lack of Proper Equipment”, “Cost of Equipment” and “Ease of Outsourcing” issues

Summary of Findings (Cont’d) • Shop Redesign Issues/Plans • Nearly half (46%) of shops have redesigned their shop in the past to accommodate jobs/repairs/services. • Primarily to accommodate more equipment (65%) and to grow/take on more work (65%) • Other reasons include Increasing Space for Technicians (49%) and Accommodating Different Types of Work (49%) • Of those shops that have not redesigned their shop, only about one-fifth (18%) plan to redesign their shop in the future.

Final Report Shop Capabilities & Service Offerings