ALEXANDRIA, Va. — Wiygul Automotive Clinic in Alexandria, Va., has experienced robust sales this year, but inflation has prompted the dealership to increase its wages and labor rates to maintain profits.
Chris Burr, director of operations, discussed with Tire Business how customers still are keeping up with automotive maintenance at the dealership's eight locations in the Washington D.C.-metro market.
Business in the first half of 2022 has been "robust," Burr said, up 22% over the first six months of 2021.
Sales in 2021 increased 31% over 2020, and Burr said he expects sales this year will jump at least 30% compared with 2020.
How would you describe consumer confidence/spending in your market?
As you know, the Washington, D.C., area is a relatively stable market with an affluent consumer base. The customers in this area are continuing to spend money to maintain their vehicles, especially since access to new vehicles and used vehicles is challenging at this time.
Since a large majority of area residents work in white-collar environments, average miles driven across our region is down 10 to 15% compared to 2019 due to a change in work-from-home requirements for most employers, including the federal government. This is causing some downward pressure on demand for auto repair services.
What shifts in consumer buying behavior have you seen?
People are ready and very willing to maintain their cars for longer life cycles. Preparing for longer and more frequent drives is taking precedent, as the ability to travel by air remains a headache and the ease of car travel remains preferable. This is likely to continue with an increase in interest rates for loans and the possibility of the looming recession and potential job losses.
Have you been able to pass along the series of tire manufacturer price increases?
Yes. In general, customers are paying more due to supply constraints and waiting longer for their repairs to be completed.
How have customers reacted to price increases?
The reaction to date has not been noticeable in units sold as customers continue to purchase tires, but we have noticed consumers opting for the mid-tier more frequently.
Have you increased your labor rates to customers this year?
Yes. As most products and services have been influenced by inflation, we've had to increase our rates to maintain gross profit.
By what percentage?
About 7%. We increased our labor rate in January.
What product shortages have you experienced?
Parts suppliers have had trouble meeting our needs and parts procurement is a continuing daily struggle.
What have you done to offset the shortages?
We have reached out to make more agreements with existing suppliers and we are actively searching for more parts suppliers to meet our needs.
What do you expect with supply shortages for the rest of the year?
From everything we are hearing, shortages are likely to continue as the supply pipeline disruption will not catch up to demand in 2022.
What kind of trends are you seeing in the marketplace?
Customers are generally patient and expecting delays in repairs. Although, on our end, we are doing a lot of things to ease the impact on their daily lives by making it easy to do business with us.
How is your company reacting to them?
We offer free Uber pick-ups/drop-offs, concierge service where our staff picks up and drops off vehicles for our clients for free, and we are bringing more loaner cars online to make the convenience of repairs and maintenance on our customers' vehicles more efficient.
What do you see as your biggest challenge for the second half of the year?
Momentum from the first half of the year will need to be followed by improving every aspect of our external and internal customer experience. More and more competitors will be forced to up their level of service and employee compensation, so we must stay ahead of the competition, both externally and internally. We must continue to make it easier for our customers to do business with us without sacrificing quality and we must make WAC one of the best places to work for in the country.
How has your company addressed those challenges?
We have adjusted our PTO program, enhanced our paid holidays and we are currently changing store hours to help our team have a better work-life balance. We have worked hard to engage our employees in a more meaningful way through constant communication and by setting goals and measuring against them. We have promoted goodwill in our community and to our customers through monthly marketing and media concepts that reward our existing customers loyalty and simultaneously celebrate our new customer groups. We continue to use digital technologies in order to remain timely with our communication with each and every one of our customers.
Are you experiencing staffing shortages?
We have had minimal impact of staffing shortages. During COVID, we invested in our team members and outwardly recruited talent to staff up for the post-COVID marketplace.
What are you doing to attract qualified job applicants?
Offering opportunity and a five-day work week are at the top end of work-life balance. We pay at the top end of our market, and we live a very family-based value system that is important to the Wiygul family.
Have you been able to increase wages this year?
Yes, wages have increased along with sales increases as our cost of goods for labor and our sales staff expense are directly tied to increases in revenue.
If so, by what percentage?
15% to 20%
