There is news that Ford CEO can't find dealership mechanics for $120k a year.
Something is completely wrong in that shit.
AFAIK, dealership mechanic get around $30 per hour (at least at GM, don't think it is much different for Ford). And that hour is not real hour, but hour from Service Bulletein or whatever corporation paper, where times for repairs and service set. This times are underestimated even for a new car, for used one real times will be times more, but mechanic still will be paid according to the corporation norms.
Let's take, say, water pump replacement. All operations will sum up to around a hour. So, $30 to mechanic. Pump itself is overpriced original for $100. But dealership will charge you something like $800.
So, in ideal impossible conditions, when all bolts and nuts come out easy and there are no any unforeseen problems usual when working on cars, with $30/hour mechanic and 8-hour 5 working days a week mechanic will get only 52 * 5 * 8 * 30 = $62.4k for 52 weeks a year working without vacations. Looks Ford ready to pay even twice more than average.
But that's not what attracted my attention.
Dealership with $800 check for $30 work and $100 spare part get $670. What the fuck? Where that money go, and why actual mechanic job is 22 times cheaper than money dealership take?
OK, let's imagine rent, taxes, electricity, consumables, other dealershp employees salaries and all other necessary things. But I can't imagine that they actually cost $670/hour per each car repair stand in dealership service. Especially when mechanic often have to buy normal tools himself to be able to do his work, because dealerships provide some cheap garbage that breaks and then mechanics charged by dealership for this broken tools. I could believe in something like $100/hour, even $200/hour max, but definitely not $670.
Either there is something completely broken, either there is some total scam with 200-300% profit is going on in automotive industry. Like drugs or weapons.
Yes, I know that dealerships usually a franchise, the thing I can't figure out is that huge difference between service cost for dealership and customer check.
If that difference is real average business expenses, than how could business in US be attractive for anyone.
If that somehow specific only to automotive business, then what's the real reason for such expenses - huge franchise payments to franchisor?
If neither - why so huge difference between cost of service and customer check? Dealerships make enormous profits on service?
Workman’s comp & liability insurance alone can cost a dealership over 2 million per year.
So dealership hire low wage mechanics and cover their low skill with expensive insurance? Very strange business model. Profiting insurance companies instead of profiting own business....
Lawsuits are insane here, and insane risk for businesses. So insurance is insane.
Your mechanics can sue you, your customers can sue you, your salespeople can sue you, hell, someone who runs off the road and crashes into your cars can sue YOU for having them “too close to the road was distracting”…
In addition to insurance for hail damage, tornadoes, fires, flooding, earthquakes etc.
Welcome to American business. Regulations require equipment to capture used petroleum products and lubricants (and I'm ok with that). Most businesses are top heavy with management in my opinion, many times due to regulations (it's how government creates jobs in the US). Most large companies have shareholders and have a fiduciary responsibility to maximize profits.
That's can't be that expensive. Even used AC refrigerant is easily captured by the same equipment used for recharging. And most works on the car is not even connected with draining fluids.
So, it is salaries of excessive management workers and/or regulation certification/audit taxes.
What is average dividents per share for automotive industry? I tried to find this data, but either I don't know what to search, either this information show the opposite.
Simple search shows "annual divident yeld" as 0.85% for GM and 4.5% for Ford. It is even lower than inflaton, so there is no any sense to use shares as investment for dividents and looks like main shareholders don't care about profits. IDK, but with such low dividents it is better to zero profits and spend that money on the company growth which is not the case for modern automotive industry - it is shrinking, not growing in terms of valuable real assets like new factories, assembly lines and all that stuff.
Check the shares of Auto Nation, they are one of the biggest dealerships in the country if not the biggest. If any company starts making large profits, the government will find a way to take some of it
Looks like Auto Nation have zero divident yeld.
Interesting. turns out that on average dividents or profit can't noticeably exceed inflation, or else "government will find a way to take some of it".
That's bigger shit than I thought.