The Canadian auto repair industry is racing against an unexpected roadblock – a growing shortage of skilled labour to meet the ever-increasing demand. This issue comes at a time when the demand for auto repair services is at an all-time high, coupled with an acceleration in inflation that has implications for both businesses and consumers. It's time to tach-up the prices, wages, and vacancies in order to address this pressing concern.
A Shift in Gear: The Current State of the Auto Repair Industry
The auto repair industry, traditionally robust and resilient, is feeling the pinch. The growing demand for auto repair services, propelled by a combination of factors including the surge in used car sales, the aging vehicle population, and the increasing complexity of vehicle technologies, coincides with rising inflation.
Moreover, the pandemic accelerated a shift towards personal mobility due to concerns over public transport, further driving demand for both new and used vehicles. This has led to a significant increase in the need for maintenance and repair services. Concurrently, the supply side of the labour market has been hard-pressed to keep up with this accelerated demand, precipitating a broad-based shortage of skilled workers in the auto repair industry.
Pedal to the Metal: Inflation and Labour Shortage in the Industry
Inflation has accelerated over the past year, and it’s filtered down to both businesses and consumers. In August 2022, prices for motor vehicle engines and parts manufactured in Canada were up 6.8% compared with August 2021. Consumers paid 7.9% more year over year for passenger vehicle parts, maintenance and repairs.
This has translated into increased expenditure for Canadian households on maintenance and repair of vehicles. In the second quarter of 2022, they spent a total of nearly $3.5 billion, up from $3.1 billion in the same quarter of 2021 and nearly $2.3 billion in the same quarter of 2020.
Meanwhile, like many sectors, there is a shortage of skilled labour to meet demand. There were 11,645 job vacancies for automotive service technicians in the second quarter of 2022, more than double the 5,730 openings in the previous year. Their average hourly wage also ticked up by over $2 during the same period to $26.90, and to $28.60 for positions requiring at least a certificate or diploma.
The job vacancy numbers are up against the backdrop of 339,820 new motor vehicle registrations in the first quarter of 2022, down by 9.6% from the first quarter of 2021, when the global semiconductor shortage began. This signifies that when the semiconductor supply situation remedies, and an increase in vehicle production and sales likely follows suit, an even more severe shortage of skilled labour could arise, thereby exacerbating the problem (Source: StatCan).
The Road Ahead: Course Corrections and Redefining Success
Attempts at course correction begin at the leadership level in many cases, with a number of shops moving away from paying technicians by flag hours (as previously mentioned) and moving towards conventional salaries, some with the addition of a commission based on revenue, split by the individual or by gross shop sales. This measure removes some of the pressure of beating the clock on the book’s labour hours for a given job, a situation that normally does as much to encourage speed as it does contribute to technician burnout on trickier jobs that eventually exceed the book time, or worse, cause mistakes.
The auto repair industry can consider the following solutions:
Upskill Current Workforce: Introduce specialized training programs to equip existing workers with the latest knowledge and skills, keeping them updated with the changing demands of the industry. Particularly, given the significant increase in battery electric (+135%), hybrid electric (+93%) and plug-in hybrid electric (+79%) vehicles in the first quarter of 2022, there needs to be a major shift in training focus. Although gasoline-powered vehicles accounted for over 4 in 5 (83.3%) vehicles registered in the first quarter of 2022, their numbers are down 6.6% from two years prior. In other words, a gradual shift away from the internal combustion engine means a shift to a more electric feel for training and apprenticeships (Source: StatCan).
Attract New Entrants: Campaigns can be launched to attract more people into the profession. This could involve dispelling misconceptions about the industry, showcasing the rewards and benefits of a career in auto repair, and offering incentives to new entrants.
Foster Collaboration: The industry could benefit from closer collaboration with educational institutions to create tailored courses that equip students with the skills needed in the modern auto repair industry. Apprenticeship programs, internships, and hands-on experience can be instrumental in cultivating a new generation of auto repair professionals.
The shortage of skilled labour in Canada's auto repair industry, compounded by rising inflation, is a national concern that affects auto repair shops and consumers alike. Addressing this requires a tach-up in multiple areas – from upskilling current workers and incentivizing new entrants, to leveraging foreign talent and fostering collaborative partnerships. As the industry navigates these speed bumps, proactive measures and innovative solutions can ensure its healthy and sustainable growth.
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