By: Olufemi Esan
Recently, I was at a friend’s garage, he was working on replacing the rear end engine seal of a Lexus 330. I did not meet him in the garage, but I witnessed the removal of the engine and wondered how much he was going to charge the customer for this operation.
For those of us that run a standard garage, the operation attracts:
1. Removal of engine
2. Replacement of the damaged parts, and
3. Reinstall of engine.
Total hourly chargeable would have been about 20 hours and at charge out rate would mean close to N35,000 to N40,000 workmanship.
Will my friend charge N35,000?
I am privilege to know the costing of repairs and maintenance of many countries. There are certain factors that should be considered when calculating quotes or bills that should be paid by customers.
A technician in Europe or America is very well off than their counterpart in Nigeria. Here in Nigeria, technicians are just puppets living in the shadow of the economy. That is the reason for a lot of malpractices.
My friend admitted that there was no how he could charge N35,000. Why? Simply put, the customer cannot afford to pay that. Why? The customers to these workshops ride on the workshops to enjoy their vehicles.
Let us consider the customers compositions. In Nigeria we have seven types of customers attributes and these are:
- The Pretendant: Vehicle users that pretend to be rich but are poor vehicle users. They don’t earn enough to pay for their maintenance costs and can only afford second-hand parts/non genuine parts for their vehicle maintenance.
- The Middleclass: Vehicle users that are well paid, but are sapped by many other family costs that affects spending. Otherwise will prefer to have good services but cannot because of economic reasons.
- The Small Business Owners: Vehicle users that run small businesses and are not strong enough to handle logistics spending. These groups are as good as the middleclass spenders.
- The Rich Owners: Vehicle individual users that have the wherewithal to pay for good services and only want premium services. They can afford the prices of maintenance and have a choice of genuine parts and skill preference.
- The Big Organizations: Vehicle users that run big organizations and have the wherewithal to do good services, but are divided by who runs the logistics and transport. The policy is to have good maintenance.
- The Civil Servant Users: Vehicle users that uses official vehicles of the Ministries and Local Government arms. These are in the class of small business owners and are ready to cut corners to achieve some level of maintenance and still have some money in their pocket.
- Commercial Buses Owners: Vehicle users that uses the vehicle to commute people on a commercial basis. These have no basis for good services, but to have the vehicle moving at all cost. No intention is made to maintain except breakdown maintenance.
These are the composition of the clientele of our maintenance industry in Nigeria; and now let’s look at the contribution and pattern of vehicle use in the industry.
Only the Rich and Big Organizations have the money to spend to achieve good maintenance. And the percentage of this group is just 18 percent of the total vehicle users; and those that cannot afford good repairs are in the 82 percent bracket of users.
What is the World Standard deviation for charging maintenance costs? For close to 40 years in the motor industry, I have come to realize that most charges everywhere and even for generating a business plan is at a ratio of 1:2 that is 33percent of every quote of bill goes to workmanship, while the cost of parts average 67 percent.
In other words, if the bill for maintenance is N45,000; Parts share of bill at 67 percent of bill will mean N30,150. Workmanship share of 33 percent will mean N14,850.
This is obtainable from the average International Standard in Billing. The question is; can an average bill of the 82 percent patronage yield a profitable business venture (33 percent) for the technician of Nigeria?
The answer is “NO”. Where lies the fortune of the Nigerian technicians?
In only complying with the international standards, at least every bill should carry a workmanship minimum charges of 25 percent of the bill/quoted face value.
And unless there is an operational review of the Standard Operating Charges and a strict compliance to standard, the Nigerian Technician will not earn what their counterparts in Africa and other parts of the World earns.
* Mr. Olufemi Esan can be reached on Tel: +2347031931766