If you want to grow your auto repair shop profitably, you need more than cars lined up outside and a gut feeling about how the business is doing. You need data that tells the real story. That’s where KPIs (Key Performance Indicators) come in.
Here’s the truth: most shop owners are missing the mark on KPIs. Some track the wrong numbers, like car count or total sales. Others don’t track enough to see the big picture. And plenty aren’t tracking anything at all.
When you don’t measure the right KPIs, decisions are made on guesswork instead of facts. That leads to wasted labor hours, messy margins, and pricing problems that quietly chip away at your bottom line.
The good news? You don’t need 25 different metrics to fix it. You just need to focus on the handful of KPIs that matter most.
KPIs filter out the distractions and highlight the numbers that truly measure your shop’s performance. They help you:
Without them, you are left reacting to problems instead of staying ahead of them.
KPIs turn financial statements into tools you can actually use to run a stronger shop. For more on financial statements for automotive repair, read our blog about how often auto repair shops should get financial statements.
These are the metrics top-performing auto repair shops track consistently. They are also the numbers that struggling shops often overlook.
Gross profit is the foundation of your shop’s financial health. It determines what you can pay your team, how much you can reinvest, and what you take home. If you aren’t measuring it, you’re making decisions without facts, which often leads to financial surprises.
Target benchmarks:
Falling short of these benchmarks means you are underpricing, over-discounting, or letting costs creep in. For example, if your parts margin is only 40%, you are giving away 10–15% of your profitability before the car even leaves the bay. Shops that consistently track gross profit know exactly how much room they have to reward staff, expand, or handle slow months.
Are you making a profit on parts? Watch this video to find out how to catch unbilled parts and stop the profit leak↗︎.
Your posted labor rate and your effective labor rate are rarely the same. The posted rate is what you charge per hour on paper. The effective rate is what you actually collect after discounts, unbilled hours, and inefficiencies.
Formula: Effective Labor Rate = Total Labor Sales ÷ Total Billed Hours
If your effective rate is more than 10–15% lower than your posted rate, money is slipping through the cracks. For example, if your posted rate is $120 per hour but your effective rate drops to $100, that $20 gap on every billed hour adds up fast. Over a month, it could mean thousands of dollars in lost profit.
Use our Labor Rate Calculator to see where you stand.
For example, if a tech is scheduled for 40 hours and you only bill 30, that’s 75% productivity. If they work 10 hours on a job but you only bill 8, that’s 80% efficiency.
Both numbers matter. Low efficiency means jobs are taking longer than you charged for. Low productivity means you aren’t keeping your bays full. Strong performance in both areas maximizes profit per technician and keeps the shop floor running smoothly.
ARO measures the average dollars spent per repair order. It reflects both the value of each job and how effectively advisors present needed work.
Formula: ARO = Total Sales ÷ Car Count
A shop doing 300 cars a month at $300 ARO brings in $90,000. Another shop doing 150 cars a month at $600 ARO also brings in $90,000, but with fewer cars, less wear on the team, and often higher margins. Focusing only on car count hides these differences. ARO shows whether you are capturing the full value of every car that comes through your door.
Car count is one of the most overvalued metrics in auto repair. By itself, it doesn’t tell you much. The key is to measure car count alongside ARO.
For example, if your car count rises from 200 to 250 but your ARO drops from $500 to $350, you’re doing more work for the same revenue. That strains your techs, service advisors, and bays without actually improving profit. The best shops watch both numbers together to ensure volume is profitable, not just busy.
If you want one KPI that pulls the others into a single number, track Gross Profit per Hour.
Formula: Gross Profit per Hour = Total Gross Profit ÷ Total Available Labor Hours
This KPI shows exactly how much profit your shop makes for every hour it is open. If your shop generates $60,000 in gross profit in a month with 1,000 available labor hours, your Gross Profit per Hour is $60. Tracking this number regularly gives you a clear, simple way to judge if your shop is moving in the right direction.
You don’t need an expensive dashboard to get started, but you do need consistency. Shop management software makes it easier, but even a simple spreadsheet works if you stay disciplined.
Here’s where to begin:
For example, if your Effective Labor Rate is too low, you might revisit how often discounts are given. If your ARO is weak, it could mean your advisors need support presenting inspections. The key is to focus on progress, not perfection.
The shops that win aren’t always the busiest. They are the ones where owners know their numbers and use them to lead. Tracking KPIs helps you:
The result is a shop that grows profitably and sustainably, instead of just getting busier without earning more.
Turn your numbers into a game plan.
KPIs give you the facts but using them effectively takes strategy.
Book a discovery call and let’s connect the dots between your numbers and your shop’s growth.