Why Do Automotive Repair Shops Charge Diagnostic Fees? The How’s and Why’s of Your Vehicle Repair and What You are Not told About Factory Warranties.
Most vehicles produced since the mid 1980’s are run by at least one, usually several computers or control modules. Today’s most advanced modern cars may have up to 40 or more computers that communicate and share data on a Fiber Optic Network (known as CAN). The engine is managed by an electronic control module, or ECM. These control modules monitor and control the fuel, emissions, temperature, the timing of the engine, braking, starting, charging, transmission shifting and speed. Automatic Transmissions are controlled by a transmission control module or TCM. The electrical accessory systems that add luxuries like power windows, door locks, seats, mirrors, heating and air conditioning, are also run by a control module, called a body control module or “BCM”.
When one of these systems in your vehicle starts malfunctioning, a driver is alerted by either the illumination of a check engine light or another notification, or possibly, your vehicle won’t start, or the fuel economy and performance level has changed, or possibly another symptom. In order to properly diagnose what is going on with the vehicle and conclude what the proper repair would be, it takes knowledge, equipment and time for the automotive technician to run the needed tests. Unfortunately, when you tap into the vehicle’s ECM it does not tell you what is wrong. In fact, the ECM makes adjustments and changes to compensate for the symptom that it is seeing, so the vehicle will still operate as close to normal as possible. The diagnostic process starts with retrieving the code or codes from the ECM. These codes give you the circuit or circuits that are affected, and what the vehicle’s computer is seeing. (This gets confusing for the public, “Do-it-Yourselfer” (DIY), and untrained mechanic because these circuits are often named after the sensor from which they are connected. Often the failure is caused upstream of the sensor and the computer is reporting that it is receiving irregular signals from the sensor.) From there a qualified diagnostic technician follows a diagnostic path of pinpoint testing to find the source of the problem.
A doctor charges to examine and run tests on patients that are having symptoms to find the answer. An automotive repair shop too, needs to charge for that testing time. To be honest this diagnostic process can be the most complicated part of vehicle repair. It takes a specialized diagnostic technician to perform the tests on the vehicle. These technicians, constantly continue to further their education, training and upgrading of their tools and equipment, since the systems on vehicles are constantly evolving and changing.
So don’t be surprised when you are quoted a diagnostic fee next time your vehicle acts up. In the end it really is less expensive to pay for a proper diagnosis, than it is to replace parts based on the hunch factor.
The cost to fix a vehicle depends on (1) what is wrong with the vehicle, (2) the repair facility you take your vehicle to for repairs (or whether you try to fix it yourself), (3) the prevailing labor rates in your area, (4) the year, make and model of your vehicle (luxury imports are always more expensive to fix!), (5) the availability of parts for your vehicle (are the parts only available from a new car dealer or can they be purchased from a local auto parts store?), and (6) how much you are willing to pay for repairs. In most cases, you will pay for what you get. In other words, the better and more specialized the repair shop, the better and more trained its employees will be, and the better and more expensive the equipment that is used.
Auto Repairs are Unavoidable
Sooner or later, something will break, wear out or fail on every car and truck. Parts that most often wear out include brakes, tires, mufflers, batteries, filters, alternators, starters, water pumps, belts and hoses. At high mileage, you may experience engine or transmission problems.
Nothing lasts forever, so when your vehicle needs repairs you obviously want to know how much it is going to cost — hopefully BEFORE the work begins. Most reputable shops should give you an estimate that lists which parts need to be replaced, the labor charge to replace those parts, any charges for diagnostic time, and any additional charges for miscellaneous items such as shop supplies, hazardous waste disposal fees, etc.
Repair Labor Rates
Labor is usually the most expensive item on most auto repairs. The longer it takes a technician to replace a part, the more you are going to pay. Accessibility (or the lack thereof) is a major issue on many late model vehicles. Some parts can be very difficult and time-consuming to replace. Time is money, and most shops charge $80 to $160 or more PER HOUR for labor (note: the technician usually receives less than HALF of the labor charge!).
Why are the hourly labor charges so high? Because auto repair is often hard, dirty, back-breaking work that requires a lot of training, skill and experience, and a lot of expensive tools and equipment. The average technician has over $20,000 invested in his tools, and the shop where he works may own hundreds of thousands of dollars of service equipment. Most of the hourly labor rate you pay goes to shop overhead (things like rent, utilities, equipment purchases & maintenance, employee benefits, etc.) and profit (which every business needs to say in business otherwise they go out of business). Even the best and most profitable shops are only able to collect between 14% and 18% profit.
Flat Rate
The labor you are charged on your repair bill is usually based on a standard “flat rate” estimate. Repair jobs are classified by year, make and model, and the times can vary a great deal from one vehicle to another. The labor time required to perform a certain task will vary depending on how much other stuff has to be removed to get at the part, the average degree of difficulty of the job, whether any special tools and procedures are required, the age of the vehicle and so on. Changing a starter on one car might be a relatively simple task if the starter is easily accessible, but on another vehicle you might have to remove part of the exhaust system or loosen a motor mount and raise the engine to replace the starter.
All of this is supposedly taken into account when a vehicle manufacturer or aftermarket manual publisher comes up with flat rate tables for various repair jobs on various vehicles. The flat rate information is published in printed or electronic format, and is then used by car dealers and repair shops to prepare repair estimates. Sometimes a shop will add extra time to an estimate depending on the vehicle’s condition, or from previous experience if they feel the published flat rate does not allow enough time to complete the job.
If the actual time it takes to repair your vehicle is LESS than the estimated flat rate time, you still pay the flat rate. Why? Once a technician is assigned a time to perform a repair, it is unethical and illegal to take it back or reduce it. The shop makes additional profit on the job, and the technician who does the work often receives a bonus for beating the flat rate (a good top-notch technician can almost always beat most flat rate times). If the actual time it takes to fix your car is MORE than the flat rate, you get billed for the extra time. The reality is each and every car is a different animal, even of the exact same make and model, and is used and/or abused differently by each owner. It is unethical and against the law in most states to charge more than 5% of the original bill without notifying the customer first.
Ideally, you should only pay for the ACTUAL time it takes to fix your car and not one minute more or less. But that’s not the system most dealerships or repair shops use for obvious reasons.
Many shops also have a separate DIAGNOSTIC fee. This covers the time it takes to connect a scan tool to your vehicle and read out any fault codes that may be in the vehicle’s computer. The diagnostic charge typically ranges from $80 to $180 or more or 1 hour of labor or more. It used to be customary to start the diagnosis time at one hour of labor. However, modern cars are packed with so much technology that it takes almost ¾ of an hour to communicate with the cars’ computer network. Therefore, initial diagnostic quotes are growing.
The cost of the parts to fix your vehicle will depend on where the repair facility buys their parts, and how much they mark them up. As a consumer, you usually pay the FULL RETAIL PRICE when you have a repair facility install the parts for you. They typical markup is 30 to 40%, though it may be less on some parts depending on the discount the shop gets from their supplier or distributor. Yes, you could save some money here by shopping around and buying the parts yourself — BUT most shops will NOT install parts that they do not purchase directly. It’s like taking a bag of groceries into a four star restaurant and asking the chef to use your groceries to prepare your meal. Most shops have brand preferences and will only install parts they know are from quality suppliers. That cheap alternator from China may cost $50 less than the brand name OEM alternator, but it will lack the durability and reliability of the OEM unit.
As a rule, aftermarket parts are usually less expensive than OEM (Original Equipment Manufacturer) parts. But the quality may not be the same, so stick with brand name aftermarket parts. In some instances, the aftermarket parts supplier is also the OEM parts supplier and the parts are virtually the same.
Where To Go
As a rule, independent repair shops are generally less expensive than new car dealers.
Dealerships are typically the most expensive because of their high overhead and extra services they provide, such as loaner cars, and free detailing, and the latest equipment from the manufactures.
Franchised repair facilities such as muffler shops (Midas, CarX, Merlin, etc.), tire dealers (Goodyear, Firestone & independents) and retailers (PepBoys, Sears, etc.) are also very competitive with their pricing. However, they typically employ low-grade, low-paid, and under-trained technicians and use average equipment in order to keep costs low and extract a high profit. Statistics have shown that most of the disgruntled automotive consumers in the market are a result of having had vehicle repair work done at such places.
Independent repair shops and specialty repair shops (those who only work on imports or specialize in alignments, brakes, transmissions, air conditioning, electrical, etc.) tend to be small family-owned and run businesses. Independent repair shops often have the most experienced technicians.
Specialty shops will typically have equipment on par with that at the Dealership and therefore are generally more expensive than general repair shops, but still less than the Dealerships. They are experts at what they do and have access to better quality parts than the general repair shop. You’re usually on a more personal level with these people, and may even talk face-to-face with the technician who works on your car.
….but I have a Warranty!
We often hear the cries of customers, “My car fell apart right after the warranty ended!”: “But it says lifetime fluid…”: “Why do I need to replace my spark plugs? It’s not a 100,000 miles yet.”; “But It says I don’t need to change my oil for 15,000 miles?” Often, it is not your fault. The truth is that you have been partly misled or better yet, not properly informed about your vehicle. There seems to exist a conspiracy amongst automotive manufacturers that what the customers don’t know, won’t hurt the manufacturer. The truth is automotive manufacturer warranties are actually the amount of time the manufacturer believes (calculates) the vehicle can survive with the least amount of money spent on repairs and maintenance or investment required.
Anything labeled “lifetime” really means the “life of the warranty.”