Engine replacements: Opportunity or headache?

Motor, Aug 2003 by Seyfert, Karl

Engine replacement work represents either an opportunity or something to be avoided at all costs, depending on your point of view. Which side of the fence are you on?

This has probably happened to you before: A customers car arrives at your shop with the help of a tow truck. A trail of vital fluids traces the crippled vehicle's path all the way from the scene of its demise to your shop door. What has happened is pretty obvious. The engine has gone south, in a big way. After climbing out of the tow truck cab, the customer asks, "What do we do now?" Your answer may be, "That depends."

Each year, an estimated two million engines require major service that causes them to be repaired, rebuilt or replaced. Is your shop participating in that statistic, or do you refer all major engine service to another shop? In this article, we'll look at major engine service and engine replacements from several points of view, and give you some strategies to use the next time a customer asks that inevitable question.

To Do or Not To Do?

There seem to be two schools of thought when it comes to engine replacement work: those who swear they'd radier do any other kind of automotive work, and those who enjoy the work and find it to be profitable and productive.

On the negative side, some say that engine replacements take too much time and can tie up a bay for three days or more, when the same tech could be doing more profitable work. Others complain about warranty issues with engine suppliers when problems occur. On a big-ticket job like an engine replacement, it's believed that one comeback can eat up the profit on three or four engine jobs. And even when the entire job goes perfectly, some complain about feeling "married" to the customer because he now feels you are responsible for everything that ever goes wrong with the car from that day forth.

Are there good reasons for a shop to offer engine replacement service? While some complain about feeling married to the customer after an engine replacement, others see this as a positive. After making a significant investment in the vehicle, you can count on the customer coming back to you for all future work. You may even add some new customers if their regular shop would not do the engine work for them. Also, refusing to do die work may cost you an existing customer. Perhaps he'll take the vehicle to another shop for the work, or he may trade the vehicle in. Either way, you stand the chance of losing that customer for good.

According to Ron Ruppert, Marketing Manager for Recon Automotive Remanufacturers, "By installing a replacement engine in a customers car, the shop owner has assured continued business from that customer, who would almost certainly use a dealerships service department for the next few years because a new car would be covered by a factory warranty. So by selling the customer a remanufactured engine, the shop is retaining business that might otherwise be lost altogether."

Most engine replacements require no special tools, skills or training. Your labor is billed at the full rate, plus there's a markup on the engine itself. To do the job right, there will be additional parts sales for belts, hoses, antifreeze, thermostat, spark plugs, motor mounts, clutch and other parts.

Let's look at it from the customers perspective. An engine failure would have to be considered an unexpected expense. The customer must choose between fixing the vehicle or replacing it with a new or used one. all of these choices represent money the customer didn't plan to spend. Economic incentives like rebates and low- or no-interest financing on new cars may seem to tip the scales in favor of ditching the old car, but it's not that simple.

The average price of a new car is about $20,000. For approximately 10% to 15% of the cost of a new vehicle, a fully remanufactured engine can be installed. This avoids monthly payments that may run for as long as 72 months. In states where registration fees are based on vehicle resale value, additional money can be saved by hanging onto the existing vehicle.

What about replacing the disabled vehicle with a used vehicle? This may seem like a simple solution, but it holds some potential pitfalls. In most cases, the service history of the used replacement vehicle is unmown, or sketchy at best. At least the service history of the customers present vehicle is known.

The argument to repair the engine rather than replace the vehicle is even more persuasive for owners of commercial vehicles.

"The cost of adapting the replacement vehicle for its intended use must be figured into the equation," says Zach Bawel, Vice President of Sales with Jasper Engines and Transmissions. "If the disabled vehicle is equipped with ladder racks or other specialised equipment, these things will have to be installed on the replacement vehicle. Drilling holes or making other modifications to install this equipment automatically depreciates the value of the replacement vehicle."

For your green-minded customers, repairing an existing vehicle also offers some environmental advantages. The new engine is likely to be more fuel-efficient, use less oil and produce fewer emissions than the engine it replaced. Further, most replacement engines are recycled products, because most engine blocks and heads are machined and reused, rather than discarded. In recent years, the Automotive Repower Council (ARC) has tried to educate the public on the advantages of "repowering" a vehicle with a replacement engine, rather than replacing the vehicle.