Are you actually making money? Most workshop owners can tell you how busy they've been, but not whether that busyness translated to profit. Tracking the right KPIs (Key Performance Indicators) is the difference between guessing and knowing.
This guide covers the 10 most important metrics for NZ automotive workshops, with benchmarks from industry data and simple formulas you can use today.
Target Net Profit
15-20%
of total revenue
Tech Efficiency
85%+
billed vs available hours
Lost Revenue
$50-100k
from poor efficiency (per tech)
↓ In this guide
📊 Why Workshop KPIs Matter
Workshop owners who track KPIs consistently report 20-30% higher profitability than those who don't. Why? Because you can't improve what you don't measure.
KPIs help you:
- Spot problems early — declining efficiency or rising costs show up in the numbers before they become crises
- Make informed decisions — should you hire another tech? Raise prices? The data tells you
- Set meaningful goals — benchmarks give you targets to aim for
- Track progress — see the impact of changes you make
💡 Pro Tip
Don't try to track everything at once. Start with 3-4 KPIs that matter most to your current situation, then add more as tracking becomes habit.
💰 Financial KPIs
1. Gross Profit Margin
Your most important profitability metric. This tells you how much money is left after direct costs (parts and labour) to cover overheads and profit.
Formula:
(Revenue - Cost of Parts - Labour Cost) ÷ Revenue × 100
| Performance Level | Gross Profit Margin | What It Means |
|---|---|---|
| Poor | Below 50% | Pricing too low or costs too high |
| Average | 50-58% | Room for improvement |
| Good | 58-65% | Healthy workshop |
| Excellent | 65%+ | Top performer |
To improve gross profit margin, review your parts markup strategy and labour rates.
2. Net Profit Margin
The bottom line — what's left after all expenses including rent, utilities, insurance, and admin costs. This is what actually goes in your pocket.
Formula:
(Total Revenue - All Expenses) ÷ Total Revenue × 100
| Workshop Type | Typical Net Margin | Target |
|---|---|---|
| Independent Mechanic | 8-15% | 15-20% |
| Specialist Workshop | 12-18% | 18-25% |
| Panel & Paint | 5-12% | 12-15% |
| Tyre Shop | 6-12% | 12-18% |
⚠️ Warning Sign
If your net margin is below 10%, you're working hard but not building wealth. One bad month could put you in the red.
3. Average Repair Order (ARO) Value
The average dollar amount per job. Higher ARO usually means better profitability because fixed costs (booking, invoicing, customer communication) are spread across more revenue.
Formula:
Total Revenue ÷ Number of Jobs
NZ Benchmark: $350-$600 for general mechanical work. Specialist workshops often see $600-$1,200+.
To increase ARO:
- Perform thorough vehicle inspections and recommend needed work
- Bundle related services (e.g., timing belt + water pump)
- Focus on higher-value services rather than competing on price for basic work
4. Parts-to-Labour Ratio
The relationship between parts revenue and labour revenue. This tells you if your service mix is balanced.
Formula:
Parts Revenue ÷ Labour Revenue
| Workshop Type | Typical Ratio | Ideal Range |
|---|---|---|
| General Mechanic | 0.8:1 to 1.2:1 | 1:1 |
| Auto Electrical | 1.5:1 to 2:1 | Higher parts focus |
| Diagnostic Specialist | 0.3:1 to 0.6:1 | Labour-heavy |
If your ratio is too low (labour-heavy), you may be under-charging for parts. Review your parts markup matrix.
⚡ Efficiency KPIs
5. Technician Efficiency (Productivity)
The percentage of available hours that are actually billed to customers. This is the most critical operational metric for workshop profitability.
Formula:
Billed Hours ÷ Available Hours × 100
Example: A tech works 8 hours but only 6 are billed = 75% efficiency
| Efficiency Level | What It Means | Annual Impact (per tech) |
|---|---|---|
| Below 70% | Significant unbilled time | $60k+ lost revenue |
| 70-80% | Average workshop | Room for improvement |
| 80-90% | Well-run workshop | Strong performance |
| 90%+ | Top performer | Maximised revenue |
Where does unbilled time go?
- Waiting for parts
- Diagnosing issues that weren't quoted
- Rework and comebacks
- Admin tasks, cleaning, meetings
- Poor job scheduling (gaps between jobs)
6. Labour Recovery Rate (Proficiency)
How much you bill compared to what you could bill if every job was done in standard time. This measures how well you're capturing the value of skilled work.
Formula:
Hours Billed ÷ Hours Taken × 100
Example: A job is quoted at 3 hours but the tech completes it in 2.5 hours = 120% proficiency
Target: 100%+ for experienced technicians. Rates below 90% suggest quoting issues or skill gaps.
✅ Best Practice
Use flat-rate labour times from databases like Autodata or Mitchell. This ensures consistent quoting and helps identify when techs are beating or missing times.
7. Work in Progress (WIP) Value
The total value of jobs currently in your workshop that haven't been invoiced. High WIP ties up your cash and can indicate bottlenecks.
Formula:
Sum of all open job values (parts ordered + labour completed but not invoiced)
NZ Benchmark: WIP should typically be 3-5 days of revenue. Higher than 7 days suggests jobs are getting stuck.
Common causes of high WIP:
- Waiting for customer approval
- Parts on backorder
- Jobs not closed off promptly
- Payment delays
👥 Customer KPIs
8. Customer Retention Rate
The percentage of customers who return for repeat business. Acquiring new customers costs 5-7x more than retaining existing ones.
Formula:
(Customers at End of Period - New Customers) ÷ Customers at Start × 100
| Retention Level | What It Means |
|---|---|
| Below 50% | Serious issues — customers aren't coming back |
| 50-65% | Average — significant churn |
| 65-80% | Good — solid customer base |
| 80%+ | Excellent — strong loyalty |
Improve retention with automated service reminders and consistent communication.
9. Average Vehicles Per Customer
How many vehicles each customer brings to you. Higher numbers indicate trust and loyalty.
Formula:
Total Vehicles in Database ÷ Total Unique Customers
NZ Benchmark: 1.3-1.8 vehicles per customer for suburban workshops. Higher in family-oriented areas.
Strategies to increase:
- Ask customers if they have other vehicles
- Offer family/fleet discounts
- Send service reminders for all registered vehicles
10. Quote Conversion Rate
The percentage of quotes that convert to actual jobs. Low conversion means you're spending time quoting work you never get.
Formula:
Jobs Won ÷ Total Quotes × 100
| Conversion Rate | What It Means |
|---|---|
| Below 40% | Price shoppers or pricing issues |
| 40-60% | Average — room for improvement |
| 60-75% | Good conversion |
| 75%+ | Excellent — strong trust & value proposition |
Low conversion rates may indicate:
- Prices too high (or customers perceive poor value)
- Slow quote turnaround — customers went elsewhere
- Poor follow-up on outstanding quotes
- Attracting the wrong type of customer (price shoppers)
📈 How to Track These KPIs
Manually tracking KPIs in spreadsheets is possible but time-consuming. Modern workshop management software calculates most of these metrics automatically.
What to look for in software:
- Real-time dashboards — see KPIs at a glance, not just at month-end
- Job costing — automatic parts and labour cost tracking
- Technician reporting — efficiency and proficiency by tech
- Customer analytics — retention, vehicles per customer, job history
- Xero integration — financial data flows automatically for accurate profit calculations
Track Your Workshop KPIs with Hoist
Hoist automatically calculates key workshop metrics and displays them in real-time dashboards. See your efficiency, profitability, and customer retention at a glance.
Start Free Trial✅ Your KPI Action Plan
Here's how to get started with workshop KPIs:
Choose 3-4 KPIs to start
Gross profit margin, technician efficiency, and customer retention are a good starting set.
Establish your baseline
Calculate your current numbers. Don't judge yourself — you need to know where you're starting.
Set realistic targets
Use the benchmarks in this guide. Aim to improve 5-10% over 6 months.
Review weekly/monthly
Schedule time to review KPIs. Many workshop owners do this Monday morning or end of month.
Take action on insights
KPIs are only useful if you act on them. Low efficiency? Investigate the causes. High WIP? Speed up invoicing.
🎯 Key Takeaways
- ✓ Track gross profit margin — target 58-65% for healthy profitability
- ✓ Monitor technician efficiency — 85%+ billed hours is the goal
- ✓ Measure customer retention — aim for 70%+ returning customers
- ✓ Use software — manual tracking is tedious; automate where possible
- ✓ Review regularly — weekly check-ins prevent problems from growing
❓ Frequently Asked Questions
Sources & Further Reading