Local Auto-Repair Shops Struggle to Keep Business Running

By Hunter Clauss | Monday, May 17, 2010
Michael Melfi

Javier Pedraza, Jorge Saldano, and Michael Melfi, owner of C-M Motors. "I've been through three recessions. This is worse than a recession." Photo by Mike Fourcher.

Michael Melfi has helped navigate Lincoln Square-based C-M Motors through two economic recessions since he took over the auto-repair shop in 1985, but he says the current downturn has left him with few choices to keep his shop running.

“It’s almost put me out of business. I’m that close to shutting down,” he says. “I’ve leaned [the shop] down to the point where I only have one more year.”

C-M Motors, at 4534 N. Damen Ave., isn’t the only auto-repair shop in the Lincoln Square, Northcenter, and Ravenswood area that’s struggling to stay afloat. Owners of other shops say they’re in survival mode as they grapple with a sharp decrease in customers, as well as the side effects of the federal “cash for clunkers” program.

Melfi says C-M Motors took in up to $100,000 a month in revenue before the recession hit. He says he’s now down to $38,000 a month. In the past, Melfi says he was able to employ two people to work behind the front desk, three managers, and 11 technicians. Now it’s just him and five technicians, and he says he uses his paycheck to help pay his remaining employees. “You can’t get any more down to the bone then this,” Melfi says. “I’m down to the point where I can hardly pay the rent here.”

One reason Melfi and other auto-repair shop owners gave for their financial troubles is that car owners are cashing in insurance checks that would have normally been used to pay for repairs stemming from an accident. There’s nothing illegal about cashing in an insurance check, but not using the money to get a car repaired could lead to headaches down the road, says Melfi. He says insurance companies can sometimes miss things in their inspections, and car owners could end up losing money from their insurance companies if they don’t take their cars in to the garage.

“Additional damages are found once the car is opened up,” he says. “People are literally cheating themselves out of that [money], because there’s no recourse for them to go back to the company a year or two years later when they decide to fix the car. Having spent the money for it already, they can’t reopen the claim.”

Bob Wasserman

Bob Wasserman, co-owner of Capital Auto Body. "'Cash for clunkers' took a lot of SUVs and minivans off the road. That was a lot of my business." Photo by Mike Fourcher.

Bob Wasserman is with Capital Autobody and Repair, 2839 Elston Ave. He says he has also seen customers use their insurance checks to pay rent and other cost-of-living expenses instead of getting repairs done. Wasserman says he has seen a 25- to 30-percent drop in business, and as a result, he’s had to scale back by cutting his crew from an all-time high of 20 employees down to eight. “We’re definitely not running at full capacity,” he says.

Wasserman also says last year’s “cash for clunkers” program had a big impact on his shop. Steve Marvin with the Northcenter-based Transtatic Plus, 3717 N. Ashland Ave., says he has also seen a drop in customers when car owners traded old cars for newer ones under the federal program.

“It helped out the dealers,” Marvin says. “But people got rid of those old cars and stopped working on them, which kind of hurt the aftermarket industry.”

Marvin says he used to have a full-time employee who worked at the shop, but he now has a temporary employee who will only come in when there’s business. “For the last two weeks, I’ve needed five hours of help from the temporary employee,” he says. “Before [the recession], it was 40 hours a week—no problem. Not even taking a lunch, just working throughout the day.”

Marvin says the first and last weeks of the month don’t see a lot of business, but the middle of the month brings in enough money for him to keep the shop open. Though, Marvin says he’s beginning to see business slow down during the second week.

“That first week, I’m not really scared because I’ve seen the trend, but when it goes into that second week, you better believe I’m getting scared,” he says. “I’ve got bills to pay, and there hasn’t been any concessions for me.”

Steve Marvin

Steve Marvin, owner of Steve's Transtastic. "Business has been real slow." Photo by Mike Fourcher.

Marvin says he hopes things will get better in three years when leases for new cars purchased under the “cash for clunkers’ program begin to expire. Until then, Marvin says he’ll rely on the leaflet marking campaign he has used in the past to help advertise his shop. Marvin also says he’s been able to develop a support group with friends in the auto-repair industry. He says if he doesn’t have a tool he needs in the shop, he can call up a friend and see if he has it.

Wasserman says he hopes to ride out the recession by making his shop more environmentally friendly. He says his shop currently uses water-based paint instead of solvent-based paint. Wasserman also says he’s looking into electric-car technology and how his shop could cater to that market, but he says there are no definite plans yet. Wasserman says he hopes his move toward more environmentally friendly technology will help his shop get through the recession.

“There are good days and bad days, but what are you going to do? Cry about it?” he says.

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