The portfolio spans a factor of nearly one hundred and sixty in price, from a R135 service-department wash to a R21,500 paint protection film application. Understanding which of these actually earns money requires measuring contribution per labour hour rather than margin per job,because labour hours, not vehicles, are the constrained resource.

The full service and price schedule

Table 10. Service portfolio: price, labour content and contribution per labour hour

Prices are FY2028 levels before annual escalation and before the 10% dealer volume rebate, which is applied within the model. Contribution is stated after consumables and direct labour at the applicable wage grade, before site fixed costs and head office.

What the contribution analysis actually says

• Protection work is in a different economic category. Ceramic coating generates R752 of contribution per labour hour and paint protection film R818, against R213 for a service-department wash. Every protection bay hour is worth several volume bay hours, which is why the studio layout in Section 14 allocates three of eight bays to protection despite protection representing a small minority of vehicles.
• Dealer volume work is not high-margin, and is not supposed to be. Service-department washing carries the lowest contribution per hour in the portfolio. It is included because it is the volume that makes an embedded team fully utilised, because it is contractually bundled with the higher-value preparation work, and because it is the entry point that gets Highveld inside the dealership at all.
• Certified pre-owned preparation is the best dealer work. At R882 for 5.5 hours it earns R78 per hour,materially better than standard preparation, and growing as a share of dealer volume as manufacturer CPO programmes expand. Shifting mix toward CPO work is the single most accessible margin improvement available to management.
• The express valet is a marketing cost that happens to break even. Retail walk-in valeting exists to fill volume bays between booked work and to introduce customers to the brand. It should not be scaled.

Pricing strategy and escalation

Retail prices escalate at 6.0% a year and contract prices at 5.0%, against wage escalation of 6.8%. This is a deliberately unfavourable assumption: contract pricing lags wage inflation, which compresses margin on the dealer channel over time and is the single largest driver in the sensitivity analysis. Dealer contracts are modelled with annual escalation clauses linked to a published index, but with a negotiating position weaker than the company’s own cost inflation.

Contract pricing is the largest value driver in the tornado analysis in Section 31, swinging enterprise value by 41.3 million rand,more than three times the base-case enterprise value itself. Management should treat annual dealer price negotiation as the highest-leverage commercial activity in the business.