Shop Profile – Preferred Automotive Specialists, Philadelphia, PA

Preferred Automotive Specialists, Philadelphia, PA

Owner's motto: embrace change and hold on with both hands to see where the future goes.

Technology, Training and Taking Care of The Community

It’s obvious to any automotive industry observer that things continue to change. One minute, you’re working on drum brakes and rack and pinion steering; the next, you’re facing ADAS and electric vehicles.

Those changes are one of the reasons Tom Palermo loves his job.

“The one thing that is constant about this industry – and one of the reasons I love it so much – is that technology moves very fast. It’s exciting to be part of the changes!”

Palermo, vice president of Preferred Automotive Specialists in Philadelphia, says he accepts and embraces the changes his shop faces without lamenting the past. “We want to be able to provide service to all of our customers – we’ve decided that we’re really going to take hold of technology. We’re going to grab on with both hands and ride it out and see where it takes us.”

Thomas M. Palermo Vice President of Preferred Automotive Specialists

Palermo’s shop was featured on the cover of the January/February issue of ShopOwner in 2015 and he says that there has been significant changes in his business over the past 8 years – most of it for the significantly better.

“We moved from our previous location in Jenkintown (outside Philadelphia) in 2017 because we completely outgrew our facility,” Palermo says. “We actually outgrew it years earlier, but it wasn’t until then that we found our current location. It’s about a 9,500 square foot building, positioned on just under an acre of land, so we have a good amount of parking. To find something like this inside the city of Philadelphia is unheard of.”

Palermo explains that the new building (actually an old Rambler dealership turned multiple automotive repair shops turned failed transmission shop) required a year’s worth of renovation before he could move in, but the time gave him the chance to create his ideal facility. 

“It gave us the opportunity to really focus on reinventing the place. Making it exactly what we wanted, trying to make it comfortable for our employees and have it be as efficient as humanly possible,” Palermo says. “We focused primarily on process and efficiency.  We did some studies of how to set up, where we wanted technicians to be, how we wanted to set up lifts, and what lifts should go where, because it was a big luxury for us to be in a shop that was that size.

Like many owners, Palermo say he’s never had “enough” room in his shop, so through some trial and error, some assistance from industry experts and some from resources like ShopOwner magazine, he and his team were able to address their previous inefficiencies and turn them to advantages. 

“As many shops do, we’ve always been trying to fit ten pounds into a five-pound bag. Over the years, we got good at working efficiently in an inefficient space. It was eye-opening because we realized that some of the things that we thought were efficient were actually going to be inefficient in our new location.”

Palermo says his team was split between locations for about six months as renovations progressed, but he used the shops’s differences as an efficiency experiment. 

“While we were getting out of the one place and coming here, we funneled specific work into this shop and then monitored the productivity. We knew the productivity capabilities of the techs that we brought up here from the other shop. They were known quantities, so we used our people as the control because we knew what they could do.”

Doing so, Palermo says he was able to see how vehicle flow through the shop could be manipulated for maximum profitability. The space offered great flexibility but required unconventional thinking to take advantage of the space.

“One section of the shop had three doors, with about 80 feet of space behind each one,” Palermo says. “Here’s the problem with that. With the kind of work we do, we have some jobs that are in for hours, and we have some jobs that are in for days. Sure, I could put 20 lifts in this place if I wanted to, but the question was, would it make sense and would I box myself in if I just fill the place up with lifts? We changed the layout of the that section, so cars come in one door and then kind of peel off into bays that are on an angle. We did lose a place to put a lift or two, but when we studied it, the efficiency was through the roof.”

Palermo says since they moved, they immediately increased their business, and it’s been doing well every year since.

“It was one of those things that, when we initially thought about doing this, was a little stressful because I wanted to maximize every inch of space in this place,” says Palermo. “Lifts equal dollars, right? So, the thought of missing out on that weighed heavily on my mind. “Nothing is perfect and we’re far from perfect, but we like to think we do a pretty good job.”

Palermo points to two things that may be considered primarily comfort and convenience oriented as significant profit generators. 

“The entire building, including offices AND the entire shop floor is air conditioned. Much better working conditions. And there’s technology everywhere in here. Our technicians are all running tablets. We’re doing digital vehicle inspections that integrate with our management system. We’ve developed systems that keep communication flowing freely between the front of the operation and the back and vice versa.”

Palermo categorized his shop’s focus as primarily fleet-centric, though he’s proud of a small but consistent customer base of private individuals. “We work on everything from low speed electric vehicles all the way up to transit buses. We do alternative fuels, EVs, hybrids, the whole gamut,” he explains. “For the past 15 to 20 years, our primary focus has been on fleets. We did that because we recognized a stability in car count and it fit what we were looking to do. We always want to try to be a one stop shop.”

The challenge of servicing fleets, Palermo says, is regardless of vehicles or equipment a fleet manager needs to have serviced, you’re able to provide that service. Making that decision to be versatile has led Preferred Automotive Specialists to the present day.

“If you walk through my shop right now, I’ve got a Mini on one lift and a clutch coming out of a VW; a school bus in one bay, an ambulance in another, etc. – there’s always a lot going on.”

Palermo says being able to renovate the building to meet his needs, rather than try to fit his needs into a less appropriate space, has given his team to focus on the customer, no matter the affiliation.

“Our focus has always been on the customer, both private and fleet,” he says. “One of the ways that we are able to accomplish that, is with our loaner car fleet. If I’m swamped with fleet vehicles and Mrs. Jones comes in needing a water pump in her car, I can put her in a loaner car. This allows us to provide a high level of service for everyone, whether they have two cars or a hundred cars.”

Palermo looks at changes his shop has experienced since his last ShopOwner profile and says technology has the key. 

“Electrification and ADAS is becoming a much bigger deal and we anticipate our fleet customers to drive that. Yes, the average age of a vehicle now is around 12 years old, and we’re still seeing cars from 2010 so the private side of the electrification is going to come about a little slower. With our fleets, they cycle vehicles out at around 36,000 miles, so we’re expecting to really start seeing newer technology on a larger scaler in the next year or two,” Palermo says.

“Being in the fleet business is great, though there can be some risks to it,” Palermo says. “When you do only private work and you lose a customer for whatever reason, that might only be two cars. If you lose a fleet, you could lose 50 vehicles. The tight rope is definitely high.”

However, despite focusing on a different customer, the method of serving them hasn’t changed. “The way we succeed may have changed a bit, but the focus is still on the customer. And I continually remind my people that, ‘Yes, we service automobiles and trucks, but ultimately, we’re in a relationship business. We want customers to they feel like they can trust that their problems will be resolved,” Palermo says. “You don’t get that just by looking at every vehicle as a couple of lines on an invoice. Remember, this is someone’s van that’s going to make them money, or somebody’s car that’s going to take their kids to school.”

Palermo views the changes occurring in the industry in a positive light. 

“It gets better for the consumer driving the vehicle, but it also gets better with respect to the technician in the shop. It should always have been that way, of course, but I think people are starting to understand how much technology is involved to understand and repair vehicles.”

As a member of the ASE Board of Directors, Palermo credits the national organization for helping to improve technicians’ images.

“ASE truly has been invaluable to us as far as being able to have technicians who are able to showcase their abilities both to the customer and to me as an employer,” he says. And that value is just going to increase as time goes by.”

Palermo also praises his crew for their professionalism, with attention to technology and customer service. “We have a good crew of people; including one guy who has been here 30+ years, even before I could drive (and he reminds me of that from time to time!). I have other technicians who have been with us 20 years, 15 years, a couple of tens, five… We consciously approach a relationship business model to our employees as well because we started out as a family business.”

Palermo’s father, Joseph, opened his first service station more than 50 years ago. Tom says he remembers being 4 or 5 years, old, coming to work with his dad and declaring “’Dad, one day I’m going to work in the business with you.’” Preferred Automotive Specialists was established in 2000 and the younger Palermo says, “This has always been a passion of mine – It’s always been what I was destined to do.”

The elder Palermo still comes to the shop about three days a week, and Tom says he loves the relationship. “I’m a lucky guy because I get to come to work at a job I love and three days a week I get to see my dad during the day.” 

And, he says, his 21 employees are part of the family as well. “When they hurt, we hurt. If they’re happy, we’re happy. Because when you think about it, you’re spending more than half of your waking hours with the people you work with.

“We have three service writers in the front, seven technicians in the back, multiple members of our administrative and sales staff, as well as runners who are picking up and delivering vehicles, parts and customers. When the doors are open here, there’s a low hum that’s happening all the time,” Palermo says.

Because there are so many facets to meeting customer needs, he says regular training is a constant. And not just for technicians, either, Palermo explains.  

“Yes, there are people who are strictly technicians and people who are strictly service writers, but we have cross trained people to help during the real busy times if we need to insert somebody into a particular operation, whether it’s to process paperwork or maybe do some oil changes or fix some flats.”

Palermo believes cross training is important for both efficiency – somebody can step in and take up the slack – but also for empathy. “It’s good to give people a perspective of what other people have to go through during a day.”

As a NAPA AutoCare Gold Certified member, Palermo says he can take advantage of many training benefits, from in-person, to remote, to NAPA’s LMS resources. 

Preferred Automotive Specialist is a NAPA Gold Auto Care Service Center, and Palermo – the 2015 NAPA/ASE Technician of the Year – credits relationships he has made that have helped him move forward both personally and from a professional standpoint.

“I made some good friends with NAPA Auto Care Council members. For independent shops, it can be difficult to get your brand out there – NAPA does a lot for us, both with marketing and training.”

He believes that his relationship with ASE is equally beneficial.

“I can’t tell you how honored I was in 2018 to even considered to be on the Board of Governors for ASE. Being able to give input and ideas and be part of some decision making was an honor. And then in 2020, when I got nominated to the board of directors, that was an even higher honor,” he says. 

“The impressive part to me about ASE is how connected they are to the industry. The Board includes independent repair shops like myself; representatives from multi-location franchises; original equipment manufacturers; parts entities like NAPA; the list goes on. We all get together to talk about what’s happening in the industry and how we can help ASE maneuver into the right position to be the pinnacle of success.” 

Palermo’s customers can definitely feel the depth of ASE’s presence in the bays of Preferred Automotive Specialists. “The total number of ASE certifications in the shop is 91. There are three Master techs, some in multiple areas, including me, as well as other certified techs in the shop so it adds up quick. For me specifically, the number is 50 certifications (I’m an over achiever),” he admits.

Relationships have been great for Palermo and his team and he says he’s always trying to share that success. “Over the last 8 years we’ve worked with a few different entities trying to pay it forward,” he says. “Our goal is to pick different charities to support each year – we’ve worked with the V.A. through various donations and sponsorships, including adopting a different veteran family each Christmas for several years, and we’ve donated to and sponsored events with Shriners Hospital and St. Jude’s Childrens Hospital.”

Helping at the local level is key as well.  “We’ve had customers who couldn’t afford to fix vehicles that needed massive repairs,” Palermo says. “We’ll pick a few customers throughout the year with real hardships and repair their vehicle at little or usually no cost. In fact, I just heard that one of the vehicles we refurbished in this manner made a trip to California and back without issue.”

Palermo explains, “This industry has given me so much, that anytime I have the opportunity to try to help somebody in this industry or explain our industry to other people, I do it. I feel we’re put on this earth to pay it forward, and you always want to try to leave the place better than you found it.”

Palermo says he’s proud that, while no two days are ever the same, he’s active in his dream job. “I couldn’t imagine doing anything else and frankly, I know I’m not alone when I meet other people who are in this business and I sense their passion for it, it drives my passion.”

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