2010 Automotive Trends: A Look Ahead to a Bright Future
Opportunities abound for the automotive service field.
There has never been a better time to be in the automotive business! I've been tracking the business side of the automotive service field for almost three decades, and the opportunities ahead of us in 2010 are astounding. I'll prove it ... take a look at these statistics:
There are currently 249 million vehicles on the road in the United States. Just 10 years ago that number was 201 million. Therefore, we have an increase of 48 million cars in the last decade. That's 48 million more serpentine belts, 48 million more cabin air filters, 48 million more transmission services, 48 million more LOFs ... I think you get the idea. What a bright future!
With the dramatic increase in the automobile population, you would expect there to be an increase in the number of shops offering maintenance and repair. In fact, the opposite is true. Over the past 10 years, the number of service bays has decreased from 1,237,000 to the current service bay count of 1,194,000.
Two factors have influenced this decline. First is the disappearance of the corner service station. (My teenage daughter has never seen this kind of station before!) Second is the loss of 2,000 car dealerships in the past 18 months.
When you put these two statistics together, it means there are 48 million more cars and 43,000 fewer service bays. That translates into unprecedented opportunities. Laws of supply and demand dictate value. Therefore, as the service bay count continues to decline, the value of your service bays continues to increase. What a bright future!
The average age of cars on the road today is 10.6 years. For domestic vehicles, the age jumps to a whopping 11.9 years. Do you suppose your technicians can find any repair or maintenance opportunities on a vehicle that's more than 10 years old? What a bright future!
In 1999, Americans collectively drove 2.4 trillion miles. Last year that number jumped to 2.7 trillion miles. In other words, "miles driven" has increased by 300 billion (.3 trillion) miles annually.
Every service center in the nation does 30,000-mile services or performs preventive maintenance at 30,000-mile intervals.
That means there are 10 million more 30K services that need to be done annually (300 billion miles divided by 30,000 miles) ... wow! What a bright future!
Let's talk about the competition: forget about them and focus on your own opportunities! Last year dealerships did 16 percent of all the customer-pay maintenance and repair business ($30 billion). The remaining 84 percent was performed by independent shops, tire stores, fast lubes and truck shops ($156 billion).
The independent shop is not the enemy of the dealership, the dealership is not the enemy of the fast lube, the tire store is not the enemy of the dealership ... and so on. Here's why: According to the Motor Equipment Manufacturers Association, last year there was $50 billion of unperformed maintenance. That means, as an industry, we left $50 billion "on the table." Ouch! This was service and repair work that should have been done, needed to be done, and would have been done ... if shops had simply educated their customers and asked them to buy!
Talk about opportunities; how about $50 billion worth? What a bright future!
Now that you know the facts, let's explore how to turn the opportunities into cash.
Service work in your shop falls into two categories: repair or maintenance. If your shop is producing more than 60 percent of its revenue by fixing broken cars, then it's time to rethink your business model. Fixing broken cars is "reactive" in nature and subject to fate ... it is out of your control.
Preventive maintenance, on the other hand, is "proactive" and beneficial to your shop and your customers. Your customers save money because maintenance is always cheaper than repair. More importantly, your shop makes money because maintenance is more efficient and profitable than repair.
If your business plan is heavily dependent on repair, then your prayer every night goes something like this: "Please, God, let my customers' cars break so I can stay in business." That just doesn't sound right, does it?
On the other hand, if you focus on preventive maintenance, your shop motto is: "We hate broken cars, and we are committed to keep cars well maintained so they remain trouble-free and fun to drive!"
Selling preventive maintenance is a win-win philosophy. The more maintenance you sell a customer, the more money you save the customer. The more maintenance you sell a customer, the more money you make for the shop! What a bright future!
Editor's note: This article is one of several management articles that have been contributed to AutoInc. this year by Automotive Management Institute (AMI) instructors. In 2010, AMI's knowledgeable instructors will continue covering a variety of topics designed to educate and train today's service and repair professional in AutoInc. To learn more about AMI, its courses and instructors, visit www.AMIonline.org.
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