2015 Automotive Trends: Turning Data into Dollars
It can be the best of times – if you sell preventive maintenance.
There has never been a better time to be in the automotive business than now. It truly is the best of times.
Let me clarify; it is the best of times if you are proactively inspecting vehicles and proactively selling preventive maintenance services. On the other hand, if you are operating an automotive repair business – waiting for cars to break – then the outlook may not be quite as rosy.
Selling preventive maintenance services is proactive (making it happen); repairing stuff that breaks is reactive (waiting for it to happen). You can make good money repairing broken cars, but it is not a long-term, sustainable business model. Yet combine auto repair with a robust preventive maintenance program and the opportunities for growth are huge.
Let’s look at some key market influencers and how they impact your business:
• Independent service centers installed 88.9 percent of all the “installed parts” in 2014.
It won’t surprise you that labor percentages follow the same track. In other words, consumers overwhelmingly choose independent service centers for all their automotive needs. Why? Lang Marketing recently conducted a survey and found the No. 1 reason consumers choose a shop is quality (38 percent) closely followed by convenience (30 percent).
• Parts installed by independent service centers from 2009 to 2014 grew by $12.1 billion while dealerships declined by $.6 billion.
Not only do automotive service shops do the lion’s share of the business, but the growth over the past five years was dramatic. I predict this trend will continue. Ultimately, consumers vote with their wallet – and they are voting for you.
Your customers trust you to replace worn out parts; therefore, they will trust you when you recommend preventive maintenance services that will prevent parts from wearing out.
• Independent service centers have 75.6 percent of all the service bays in the U.S.
Automotive service bays outnumber dealership service bays by 3:1; therefore, the customers have a lot of choices when it comes to choosing an independent service provider.
Remember what they are looking for: quality and convenience. When you meet these two criteria, then your opportunities for growth increase dramatically.
What about price? Price is a factor when consumers are evaluating where to go for automotive service, but not a big factor. Lang Marketing found that only 16 percent of those surveyed said that price was their primary criteria. Value trumps price every time.
If your people are continually educating customers on the value your shop provides, then your business will grow.
• Seventy percent of shop owners said the customers’ willingness to regularly maintain their vehicles made an impact on their business in 2014.
This statistic comes from AutoInc.’s annual “How’s Your Business” survey that also found that two-thirds of shops had increased profits last year. Combine that with the fact that more than half the shops saw their monthly RO count decline or stay the same. Therefore, shops are making more money working on fewer cars. Interesting.
When you explain to vehicle owners that it costs less to maintain a car than to repair it, then they will buy maintenance services. It only makes sense.
Breaking News: Shops make more net profit on maintenance than repair. The customer pays less and the shop makes more. How cool is that!
• The average age of automobiles in the United States is 11.4 years old.
There are roughly 250 million cars on U.S. roads and half of them are more than 11.4 years old – that’s a bunch of old cars on the road. I have been tracking this statistic for more than three decades and the average vehicle age has gone up every year.
There are more vehicles sold annually than scrapped, so every year we have more cars with higher mileage. This trend will continue. What an opportunity for independent service centers. The fact is people don’t take older cars to dealerships – they bring them to you. Folks, if your techs can’t find maintenance needs on a car that’s more than 11 years old, well, then something is wrong with your techs.
In conclusion, let me encourage you to have a shop meeting with all of your employees and go over these stats with them.
It truly is the best of times in our industry. They get bombarded with so much negative garbage every day, it would be a real breath of fresh air for them to get some good news for a change.
The opportunity for growth in 2015 is available to those who sell preventive maintenance services. It’s good for the techs, it’s good for the managers, it’s good for the shop, and most importantly, it’s good for the customer! Happy sales to you!