2012 and Beyond: Opportunity or Uncertainty
Many shops around the country are experiencing a drop in sales, profits, and car counts. Many factors, including high unemployment, the housing crisis, rising costs of goods, and the ever increasing cost of doing business, all contribute to a challenging future for us. A few years back we banked on the fact that low new-car sales would result in a boom for the aftermarket. However, due to the economy and poor consumer confidence, this did not come true for many areas around the country.
In 2010, underperformed maintenance in the U.S grew to $62 billion, compared to $54 billion in 2009. This means that many consumers are either neglecting or putting off necessary repairs and services. The longer they put off these services, the more difficult is becomes to sell these services as the car ages to a point where the car owner no longer sees value in maintaining his or her car.
We all know how postponing or neglecting maintenance poses a risk to not only the car owner’s safety, but the safety of others on the road. But economic conditions sometimes outweigh common sense. A recent Consumer Reports poll showed that 40% of those polled are knowingly postponing maintenance and repairs on their primary vehicle. Lower income households and those in the age group 18 to 35, were more likely to delay needed repairs and preventive maintenance. We will likely see this trend continue as we slowly recover from the recent recession.
The economy has forced consumers to become more value conscious, with an emphasis on insuring that the price they pay for anything these days is a good choice. Value does not always mean lowest price however, it means that consumers want to make sure that their money is being spent wisely and that their buying decision will bring them the biggest bang for the buck. In other words, the consumer wants to walk away knowing they got their money’s worth and more.
Another issue we need to confront; every sector of the auto repair and service industry is frantically racing to obtain a piece of the maintenance and repairs that generally were performed by traditional independent repair shops. New car dealers, muffler shops, brake shops, transmission shops, tire stores and quick lubes are all moving toward the concept of total car care. Even many body shops are offering their customers basic repairs. This spells out a very competitive market, especially as the quality of cars continues to become more problem free, combined with the continued decline of many profit-generating services such as fuel filters, plug wires, and timing belts. Not to mention, extended oil service intervals that present their own set of issues.
Technology and electronics will be the driving force to meet the new gas mileage standards and emissions levels, which will bring an ever increasing demand for you and your technicians. Investing in training and equipment will become a key component to your future business survival.
Had enough of the bad stuff? I know I did, so let’s move on to the good stuff. By the way, there’s always been bad stuff, since the dawn of time. No one ever promised us an easy road, and we will always be confronted with challenges, it’s what makes the strong only stronger. So let’s not focus on the bad, let’s focus on the positive.
Most of you reading this are still around, which proves your resilience and your ability to adapt to the dramatic changes our industry has had to endure over the past few years. We have survived and thrived in uncertain times. Not because of hard times, but in spite of it.
Let’s take a look at a few promising facts. New car sales have lagged in recent years and although sales are better; it may never attain the sales of pre-recession era. This means that as the economy recovers and consumer confidence improves, there will be a flood of cars that will need repairs and maintenance as these cars reach post factory warranty age. The average age of the typical car in the country will remain over ten years and achieving 200,000 miles and beyond will become the norm, all great news for the aftermarket shops.
Embrace technology, it is your friend. You will have to gear up with new tools and equipment along with more training, but this will mean more and more people will need your services. Saturday afternoon tune ups in the driveway are a thing of the past. In addition, technology will open the door for more hi-tech services and repairs. Training will become easier to come by and better as more and more companies offer online courses in addition to live training.
New car dealerships have gone through a period of attrition, losing thousands of stores across the nation. This is good news for the independent shop. Although new car dealers are direct competitors, they no longer have the sheer numbers they once had and our ability to service multiple car lines in our local community, convenience, and our understanding of customer service will continue to be our competitive advantage. In time, this will prove to be a huge benefit for the aftermarket.
Want more good news? A report from a research firm, The NPD Group, recently stated that most consumers want to keep their cars longer, are favorable toward car care maintenance, and they are more interested in maintaining their cars than replacing them.
Now here’s the best news for shop owners. The NDP Group has also reported that the consumer shift away from new car dealerships will continue when it comes to having their cars and light trucks serviced. According to Consumer Reports, car owners still put their faith in the independent repair shop. 83 percent of those polled said they had complete confidence in their independent repair shop when it came to getting the right maintenance and repair at the right price. Another Consumer Reports survey indicated more than half of those polled had complete trust in their shop. Independent repair shops are, and have been, the preferred choice of the motoring public.
We all know it’s been a rough ride the past few years, but we’re still alive and kicking. Looking back on my own 31 plus years in business, I can tell you it’s been tough and rewarding. The future does look promising for those shop owners who find ways to adapt and plan accordingly. To succeed in the coming years will depend on the shop owner’s ability to be an effective leader, accept change and have the passion to commit to excellence. Offering world class customer service and community involvement must also be part of your business plan. Don’t get caught up in the way things were, that’s a waste of time. Things are different now, and in ten years they will be different than the way things are today. Find ways to make your shop stand out. Understand what makes you different in your community and use that as your competitive advantage. Don’t go head to head with the local new car dealer or major chain store. That can be damaging. Know your strengths and the strengths of the people in your company. Remain true to yourself and capitalize on what you do best and focus on the reasons why YOUR customers keep coming to YOU year after year.
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