No matter how things change, service work remains key

[xrac]

I have been reading another great piece by somebody by the name of Joe! Ha! Joe, this is a good one that I wanted to be sure that everyone saw. As some of you know I am president of the Joe Marconi fan club!

 

No matter how things change, service work remains key

Service Zone Story

 

However, this article has sparked some thoughts that I want to talk about namely how we have to change to remain competitive. My shop has been open for 11+ years and we had never invested in any Eurpoean diagnostic software or equipment. Last week I broke down and made my first investment for the European software and connectors for our Snap-On Modius. It wasn't a huge expenditure (about $1100) but it was a first. Why did I do this? It use to be that the Eurpoean cars we saw (BMWs, Mercedes, VW, Volvos, Landrovers, etc.) were few and far between. Remember that Evansville is in the middle of nowhere and we do not have an Infiniti, Landrover, or Acura dealer. However, as our business and reputation has grown we are seeing more and more Eurpoeans and we have been working on a lot of VWs lately. I realized that if we are going to be servicing that customer base I have to become equipped to do it.

 

On the subject of change the two newest Car-x Franchisee stores that opened in Indianapolis have been built as 8 full service bay shops with three additional quick lube bays attached. These stores are doing $1,000,000 in their first year. The area manager there says they build the quick lube bays, run cheap oil changes to build a database, and then use direct mail to market their other services and it works. This last month the store in the whole Car-x system with the highest sales was a store in Champaign, IL, which has been open less than one year and it is built on some type of tire store model. Remember that Car-x started as muffler shops. My point is that change is a fact of life and something we all have to be open to. If hybrid technology becomes popular we are all going to be forced to look at our business model.

[Joe Marconi]

I have been reading another great piece by somebody by the name of Joe! Ha! Joe, this is a good one that I wanted to be sure that everyone saw. As some of you know I am president of the Joe Marconi fan club!

 

 

 

However, this article has sparked some thoughts that I want to talk about namely how we have to change to remain competitive. My shop has been open for 11+ years and we had never invested in any Eurpoean diagnostic software or equipment. Last week I broke down and made my first investment for the European software and connectors for our Snap-On Modius. It wasn't a huge expenditure (about $1100) but it was a first. Why did I do this? It use to be that the Eurpoean cars we saw (BMWs, Mercedes, VW, Volvos, Landrovers, etc.) were few and far between. Remember that Evansville is in the middle of nowhere and we do not have an Infiniti, Landrover, or Acura dealer. However, as our business and reputation has grown we are seeing more and more Eurpoeans and we have been working on a lot of VWs lately. I realized that if we are going to be servicing that customer base I have to become equipped to do it.

 

On the subject of change the two newest Car-x Franchisee stores that opened in Indianapolis have been built as 8 full service bay shops with three additional quick lube bays attached. These stores are doing $1,000,000 in their first year. The area manager there says they build the quick lube bays, run cheap oil changes to build a database, and then use direct mail to market their other services and it works. This last month the store in the whole Car-x system with the highest sales was a store in Champaign, IL, which has been open less than one year and it is built on some type of tire store model. Remember that Car-x started as muffler shops. My point is that change is a fact of life and something we all have to be open to. If hybrid technology becomes popular we are all going to be forced to look at our business model.

 

The business model you speak of with the new Car-X stores is the same model I used for my expansion. My traditional 6 bay "repair shop" performs all the heavy repairs and diagnostic work. It's where the traditional "meat & potatoes work" is done. But, in today's fast past world and changing demographics; I saw an opportunity that I was not capitalizing on. My new building (a standalone 4-bay facility) is primarily for walk in trade, while you wait service, tires, alignment and other basic service work. The model works and our car counts and sales have greatly improved.

 

The point is, and I know you realize this, is that we DO need to change with the times. We cannot conduct business the way we did 15 years ago.

 

Smith Corona, the great typewriter company, viewed itself as a typewriter company and could not adapt to change. Instead of making the bridge into the computer age, it stuck by its traditional product and went belly up in the early 1990's.

[xrac]

Here is an article that everyone should read. How is this for an eye opener:

 

.....Domestic cars will sink to only one-fifth, 20%, of light vehicles in the United States by 2016, a mere half their 1999 market share and down nearly one-third from 28% of the 2009 vehicle mix....

 

Vehicle Mix is Dramatically Changing Aftermarket

 

AFTERMARKET INSIGHT Issue 227: Vehicle Mix is Dramatically Changing Aftermarket

[CARMandP]

Wow is that an eye opening article. I guess my import training will pay off in the next few years if I really pursue that avenue more.

[autoguy]

Wow is that an eye opening article.

 

I agree.

[xrac]

Here is an article that everyone should read. How is this for an eye opener:

 

FOCUS THIS WEEK: SS/Garages Will Double Foreign Vehicle Repair Volume

 

"Service Stations and Garages nationwide will double their repair of foreign cars and light trucks over the next eight years. This surge will result from two factors: a big jump in foreign repair share conducted by Service Stations and Garages, and rapid growth of the overall foreign aftermarket."

 

"Half of Service Stations and Garages currently average less than 20% foreign vehicle repair business. By 2018, foreign cars and light trucks (imports and transplants) will represent over 35% of Service Station and Garage volume, as foreign vehicles top 45% of total car and light truck aftermarket product sales."

 

 

Jim Lang

[xrac]

$8 Billion Product Surge in Foreign Repair

 

 

Service Stations and Garages will install approximately $8.3 billion in products on foreign cars and light trucks this year. By 2018, Service Stations and Garages will install an estimated $16.5 billion of aftermarket products on foreign vehicles (imports and transplants) at user-price.

 

 

 

Foreign Vehicle Aftermarket Growth

 

Car and light truck aftermarket products for foreign vehicles will expand more than $18 billion between 2010 and 2018 as imports and transplants soar from 38% to over 46% of cars and light trucks on U.S. roads.

 

 

 

Six-Times Domestic Aftermarket Growth Rate

 

Foreign vehicles will surge from $34 billion in 2010 aftermarket product volume at user-price to an estimated $52 billion by 2018. During this eight-year span, foreign vehicles will grow from 37% of aftermarket product volume to over 45%.

 

As a result, foreign car and light truck aftermarket product volume will climb at a 6% annual pace. This will be six-times the 1% projected average annual growth of domestic vehicle products in the U.S.

 

 

 

Service Stations and Garages

 

Service Stations and Garages will capture the largest 2018 volume of foreign car and light truck repair in the U.S. Although foreign vehicles will represent approximately 45% of 2010 overall car and light truck aftermarket product volume, their share of products installed by Service Stations and Garages will be less, an estimated 35%.

 

This will be an increase from the 26% foreign vehicle percentage of 2010 Service Station and Garage aftermarket product volume.

 

 

 

Brands Used in Foreign Vehicle Repair

 

The soaring share of foreign vehicles in the repair mix of Service Stations and Garages will present a major challenge for domestic aftermarket brands.

 

Currently, domestic brands account for the majority of parts used by Service Stations and Garages in their overall repair business, which is dominated by Detroit Three vehicles.

 

As foreign vehicles comprise a growing portion of repair by Service Stations and Garages, domestic brands must satisfy the changing buying criteria of Service Stations and Garages for foreign vehicle parts if they are to retain their brand strength among these service outlets.

 

 

 

Distribution Challenges

 

Warehouses and Jobbers supplying Service Stations and Garages face similar challenges.

 

As foreign vehicles soar in repair volume among Service Stations and Garages during the next eight years, product-buying criteria of these outlets will change as well as their brand preferences, particularly in terms of foreign applications.

 

Warehouses and Jobbers supplying Service Stations and Garages must adjust to these changes in order to provide the types of brands and services which these repair outlets will demand as their foreign vehicle repair business steadily grows.