The future of the automotive maintenance and repair business is coming into sharper focus now that the economic challenges of the past three years have begun to diminish. Almost all of the consultants, analysts, columnists, pundits and professional automotive publications agree that the road ahead looks like this: older cars with higher mileage!
There is a tremendous amount of data to support this assertion, but for now, let’s look at just a few of the contributing factors. First, the average age of cars on the road continues to increase. Currently, it is 10.6 years old. That means over half the vehicles on the road are over 10 years old!
Second, Americans drive approximately three trillion miles per year. Lang Marketing (www.langmarketing.com) projects a massive mileage shift of 806 billion miles from new cars to older cars between now and 2014. Lang says that in the next two years, almost a third of the miles driven will shift from cars 1-5 years old to cars 6-10 years old.
Third, for most families, buying a new car is a want, not a need…whereas, having reliable transportation is a need, not a want. Therefore, they have to keep their existing cars maintained and in good working condition in order to lead their lives.
Breaking News: older cars with higher mileage need lots of maintenance and repair…and most of those cars won’t show up on your service drive unless you put processes in place to increase your share of this growing market segment.
The Automotive Aftermarket Suppliers Association (www.aftermarketsuppliers.org) has just released its 2012 “Replacement Rates of U.S. Automotive Parts” report, which draws data from IMR Inc. Below is just a snapshot of annual repair opportunities.
Of the 239.3 million light duty vehicles on the road last year:
- 0.78% got a new power steering pump (1.86 million pumps)
- 1.18% got new fuel injectors (2.8 million injectors)
- 3.26% got a new, rebuilt, or overhauled transmission (7.9 million transmissions)
- 0.81% got a new brake ABS module (1.9 million modules)
- 19% got a brake job (46 million services performed)
- 3.9% got a radiator flush (9.4 million flushes)
- 27% got a new battery (64.8 million batteries)
- 186% got an oil change… meaning every light vehicle on the road had its oil changed 1.86 times last year (445 million oil changes)
Breaking news (again): There will be a bunch of maintenance and repair done on high mileage, older vehicles in 2012. Do you have a plan in place to capture your fair share?
Replacing broken stuff (repair) is very profitable, but preventing stuff from breaking (maintenance) is even more profitable. Maintenance service opportunities are virtually unlimited, and maintenance parts, fluids, and chemicals are readily available.
Jim Lang, publisher of the Lang Report, offers the following insight on formulating a battle plan for capturing a bigger piece of the older vehicle service pie:
- Expand the age range of vehicles you service.
- Adopt an “all-makes, all-models” approach to service operations.
- Add a quick-lube operation.
- Expand service hours and take other steps to make things more convenient for your customers.
- Develop a “good-better-best” parts pricing strategy offering a mix of original equipment brands and aftermarket brands.
- Aggressively promote parts and labor sales in your marketing area.
I want to challenge you to check an important statistic: the average mileage for vehicles in your shop. You should be able to access this information from your DMS system. I recently ran the numbers for a 14-dealership group and they were shocked to see how low their average mileage actually was. The bottom line is they weren’t seeing many high mileage vehicles. They were getting all the warranty work, of course, and a little bit of low mileage maintenance services. But all the profitable, high mileage maintenance parts and labor dollars were rushing out the door…to the waiting arms of their competition. Why? Because they didn’t have a plan.
Maybe you’re not ready to jump in and implement all six items listed above, but at least pick out two or three and get started. This situation of older cars with higher mileage is not a temporary phenomenon, but rather something that is going to be with us for the next five to seven years. Don’t wait any longer. Get your processes in place right away.
My thanks to Jim Lang for giving us a plan to follow!