The last few years’ economy has been a mixed bag for auto repair shops and parts sellers. On one hand, you have people holding on to their vehicles for longer than ever before; on the other hand, cash-strapped or nervous consumers have been doing the bare minimum to keep those cars on the road, according to some industry reports.
With July car sales reports due out from automakers Wednesday, and Truecar.com’s forecast predicting the best July since 2007, a look at the businesses that serve car owners and how a glut of new cars affects them might be a fresh take on the vehicle sales story.
It’s a fairly pervasive sector that doesn’t hit the radar screen very often. According to the federal Bureau of Labor Statistics, jobs for auto mechanics are expected to grow 17 percent between 2010 and 2020, about an average rate across all occupations. About 723,000 people make their livings this way at an average wage of $35,000 a year.
And the Census Bureau abounds with information about the industry, though data is from the 2007 economic census, which of course doesn’t reflect recession results. Still, it’s a starting point you can compare local presence with. According to the bureau, some 81,000 establishments were engaged in general automotive repair and that’s in addition to 8,700 oil-change shops, transmission shops, gas stations that offer repair services, dealer service departments, motorcycle repair shops, tire dealers and more; check out this Census Bureau portal to a plethora of reports on each classification.
I bought a new car a few weeks ago and recently zoomed up to my long-time mechanic’s shop, to get advice on selling the 15-year-old compact I’d replaced and for what I assumed was a farewell until the new ride is out of warranty. I was somewhat taken aback when he casually offered an ongoing oil change/tire rotation deal that sounds superior to (and cheaper than) what I’d get at the quickie-lube drive-throughs I generally patronize. It seemed a clever way to hang on to a customer while the clock ticks down on the warranty, and made me wonder what other techniques auto shops are using to combat the consequences of new car sales.
Here’s a University of Georgia report, based on a survey, about the business issues facing the car-repair industry; it has interesting information about pricing, staffing and other matters that will help prep you for discussions with local shop owners. Other sources include Autoinc. magazine, the publication of the Automotive Service Association trade group, and the Automotive Aftermarket Industry Association, which I’ve found helpful in sharing market research with journalists. Underhood Service and its related publications also give an interesting glimpse into the industry business models and pressures.
Don’t forget about legislative issues; check with state industry groups and read this Wall Street Journal piece about the pending Massachusetts Right to Repair Act, in which independent shops demand access to complete diagnostic data from automakers.
Industries that would seem positively affected by new car sales include satellite radio services, roadside assistance programs, insurance sales, car-wash outlets (I bet the monthly pass is popular among new-car buyers), alarm sellers and aftermarket sales of protectants, DIY car-care potions and accessories.
As always, this Wall Street Journal market data center on auto sales should be among your bookmarks.