Clean fingernails go hand and hand with new and improved auto industry

September 29, 2003
Franchise Times, September 2003

The auto industry is in the process of getting the grease monkey off its back.  With increasingly computer-dependent cars and new parts proliferating faster than ever, the grease monkey image just doesn’t fit anymore.  Today’s automotive service technicians need to be as savvy with systems as they are with sockets - and the aftermarket industry isn’t seeing enough of them.

The auto industry needs people of the same caliber as those going on to be doctors, lawyers and computer programmers, according to Skip Potter, vice president of membership for the Automotive Aftermarket Industry Association (AAIA).  “Professionals at the service level are very distinct.  If you look at National Institute for Automotive Service Excellence certified technicians, their average salary is around $50,000 a year.”

There is no shortage of work, either.  Automotive aftermarket sales, encompassing everything from car washes to hydraulic shocks, grew to $237 billion in 2002 and outpaced the overall U.S. economy, according to the AAIA.  Vehicle service repair rose 4.9 percent, collision repair sales increased 5.6 percent and do-it-yourself product sales were up 4.4 percent for the year.

For franchisors in the automotive aftermarket, franchise sales have become easier.  Joe Schumacher, chair of the franchise and distribution practice group at the law firm Wiggin & Dana and advisor to many automotive franchises, attributes that to corporate downsizing and the aftermarket’s resilience during lean times.   “People in that position are going to be sensitive to the soft economy and look to businesses that do well in that, and people need their cars to run.”

“When unemployment hits 6 or 8 percent, we start seeing an effect in our franchise sales,” said Anthony Martino, CEO at Maaco.  “Lots of people talk about starting their own business, but few of them actually do unless they’re forced to make that decision.”

The conventional wisdom is that a down cycle in the economy means a bump in business for the automotive aftermarket industry – people are more likely to save their money and repair the car they have, rather than reinvest in a new one.  But with dealer competition and financing incentives, aftermarket franchises aren’t seeing much of a surge, just steady business.

According to Potter, it’s not as simple as the economy tanking and the aftermarket booming – rather, the aftermarket’s slow periods are not as bad as the larger economy’s, and the recovery comes sooner.  If anything, continuing new car sales make him optimistic about the future:  “That just means that five or six years from now the aftermarket’s going to be seeing a big blip in sales.”

For the time being, the industry is looking for ways to boost profits.  The AAIA is working to help its members implement technology to keep up with the legions of new parts that come on the market every year, while launching a consumer initiative called “Be Car Care Aware,” which urges motorists to remember regular maintenance.

But the industry hasn’t forgotten about the technicians.  The AAIA plans to use its consumer campaign to demonstrate how advanced the industry has become, and the Automotive Warehouse Distributors Association is rolling out a new information video for high school counselors to share with aspiring technicians.

With the national Automobile Dealers Association expecting 16.5 million new cars on the roads this year, the service stations will soon need all the helping hands they can get – no matter how greasy.