Jump-Start a New Career with an Automotive Franchise
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Jump-Start a New Career with an Automotive Franchise

Jump-Start a New Career with an Automotive Franchise

If you feel like a car doing a burnout in your current job and are dreaming of being your own boss, investing in an automotive franchise may be just the ticket. The marketplace is booming and not subject to changing customer tastes or economic downturns because it provides services people always need. You also, in many cases, do not need automotive mechanical and technical ability to invest in an automotive franchise since there are a variety of business models that enable you to manage the business verses doing the actual labor.

The Current Automotive Franchise Marketplace

Registrations for cars and light trucks (SUVs/CUVs as well) in the United States have reached a record level of more than 264 million according to IHS Markit, a provider of business information and analysis for the global automotive industry. The 2017 Joint Channel Forecast Model, which is produced by the Automotive Aftermarket Suppliers Association and the Auto Care Association, predicts that the total aftermarket sales, which includes all products and services purchased after the sale of an automobile, will grow to $316.4 billion in 2020, an increase of nearly $39.3 billion over a four-year period.

Factors Driving Growth

Today, many people have two cars and often elect to keep their older car when they buy a new vehicle since improved technology has significantly increased the life of most vehicles. In fact, it’s not uncommon for owners to continue driving a car with more than 100,000 miles. People are also increasingly cognizant of the need for preventive maintenance in order to extend the lifetime of their vehicles, yet can rarely do it on their own due to sophisticated computer systems and the complexity of hybrid and electric cars.

The increasing number of older cars in use represents a robust market for automotive franchise owners. The typical car on the road in the U.S. is a record-high 11.5 years old, according to IHS Market, which predicts that vehicles in the new to five years-old category will grow 16 percent by 2021, while vehicles in the six to 11 year-old range will grow just five percent, and vehicles that are 12+ years old will grow 10 percent. The oldest vehicles on the road are growing the fastest – with vehicles 16 years and older expected to grow to 81 million units in 2021. IHS Markit’s research also indicates that more than 20 million vehicles on the road in 2021 will be over 25 years old. Since each of these vehicles needs to be maintained, there is a high demand for aftermarket parts and services, which is creating new growth and revenue opportunities for a wide range of automotive franchising businesses.

Types of Automotive Franchises

According to the International Franchise Association, there are 38,065 automotive franchises in the United States.

The automotive franchise business models to select from are varied. To keep vehicles running there are automotive repair, oil change, transmission, and gas station franchises. The mechanics making the repairs use products and services provided by replacement parts franchises. Many vehicle owners like their wheels to look nice, which creates demand for car wash, detailing service, and aftermarket parts franchises. And when vehicles get into accidents, there is a need for body shop, dent repair, paint job, and car rental franchises.

Investing in an Automotive Franchise vs. Going out on Your Own

Statistics show that 25% of startup businesses don’t survive the first year; about half make it to year five; and approximately 30% last ten years. If your business is going to survive, you’ll have to work long, hard hours with no support. As a franchise owner, you’ll still have to work long, hard hours to get your business off the ground, but you’ll enjoy tremendous advantages including:

  1. Brand Recognition: You will be buying into existing brand recognition and customer loyalty.

  2. Easier Access to Financing: Since you are buying into an established brand and costs are known, potential lenders are likely to be more comfortable loaning you the funds you need to invest in a franchise.

  3. Training & Support: You’ll receive training and ongoing support from the franchisor and fellow franchisees. This includes assistance with site selection, build-out, marketing, IT, and training. Fellow franchisees understand the ins and outs of the business and will share what works for them.

  4. Proven Concept: The franchise system has already been tested and the kinks worked out.

  5. Better Pricing: Franchisors leverage volume orders to negotiate better pricing. Typically, they pass on the cost savings to their franchisees.

  6. Competitive Edge: There are only 24 hours in a day and without the support of your franchisor, you’d be struggling to do your job while implementing a variety of important and time consuming tasks such as marketing.

Since the United States generally has very limited public transportation, Americans rely on their vehicles to get around. Automotive franchises that keep their vehicles running safely and looking good offer a tremendous business opportunity, particularly since your customers are likely to be repeat customers.

Published: February 12th, 2018

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