Trends in Automotive Franchising

By AMY COVINGTON

Buckle Up for Success

The automotive industry has steadily grown over the years, culminating recently as more and more Americans take to the road for vacations, and automotive franchises, from car rentals to after market accessories franchises, are reaping the rewards.

Aftermarket products and accessories comprise a burgeoning segment of the automotive franchise market. Enhancing and maintaining both the interior and exterior of vehicles is a trend not likely to slow down any time soon. From restoring pre-owned vehicles to "like-new" condition to installing top-of-the-line stereo systems and tire rims, keeping cars in pristine condition, while at the same time exuding style and luxury and offering convenience and utility, is a multi-billion dollar industry.

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"The demand has always been there," said Ken Boyce, Director of Franchising for AutoQual USA, "it was just a matter of someone providing a service that is cost effective." Automotive franchises included in the "appearance" category include car washes, after market auto accessories and services, and franchises specializing in interior auto maintenance and reconditioning to help consumers retain the value of their cars.

Car wash franchises have evolved over time, expanding service offerings to capture a bigger market share. Many car wash businesses offer additional services such as professional detailing, paint and fabric protection, rust protection, window tint, electronic systems, and other accessories. Car wash businesses can be fixed locations that are either full service or self service, such as Super Wash and Magic Wand Car Wash, or mobile operations. Super Wash is a coin-operated self-serve/brushless automatic car wash franchise.

Xtreme Conditions

In the earlier years of the automotive industry, the mobile electronic market was non-existent because auto manufacturers spent their energy and resources on the vehicles' exteriors and interior furnishings, not the stereo. Drive down any street today or open the window of your house or office and you'll know that automotive electronics, such as car stereos, amplifiers, equalizers and processors and car alarms, are hot trends. Look at the cars around you the next time you're at a stop light and you will probably see at least one mobile theater system playing for a pack of transfixed youngsters. The growing popularity of these devices, which include GPS navigation systems and hands-free cell phone accessories, has created a flourishing niche market among automotive franchises.

That New Car Smell…

Just as consumers want to keep their cars in tip-top shape, car dealerships and car rental agencies want to keep their cars looking and smelling new. AutoQual is one franchise company that offers car dealerships and car rental agencies cleaning and maintenance services that keep showroom car interiors like new until sold and rental cars in rentable condition longer. Creative Colors International is another automotive franchise well known for repairing, reconditioning and restoring the color of leather, vinyl, fabric and plastics. AutoXcel also specializes in reconditioning, offering specialized exterior and interior repair.

Tune Up for Business

With increased driving comes worn out tires. The tire industry alone grosses over $1 billion every year. There are many potential revenue streams for selling tires, including individual consumers, dealerships, car rental companies and insurance agencies. More cars on the road also means demand for preventive maintenance and repair services. People get regular check-ups and vaccinations to prevent problems before they happen. Today, consumers are savvier than ever before and know the value of preventative maintenance for their vehicles, as well as their health.

Maintenance has moved beyond the standard oil change and many franchises specializing in quick lubes have cashed in on this trend by diversifying their product offerings-some even sell tires. Precision Tune Auto Care is one example, as they plan to add tires to some of their stores in the near future, according to Robert Falconi of Precision Tune. "We also will do associated work like tire rotation-it's just one more way to distinguish us from the competition," he said. Some franchise companies continue to thrive as specialists. The Tire Warehouse "Tires & Auto Parts for Less" has been operating in New England for over 30 years with a widely recognized name in the retail tire and auto parts industries. Precision Tune, which started out under the hood, has added several comprehensive services for under-car repairs and maintenance in addition to adding tires to their product offering.

Auto repair and maintenance franchises are positioned, more so than independent auto bodies, to take advantage of market demand. "As autos get more complex, independents are less likely to survive," Falconi said. "The do-it-yourself market is going away, as it gets harder to do what should be simple maintenance like changing your own oil." Independent shops do not have the support of dozens or hundreds of other operators in a system or a franchise company from which to find out about new technologies and receive ongoing training and support. According to Falconi, car dealerships are their main competitors. "We are able to stay competitive in part because we remodeled the lobbies of our locations, next we will do the exteriors." This aesthetic overall enables Precision Tune to appeal to female customers by providing comfortable waiting rooms that are not intimidating to women. Many automotive franchise companies are actively recruiting women operators to assist in garnering a larger share of the female consumer market.

Something Borrowed

Whether on a business trip, family vacation or joy ride, many people turn to car rental agencies to provide their transportation. An emerging, however unlikely, trend has emerged in this segment of the automotive franchise market. Rent-A-Wreck, the first used car rental company in the world, has been making headlines in newspapers and magazines around the county and were featured on NBC News and the Oprah Winfrey Show. Affiliated Car Rental also has received acclaim for its success in the car rental industry. Entrepreneur Magazine ranked them among the "best of the best" in automotive franchises.

Heading Toward the Future

While having automotive industry helps in some cases, industry veterans agree that strong business acumen and management ability are the keys to a successful automotive franchise. Similar to any other major business venture or financial investment, the purchasing a franchise is a risk. When selecting a franchise to invest in, take into consideration the following demand for the product or service (is the concept a fad that will pass or too specialized or obscure to be profitable?); competition (is the market saturated with the business you want open?); training and support offered by the franchisor; expansion opportunities; brand name equity; and years in business, plus your own abilities and experience.

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