The $36 Billion Business
Editor’s Note: Interstate Batteries® originally published the following four-part series as a full length article titled “At Today’s Shops, the Trend Is Up, Up… Up?” in the winter 2011 issue of CURRENT magazine. We’ve edited the 1,600-word piece into more manageable chunks to preserve your browser’s Temporary Internet File memory and to accommodate any potential attention deficit disorder. You’re welcome. Here’s the second part.
In the past, more car sales typically meant more cars for America’s repair shops. Since 1994, the American street fleet grew by at least 15 million cars a year – until 2008. Then car sales dropped to 13 million and dropped again to 10 million in 2009. After years of momentum heading toward 20 million new cars on the road, new car and truck sales slumped to half that in 2010.
Fewer car sales mean less revenue for repair shops, right? Wrong.
Instead, the auto repair industry posted its best years since the turn of the millennium. General repair shops reported about $36 billion in 2010 sales. That’s up from $33 billion in 2007, according to the Automotive Aftermarket Industry Association.
For Steve Wright, the owner of Granite Reef Service Center and Interstate dealer in Scottsdale, Ariz., the last three years have been a blast.
“My accountant keeps telling me, ‘I don’t know how you’re doing it. Your numbers just keep getting better,’” Wright said.
For Pacific Car Care, an Interstate dealer in Portland, Ore., business grew 18% since 2008. The owner, Ken Williams, attributes his sales boost to a combination of new consumer habits and his efforts to educate his customers. Even in a down economy, the customers calling Pacific Car Care will pay for maintenance and even repairs because a breakdown could translate to a lost job or greater repair costs later.
For Handlon Bros. Auto Parts and Service, another Interstate Dealer, the years have been a rollercoaster, largely a sign of the shrinking economy in and around Detroit. Rather than seeing his business grow, his sales have held at average while the demographics have changed.
“In my area, it’s changed drastically,” Handlon said, explaining that he and his brother have considered moving shop. “It’s pretty bleak here. The things you read about Detroit, they’re true. That’s the interesting thing: Twenty-five miles out, it’s a totally different life.”
Watching similar economic difficulties in Rochester, Marone altered his business direction. He’s added a business-to-business model, servicing small fleets for construction companies. The population in Rochester’s returning to pre-1910 levels. With it goes much of the growth potential Marone would like to capture. Business has held steady for the New York shop owner, despite significant drops in his customer base.
While general repair shops together made $5 billion more in 2011 than in 2007, about 1,100 repair shops closed nationwide, according to the Bureau of Labor Statistics. Williams has seen it in the Portland area.
“The business gets redistributed,” Williams said.
In 2007, he had more than 35 competitors within 5 square miles of Pacific Car Care; going into 2012, he’s got just 26 competitors.
There’s more business going to fewer garages, but what about the recession? How long will it last? The hit to the economy may be the best news for repair garages since record auto sales in 1994.
- At Today’s Shops, the Trend is Up, Up… Up? (blogbattery.com)
- Winter Battery Tips from Interstate Batteries’ Gale Kimbrough (blogbattery.com)
- Technological Challenges Loom for Auto Repair Shops (prweb.com)
- The Repair Boom (blogbattery.com)