This is a guest blog post by Dave Schaefers, Senior Vice President of Meineke.
For many people, warm June temps call for the annual road trip – a time to put the pedal to the metal and sweep across the country in their favorite car. In fact, with gas prices down about a dollar per gallon from last year, about 6 in 10 Americans say they are more likely to take a road trip of 50 miles or more in 2015.
Industry experts are noting the booming automotive aftermarket as drivers are making sure their brakes, tires and windshield wipers are up to par for the travel season. As an industry that has seen steady growth for the past 20 years, recent vehicle trend reports show that the automotive aftermarket is projected to top more than $722 billion worldwide by 2020, showing no signs of slowing down in our ever-changing economy.
What are the causes that fuel this booming automotive aftermarket industry?
For starters, our economy varies from times of upward growth to a series of unexpected downturns and shifts in employment opportunities. These transitions directly influence the mindsets of Americans, causing financial uncertainty.
Shifts in stability directly affect the automotive industry as drivers are now beginning to hold onto their vehicles longer, as opposed to trading in for the next best model. The average age of vehicles on the road today stands at a record high 11.4 years and is expected to continuously escalate all the way up to 11.7 years by 2019. If you compare that with the average lifespan of 8.2 years in 2000, it’s pretty astonishing.
Since vehicle owners are unable to decipher what the ever-changing economy will hold for them in the coming years, drivers are doing whatever they can to protect their current automotive investment by paying it forward on small repairs. Therefore, alternative car care companies, such as Meineke, a nearly 1,000-unit, top-rated aftermarket auto franchise, are spotting a significant boost in customers looking for a great value service in order to help protect and increase the longevity of their aging vehicle.
New Car Sales
While Americans are keeping cars longer, increasing new vehicle sales continues to add to the recent success of the aftermarket industry. This year, U.S. sales are expected to hit nearly 17 million, which is up from the 10 million seen only five years ago. This is leading to a record number of cars on U.S. roads totaling nearly 253 million.
It’s inevitable. When gas prices spike, drivers are in turn less willing to hit the road for their annual 150-mile expedition. However, with the average price of gas per gallon significantly lower than seen in recent years, motorists are becoming more willing to put those extra miles on their car. For example, in 2014, gas prices were averaging an astounding $3.65 a gallon. This year it’s down to around $2.40, hence, the significant increase in American driving habits during this time of year.
While these added bonus miles to the family car ultimately create memorable experiences, they also take a substantial toll on a vehicle’s quality. Paired with the harsh weather conditions seen throughout vast regions of our country, it might not be a surprise that general-non-warranty automotive repairs and maintenance cost consumers $1.6 billion in 2014.
Between front-end and suspension work due to potholes and collision repairs from the icy conditions during the wild winter weather, projections for the auto care industry this year are expected to grow even further. Turning the focus onto spring, auto repair shops are now being infiltrated with requests for oil changes and other routine maintenance as drivers are gearing up to hit the road safely this summer.
What are the effects of the industry’s vast growth?
With the U.S. automotive aftermarket industry, consisting of replacement and installation of parts and
accessories, growing at a compound annual growth rate of 3.4 percent until 2017, the automotive aftermarket segment is projected to top more than $273.4 billion by the year 2017. Keeping up with this fast-moving industry, Meineke is poised for unparalleled growth as consumers place a greater focus on preventive maintenance and entrepreneurs seek franchising opportunities.
In order to boost unit growth, the brand has created multiple financing and incentive programs for new and existing franchisees. Through the recent partnership with BoeFly, the online marketplace harnessing technology to dramatically simplify the execution of commercial transactions, this industry-leading auto franchise is now able to provide quick start-up periods, as well as better financing options for qualified franchisees with access to more than 3,600 lenders.
Meineke’s parent company, Driven Brands, Inc., is a leading automotive franchise holding company with over $1 billion in system-wide annual sales and more than 1,500 locations worldwide. Over the past year, the company has placed a greater focus on brand acquisitions, inking deals with seven brands in the last 18 months and further accelerating growth for brands such as Meineke and MAACO. Combined, Meineke and MAACO signed 210 licenses last year through acquisitions and franchise deals with new owners.
Since the automotive aftermarket is often misunderstood in consumers’ eyes, many times, the first thought that comes to mind is a dirty garage that smells of harsh gasoline. That’s about to change. Consumers are now benefiting from the industry’s hyper-growth as automotive care providers like Meineke are transforming the typical customer experience by applying technology throughout the shops for better understanding.
The brand is announcing the first initiative of its kind that will integrate the use of iPads with videos to help customers understand what mechanics are doing to their vehicles. The videos will visually explain any problems found during a routine check-up and will also provide customers with an easily-accessed electronic copy.