Car makers such as General Motors, Ford, and Chrysler have been sparking headlines in the past few years over disappointing demand and sales results. While it’s true that these Big Three automakers have had to cut costs and redevelop their strategy, the automotive industry remains a significant contributor to the United States’ economy and has began to climb back from the difficult challenges they have faced in recent years.
High oil prices in the mid 1990s caused many consumers to shift away from high fuel dependent vehicles like SUVs and Hummer’s that the US automakers were producing to lighter and more compact cars. Sales dropped dramatically as more and more people preferred the smaller and more fuel efficient Japanese cars to the more high powered American ones. The financial crisis in 2008 made matters worse as car sales further plummeted and the Big Three needed billions of dollars in government bailout funds.
As of 2010, the automotive market contributed to approximately 4% of the United States’ GDP and employed millions of workers. Sales have risen 11% since last year and is expected to maintain stable growth for the next few years.
These recent events have changed the landscape of the automotive market, but they have also created large amounts of opportunities for aspiring business owners to capitalize on the recent transformation of the automotive industry.
What does the Automotive Franchise Industry Do?
The automotive industry is involved in the process of designing, manufacturing, and selling motor vehicles. However, it is not just about selling cars to consumers. The services required to maintain and distribute cars after the car’s initial sale are part of the automotive aftermarket, a 257 billion dollar market. These services include the car accessories and repairs vital for the automobile ecosystem to function.
Interesting Automotive Franchise Industry Business
There are very few instances in history where the automotive industry have experienced as big of changes as they are right now.
As fuel prices remain high and there is greater concern for the environment, more energy efficient cars are increasing in demand. Moreover, as part of their bailout specifications, the Big Three automakers are required to quickly release more energy efficient vehicles to the market. This increasing popularity for hybrid and electric cars are going to affect the industry in big ways as it will create a new market for businesses to cater to these new forms of vehicles.
People are holding their cars longer
As the United States slowly recover from a recession, consumers are still tight on their budgets and conserving the amount of luxury goods they purchase including new cars and other vehicles. According to the automotive industry research firm R.L. Polk & Co., consumers are holding their cars, on average, for 63.9 months, which is up 4.5 months from the previous year. Additionally, the quality of cars have increased leading people to hold their cars for longer periods of time without the need to purchase new ones. While this can lead to reduced car sales, it can increase the need for repair and maintenance as people choose to keep their older cars.
Interestingly, growth in used car sales are lower than new car sales as people are preferring to purchase newer cars as opposed to buying used ones. A big part of that has to deal with the fact that there is a reduced supply of used cars raising the price of these cars leading people to just buy new cars.
Different Automotive Franchise Opportunities
|Automotive Repair||Automotive repair is useful for any owner regardless of the age or type of vehicle. These franchises offer a wide variety of services that handles the maintenance of both the outside and inside of the vehicles.|
|Car Rentals||Car rentals are important for travelers needing a ride to their destinations. As air travel picks up, demand for car rentals are also expected to increase.|
|Auto Accessories||Auto accessories are helping owners improve the look and style of their vehicles. As spending for maintaining cars increase, the auto accessories franchises directly benefit from this trend.|
|Auto Transmission||Auto transmission checks and services are important to prevent cars from overheating and burning out its transmissions. There are different levels of protection these franchises can provide depending on the owner’s personal preference.|
|Car Washes||Car washes are becoming popular as people hold their cars longer and want to maintain their cars in good a condition. These services may include full-service, exterior, or stationary automatic car washes.|
|Auto Body||Auto body, paint, and glass repairs are necessary to mend damages from car collisions and any wear and tear on the surface of the vehicle.|
|Motorcycles||Motorcycles are a different beast than regular cars and require more specialized services which provides opportunities for people who understands the specific needs of motorcycles and wants to show their knowledge of them.|
|Oil Change||Oil changes are routine maintenance procedures that car owners should be familiar with. The industry is highly fragmented with the 50 biggest companies controlling 35 percent of the entire industry’s revenues which provides a good prospect for franchisees.|