Mixed numbers amid auto mergers
Change is a constant in auto-mobiles, but with the rise of shared-car services and fast-tracked driverless vehicle technology, the pace of upheaval in this massive industry is going faster than ever.
In auto service and collision repair, higher-tech cars have raised the barrier to entry and competition with the big, national players has risen dramatically. With the added influence of insurance providers inking nationwide service contracts, a wave of consolidation means mom-and-pop shops are gradually heading by the wayside.
These trends have benefitted national players like CARSTAR, Meineke and Maaco—under the Driven Brands umbrella—and other big brands including Jiffy Lube, Midas and Valvoline Instant Oil Change. Every one of these brands posted healthy sales growth, led by Valvoline’s 10.8 percent pop in 2015.
This top tier of franchised auto brands includes J.D. Byrider, a used car dealer, and Christian Brothers Automotive, which led the category in systemwide sales growth two years in a row.
The category’s biggest news this year is CARSTAR’s acquisition by Driven Brands last fall. Newly tethered, the auto body chain delivered healthy results for its new parent—9.3 percent sales growth with 35 new units.
At TBC Corp., its marquee brands of Midas and Big O Tires each posted healthy growth, as well. Brant Wilson, senior vice president of TBC Franchise, said the category has recently seen some softening in its numbers that he attributed to geographic and weather anomalies.
“While we’ve had short-term softness in the industry, the long-term tailwinds are significant,” he said.
In response, Midas has enlarged its marketing budget and begun a big focus on tire sales, which the company sees as a means of gaining new customers and increasing sales to its existing customers.
On consolidation, Wilson said TBC is actively looking for opportunities to convert independent shops into Midas locations, rather than buying and supporting additional brands in the space.
Several other companies in the space delivered notable sales gains, including Express Oil Change, Precision Tune Auto Care and Grease Monkey.