When cars don’t need drivers, who will need repair shops?
Mercedes-Benz is one of many automakers reaching the finish line in the development of autonomous, self-driving technology that will shake up any business connected to cars.
Those futuristic days where autonomous cars handle all the frustrations of driving while we humans read the paper, take naps and sip coffee are almost here. Once self-driving cars take over—forecasted to happen in the next five to 15 years—old-school drivers will no longer need to buy and maintain our own set of wheels.
This long-anticipated technological advancement is great in theory: fewer or no traffic deaths, increased leisure time, easier long-distance trips and no more loan payments.
Auto repair shops, however, are being forced to confront a massive sea change that will drastically change the fundamentals of their business. To adapt to a world with human and computerized drivers sharing the roadways, national car repair brands are looking to capture large-scale fleet customers and shift their focus from specialized niches (like transmission or brake experts) to total car care.
Here it comes
General Motors President Dan Ammann recently told The Wall Street Journal that the auto industry will “see more change in the next five years than there’s been in the last 50.” He wasn’t kidding, and it’s incredible to think of the many changes that will result from a mass decline in private automobile ownership.
In franchising, the quickly modernizing auto repair category might appear to be one of the biggest victims in a world with fewer crashes and cranky car owners, but recent moves from TBC Corp. and Driven Brands suggest the industry is quickly adapting to survive in this brave, driverless new world.
As independent and mom-and-pop shops continue consolidating toward larger national brands and fewer mom-and-pop shops, Charlotte-based Driven Brands (owner of Maaco, Meineke, Merlin, Econo Lube and Carstar) announced a big push toward fleet customers that bring in large numbers of new vehicles with only one owner—a boon to the bottom line, with fewer individual customers to keep happy.
Driven’s newest client is FedEx, owner of one of the nation’s most gargantuan fleets with thousands of cars and trucks in every state. After working to increase fleet clients across its portfolio, the company now has more than 1,000 body shops participating in its fleet partnership program.
Artemio Garza and Frank Petrane, chief brand officer at Driven Brands and VP of Driven Fleet, respectively, see this partnership as a sign of the times, and illustrative of what national brands stand to gain from the massive changes happening in the industry.
Fleet clients mean less administrative work for auto repair shops, but corporate owners urgently need their vehicles back on the job.
“It’s a value proposition for Maaco, and we hope to duplicate it throughout the brands,” Petrane said. He added some shops already implementing this fleet focus have seen their sales double, which explains Driven’s enthusiasm for spreading this mindset throughout its automotive portfolio. Maaco is currently partnered with more than 100 fleet organizations around the country.
At the same time, company research shows millennials who are famous for their disdain of car ownership are more comfortable taking their vehicles into large, national brands, rather than one-off shops that tend to be less professional and physically welcoming than the more established chains.
Garza said FedEx is just one of four fleet pillars Driven is focusing on, including fleet management companies, centralized fleets like Uber and GrubHub, dealerships and private/government fleets.
Beyond adding multi-vehicle clients to its stable of brands, the industry is unique in its seasonality, meaning such fleet accounts allow individual operators to schedule fleet work for slow times of the week, month or year. That means greater profits and flexibility, while a large network of brands works together to prepare for a future where you and I don’t own cars, but instead summon whatever we want at the click of a button.
Pivoting to total car care
At Palm Beach Gardens, Florida-based TBC Corp. (owner of Midas, Big O Tires and Carroll Tire), talk of adapting to autonomous and shared cars is a hot topic in shops and around the company’s conference room tables. As its flagship brand, Midas, celebrates its 60th anniversary, management has shifted its focus to tires and brake service. As Executive Vice President and COO of Midas International Mike Gould said, tires and brakes still wear out frequently, regardless of who’s behind the wheel.
“Whether it’s a shared car or an Uber car, they have to roll and they have to stop,” he said. “Unless we see ourselves hooking up on a cable that drags us along or floating in the air, brakes, tires, fleet service and preventative maintenance is going to be there.” To spread the word, it has launched a nationwide TV advertising campaign starring Midas’ Golden Hand character that seeks to convert tire buyers into total car care customers.
Gould said his shops in San Francisco—home of Uber and one of the most car-share-friendly cities in the world—have been busier than ever. Responding to more fleet customers where time is literally money, he added some shops in urban areas have added late night and weekend hours to keep fleet-based cars on the road during peak usage periods.
“When those cars are sitting in our shop, they’re not making money,” he said. “We have to prepare ourselves to service those cars in a quick, efficient way.”
TBC hasn’t scored any massive fleet clients like FedEx, but the company caters to small businesses and owners of smaller, more local fleets to pad its bottom line.
$62 billion in repairs
According to IBISWorld’s “Auto Mechanics in the US” report, there are 253 million cars on American roadways racking up a combined total of $62 billion in annual repairs. Gould said the repair industry has softened, but franchisee activity remains strong with Midas adding approximately 20 new stores this year through a combination of new builds and store conversions.
Midas has a field staff focused on attracting more fleet contracts, and encourages its franchisees and store managers to think of creative ways of attracting commercial and large-scale clients.
“We gather with our franchisees on a regular basis,” Gould said. “We absolutely encourage them, and I’d love to shamelessly steal their great ideas and spread them through the system.”
In the meantime, human-powered drivers might consider getting a few more years out of their family mini-van in hopes that in a few short years, summoning a black car will be the domain of the masses, rather than the exclusive purview of the rich and famous.