Americans love their cars. Cars represent freedom, and there’s nothing more American than a great, old-fashioned road trip.
Whether you need to travel for your daily commute or take leisure trips, most people are opting for private vehicles (over public transport) since the COVID-19 pandemic.
In fact, trust in public transport, such as trains, trams, and buses, is at an all-time low as people continue to practice social distancing. So, with a country as spread out as the United States, it makes sense that people want dependable and comfortable vehicles they can rely on.
The American reliance on the car or truck makes the automotive industry a vibrant business sector with plenty of potential for sustainable expansion and a broad selection of pathways into car-related industries.
Most automotive and car franchises specialize in aftercare services - that's the mechanical maintenance, including servicing, replacing tires and parts, and aesthetic facilities, such as valeting and cleaning.
Some automotive franchises focus on sales, providing a choice of cars, medium-to-full-sized pickups, minivans, SUVs, CUVs, cargo- and step vans. Most vehicle dealerships make an average of 20% markup on second-hand cars and trucks, making this a healthy turnover.
And all vehicles require regular servicing, of course.
Automotive franchises cover various services, including car product retail, repair services, valeting services, car washes, car sales, and rental businesses. Most automotive franchises focus on post-sale services - in other words, providing products and services for existing car owners.
Franchising
If you're looking for a way out of the rat race but have no previous experience running a company, franchising is the common-sense approach to becoming your own boss.
When you purchase a franchise, you don't just invest in a well-known brand identity; you inherit a range of benefits that put you ahead of the game against companies that start up without the expertise and support of an experienced partner.
When you invest in a franchise, you inherit their logo and branding, giving your trade unit instant curb appeal. You buy into an instantly recognizable trade name with a company that your future customers already know and trust.
Automotive and car franchises don't just take your money and leave you to it - they have a reputation to uphold. So, most franchise partners provide world-class training to ensure that your operation will be able to provide the type of excellence that their customers have come to expect.
In addition to training, most automotive franchises provide a level of HR functionality, helping your new business comply with complicated financial-, employment-, and safety regulations.
Facts About Automotive and Car Franchises
Three-quarters of all automotive repairs are carried out by independent auto repair shops - many of which are franchises.
Consumers want to hand over their trusty steed to reliable professionals, but it takes several years to develop a reputation of trustworthiness. This is where franchising comes into its own: independent businesses often struggle in their initial years as they gradually generate the trust of their customer base. At the same time, franchises inherit that trust right from the start.
After the stay-home lockdowns of 2020, Americans have opted for native holidays rather than taking trips to foreign climes. This has meant that the popularity of the road trip has skyrocketed. Of course, when so many people are making long journeys in their vehicles, it means lots of additional business for automotive franchises who specialize in maintenance and repair.
In fact, according to research by OnePoll (on behalf of Cooper Tires), 44% of US drivers have taken more road trips in 2020 than usual.
The population rely on their vehicles even more than usual, taking car journeys for food shopping when they might otherwise have relied on public transport or walking.
Half of all automotive franchises specialize in mechanical repair, while around 30% of jobs come in as a result of a vehicle collision. Oil change and lube constitute approximately 10% of the available market, while car cleaning and valeting services make up the remainder.
We're living through a more uncertain financial landscape right now, and, as a result, drivers are keeping hold of their existing vehicles for longer, opting to repair and make good rather than buying a new vehicle.
The average duration of vehicle ownership for new and used vehicles has increased by 60% in recent years, representing the strength of the automotive franchise sector. In fact, the average age of a car on the road within the US is now around 12 years old - that’s a record high.
Combine that with a record number of vehicles that are at least 25 years old on the road, and you have a particularly fertile environment for automotive franchises.
The global automotive aftermarket industry is around $723 billion, while US automotive franchises account for approximately $41 billion.
Franchising Vs. Independent
Automotive franchises require an initial investment starting from around $50,000 to around $500,000. Of course, most of us need to seek investment and funding from moneylenders and banks to achieve that type of collateral. And this is where franchising becomes an even more attractive proposition.
Almost 50% of independent companies starting up without the support of an established and experienced partner go into receivership within the first three years of starting up. There are several reasons for this worryingly high statistic, but in most cases, it’s a lack of market penetration within the first years of trading while the new business establishes a reputation.
Franchise businesses start up with a ready-built reputation inherited from the parent company, meaning that most franchises hit the ground running.
Banks and moneylenders tend to favor the franchise model because the perceived financial risks are lower. With franchise businesses, the business operation has already proven its viability, with a clear understanding of its client base and a record of profit, sustainability, and expansion.
Independent companies often struggle to achieve startup loans because they can rarely prove the market viability of their business model.
Franchises tend to be more stable and reliable business choices, giving franchise owners the highest chance of successful penetration into a pre-established market.
Automotive Franchises
Check out Franchise Direct's brilliant selection of well-known automotive franchise brands, and take control of your working life today.
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