Ed Kovalchick Fixed Opertions

There is Big Service Money Out There; I Mean BIG

There is a vast automotive business world beyond new automobile franchises, and my colleagues, it is BIG! I was telling a service advisor class recently that the granddaddy of dealership conventions in the U.S. is the annual National Automobile Dealers Association extravaganza, which may attract 18,000 people - vendors, sightseers, spouses, dealer people, factory personnel, foreign visitors and all. They were impressed. While NADA may seem considerable, contemplate that the annual SEMA (Specialty Equipment Manufacturers Association) yearly affair, a combination of aftermarket and various independent parts and service suppliers, will entice some 80 - 90,000 people to Las Vegas each year. Thatıs about five times bigger than the largest convention the manufacturersı retail automobile sales and service business can muster. Even the annual independent bodyshop convention (NACE) is about twice the size of the NADA Convention. How about this impressive niche: there is a national publication dedicated to nothing but news and advertising for and about the ³fast lube² industry. It comes out monthly and in a most recent issue had 68 pages, tabloid size, with 68 advertisers - plus a page of classifieds! Compare that to the average dealer publication. On the web site of one of the leaders in the fast lube industry, the company bragged that its affiliates had performed over 54 million oil changes last year. How about this for big: Pennzoil and Quaker State have announced a merger to form ³a premier worldwide automotive aftermarket products and consumer car care company, with annual sales expected to exceed $3 billion.² Their words, not mine. This does not include the production or exploration aspects of these companies. This new venture will capture almost 35% of the U.S. motor market, they claim. This is dealer competition with big money for big investing, big advertising and big market penetration. Jiffy Lube and Sears have combined forces, as well as Penske and K-Mart. You may have noticed Q-Lubes in Wal-Marts. Guess who owns Jiffy Lube? Thatıs right, Pennzoil. Precision Tune recently bought up several companies to form a heady group covering all aspects of vehicle maintenance under the ³Precision² banner. And in case you didnıt notice, the fast lube people are now pursuing the whole maintenance opportunity by developing merchandising and related training to perform everything from wheel balances to cooling system flushes, all while-you-wait and quickly. They soon wonıt be known as ³fast lube² their industry description will change to ³fast everything.² How much opportunity is there? I have read that there are some 200 million non-commercial vehicles in the U.S. Consider this: if the oil was changed in these vehicles twice a year, these vehicles would provide an annual market of 400 million oil changes. Of course, everyone could follow the fast lube industryıs recommendation to change oil every 90 days, and that figure would double to 800 million per year. If the current number of dealerships retained all the twice-yearly oil change business, it would provide over 18,000 oil changes per year per dealership, or about 60 customers a day including Saturdays. At three-tenths each, that many oil changes would keep three technicians busy doing nothing but removing drain plugs full time, when you figure normal technician working days. Donıt even mention the plus business. I once calculated that on the average, over 40 labor hours of manufacturer-recommended and necessary maintenance were available over the eight years of the average vehicleıs life. These included fluid services, tire services, worn maintenance parts replacements of various types, safety and performance inspections, two front brake jobs, one rear brake job, one muffler, one timing belt, and one set of struts. That would be an average of about five hours per year, some higher, some lower, and on some models even more. Note that I am not including warranty service or repairs. Take the 200 million available vehicles and multiply it by five labor hours per year per vehicle and it calculates to one billion labor hours! Thatıs enough to create over 45,000 labor hours per year per dealership. The current number of dealerships would need about 400,000 technicians to perform just vehicle maintenance! That would answer dealer prayers for 100 percent fixed absorption in a hurry. The aftermarket in automotive service is very big, obviously much bigger than it ought to be. It certainly is much bigger than its creator, the new car dealer. Maybe itıs time for the manufacturers to invest some real money in dealer parts and service training, merchandising, and advertising, before it gets even less market penetration. This is obviously a national issue for informed manufacturers to pursue, and one that can have a very happy ending. In the meantime, I ask you thisŠare you doing all you can to get your share?