Silverstein: A Rare Opportunity

In 1997, a book titled “The Perfect Storm: A True Story of Men Against the Sea” was published. It tells the story of a rare, near perfect confluence of events that led up to a tragedy at sea. 

We're facing our own confluence of events in our trade and unlike the tragic outcome for the characters in the book and the movie that followed, the effects represent an opportunity for entrepreneurship and growth for the relationship-based independent auto repair shop. I haven't seen this level of opportunity in almost 50 years of turning wrenches.

A Review of the Numbers 

The reasons I believe we are on the cusp of the greatest opportunity for growth in our trade has its genesis with the technician shortage, shop owner retirements, and the resultant closure of many shops, consolidations, private equity firms, and scarcity. Let's review some relevant information. 

TechForce Foundation: This research and training nonprofit reported that nearly 50% of automotive technicians could retire by 2030. In its 2022 supply and demand report, TechForce noted a decades-long technician shortage, although recent graduate numbers show a slight uptick. The foundation found that the number of technicians increased by 13% between 2020 and 2023, but demand still outstrips supply.

Bureau of Labor Statistics: The BLS projected about 70,000 job openings for automotive service technicians and mechanics each year between 2022 and 2032. A substantial portion of these openings are created by the need to replace retiring workers.

Motor.com (2023): This outfit cited data showing the average age of an automotive technician is 40.2 years, with 49% of the workforce being older than that.

Various sources cite that up to 17% of current shop owners have no plans to sell their shop when they retire, and they will simply close it down (as I did). Those who choose to sell are typically doing so in a buyer’s market. This can lead to consolidation where larger entities—including franchise networks—acquire these businesses. We see this happening in the body-shop side of our industry where several large players have bought competing shops and consolidated operations.

Private equity backed investment has fueled the expansion of large multi store operations like Caliber Collision, Driven Brands (owner of Meineke and Maaco), and Crash Champions. These large chains now control a significant portion of the market. 

And it's not just private equity firms that stand to benefit; independent franchise operations will likely see an increase as well. 

Franchise growth: “The automotive service franchise industry has shown strong growth, with a 1.2% compound annual growth rate in the average number of units between 2021 and 2023 reaching 18,000 units,” the International Franchise Association reports. Major franchise brands continue to expand and dominate the market.

Take Time to Act Instead of React 

It is against this backdrop of ever-expanding volume-based transactional business that opportunity presents itself for the independent auto repair shop whose focus is on building a relationship with their clients and offering real value. It's no secret that the overwhelming majority of volume-based auto repair businesses do not enjoy a good reputation of customer satisfaction with the general public. Even a cursory glance of the reviews of larger automotive chains reveals ratings that typically range between three and four stars. The business model is predicated on being competent, not good. Employing superstars is antithetical to scaling the business for growth as there simply aren't enough of them, especially now.

So what can the independent shop do to create a distinction with a difference in the marketplace? 

Play to your strengths:

• Highlight relationships. As independent shops, we can emphasize the personal relationships we build with customers and employees, which private equity firms cannot replicate.
• Specialize in profitable services. As owners, we can learn from private equity firms to focus on profitability by identifying and doubling down on our most profitable offerings. Don't try to be everything to everyone.
• Invest strategically. By reinvesting profits back into our business, we can keep up with the changing technology and need for training.