Times Are Changing: How This Affects Your Shop
Wednesday, October 05, 2022
Times are Changing: How This Affects Your Shop
By Kelsey Scherf, marketing manager, ETE REMAN
It is no secret that the past two years have thrown a wrench in multiple industries, requiring a change of viewpoint and skillset. Changes such as the rise of car prices, increased demand for Electric Vehicles (EVs), and a reliance on E-commerce can affect your shop in a variety of ways. Let’s dig in on how you can adapt to these ongoing industry changes.
Changes in the Automotive Buying Cycle
Even with changes in the economy, the demand for cars is still rising. With supply chain issues and a shortage of parts, the supply cannot meet the demand, causing prices to skyrocket. According to the U.S. Bureau of Labor Statistics, the consumer price index for used cars and trucks jumped 40.5% from January 2021 to January 2022. This gives the customer two decisions: keep their cars for an extended period to avoid paying the inflated prices or incentivize consumers to fix up their older cars and sell them at a high profit margin.
- Decision #1: Keeping Cars Longer
With consumers wanting to hang on to their cars for longer, shops are seeing a greater variety of issues that need repairing. A car that may have only needed simple repairs, now has increased mileage that was unexpected. This falls on the shop to have the background knowledge of diagnostics to be sure you are repairing the proper issue, and not putting the older car through unnecessary strain. It is also good to have this knowledge so your shop is ready to see the influx of older models and aren’t caught off guard when a customer is hoping to get more time out of their vehicle.
- Decision #2: Selling At High Profit Margins
With the price of cars rising, many see this as an opportunity for profit for a rebuilt or remanufactured transmission. Both rebuilt and remanufactured transmissions require incredible knowledge of the parts needed and what can be fixed. Does the transmission only require a rebuild to replace the problematic parts or does it need a full remanufacture? This is a question that is continually asked by consumers and automotive professionals alike to be most cost efficient while maximizing resell value.
The Rise of Electric Vehicles
In addition to the additional work needed to repair used cars, a newer market is emerging. Even with the rising cost of new and used vehicles, the demand for Electric Vehicles has not slowed down. Let’s take a look at the key facts.
- Searches for “electric vehicles” are up by 257% over the past five years (see graph below).
- In Europe alone, sales for Electric Vehicles increased by 137% in 2020 despite a 20% year-over-year decrease in the total car market.
- Europe and China lead the EV market, with an expectation of global growth
- Bloomberg New Energy Finance expects EVs to account for 10% of all new car sales in 2025 and up to a whopping 58% by 2040.
- Regulatory requirements will drive massive growth with various cities and countries set out to achieve lower emissions.
- Right now, there are about 53,124 public EV charging stations across the U.S. However, it is estimated the 60% of Americans have garages that allow for Electric Vehicle charging.
Based on these stats, it’s hard to avoid the notion that Electric Vehicles will be coming to the United States with unprecedented growth. For example, California has committed to phasing out all new sales of combustion engine vehicles over the next few decades. An increase in battery efficiency is also expected to boost the growth of EVs in the United States, which often requires longer trips than in other continents.
How You Can Keep Up with the Rise in EVs
Whew, that is a lot of information to learn about EVs in just a couple paragraphs. The positives that the EV market brings your shop are pretty straightforward…a LOT of new business may be coming your way. Electric Vehicles still have mechanical problems and can still break down. The biggest negative? Electric Vehicles are exponentially different than the cars you currently see in your shop. They require a wider variety of parts, need to be diagnosed differently, and can be costlier to repair. According to Shop Ware, many EV dealerships are willing to make parts, service information, and scan tools available outside of its dealer network. This means they know they could use some help, and your shop could be the solution.
Our recommendations? Start ASAP on learning the most you can on EVs. Once your shop feels confident in this department, let your area know that you have this ability. Shops who aren’t aware of this EV trend won’t be as prepared, and this means more business for you. So run…don’t walk…to repair and diagnosing information about Electric Vehicles.
A Shift to E-Commerce
The final (and luckily simplest) automotive trend we are going to cover centers around E-Commerce as a growing market.
As you can see in any industry, an online presence is incredibly important to a thriving business. According to Consumers Research Online, 83% of car customers said they wish they could save time by researching online. Using the tips below, you can be sure your online presence satisfies those potential new customers.
- Make sure you have a website! Without a website, you are losing potential customers who don’t even know you exist.
- Your shop hours should be one of the first things a customer sees. By being open when they need a repair, you could gain a lifelong customer. On the opposite hand, if you are closed when your website says you are open…don’t expect to see that customer again.
- Be very clear about what services and parts you offer especially if you offer something that makes you shine over competitors (Specialty parts, faster service, EV services)
- Inventory and pricing. Yes, sometimes shops are hesitant to show their pricing online in case they aren’t the lowest price in the area. But, when it comes to keeping a customer, honesty is always the best policy.
- Already have some happy customers? Ask them to review your shop and add these to your site!
How can you keep up with all three of these 2022 automotive trends? Automotive training to keep up with the times is incredibly important. Continued training and education ensure that your shop is the best of the best. Tradeshows, such as AAPEX, work to educate in the automotive industry and keep up with changing times. The Automatic Transmission Service Group (ATSG) will be attending AAPEX this year, November 1-3 in Las Vegas, and providing two presentations by automotive experts to be sure your skills are top tier.
Oct. 5, 2022