Insights on the booming auto repair industry and its impact on franchising
Not only are Americans living longer today, but so are their cars. According to IHS Markit, the average lifespan of a car in the U.S. rose to 12.1 years in 2021. These days, odometers are reaching new heights. According to Car and Driver, today’s standard cars are expected to keep running up to 200,000 miles or more, while cars with electric engines are presumed to last for up to 300,000 miles.
This increase in longevity has been a boon to the tire business and also for franchise investors. According to industry expert Frank Costello, the longer lifespan of cars has led to more discretionary repairs on items that need to be maintained through wear and tear, such as tires, brakes, brake pads, and shocks. Here, Costello shares his insights on the tire industry and the benefits for franchise investors.
What should investors know about tire franchises?
Tire franchises have high income potential. Franchisees achieve their independence in an industry that is exploding. At Big O Tires, we’re coming off the best year yet with a brand/operating system that is the best in its sector.
What sets Big O Tires apart from its competitors?
- Stability and security: Our system offers a predictable and achievable runway to income with incredible support. We offer a stable operating system and set of costs for each franchisee that truly puts the ability to earn in a framework that will not change drastically over their agreement.
- Supply chain differential: We have cut out the middle man, reduced costs, and most importantly, solidified the product channel. This ensures products in stores at great cost comparisons, giving franchisees the BEST opportunity to drive income. Literally, 60% of all revenue for Big O Tires’ operating system comes from tire sales as the manufacture and distributor of our own product and others (our franchisees have access to ANY product that the customer wants).
- Retail experience: Our footprints, in-store environment, and customer experience are RETAIL driven, not repair driven. This creates a shopping experience for our customers, and it changes the game for our franchisees with an in-demand, Amazon-proof, service-driven retail business.
- Full support: From funding options to site selection, to LOI (Letter of Intent) or lease negotiation, to build-out or retrofit construction support, we have a full suite of subject matter experts to help, guide and support potential franchisees at every step.
- Strategic partnership approach: At Big O Tires, we don’t sell license agreements; we award them. Through an extensive vetting and due diligence period, we create an “eyes wide open” atmosphere so candidates can make a well-informed decision. Our thorough franchise development process leads to much higher satisfaction levels in the long run.
Who is the ideal candidate for a Big O Tires franchise?
We are looking for the executive model franchise owner who has led teams and managed departments and profit/loss statements. Ideal candidates should be able to manage and lead with a purpose, setting the example for the business model every second of every day. Big O Tires franchisees should not be afraid to get engaged and drive the business by acting in the brand’s best interest.
What is the status of the automotive industry and where does Big O Tires fit in?
While the industry is consolidating and contracting on some levels, it’s absolutely exploding for enterprise brands like Big O Tires.
Customer acquisition costs and product margin erosion for smaller independents have been driving the $392 billion market to large enterprise brands like us. With nearly 300 million cars on the road, and an average age of 12 years each, there is a very dynamic market.
Engine repair has been declining over the years since technology has improved and led to fewer failures in the engine cavity. There are also fewer fluid changes leading to more maintenance and discretionary repairs on items that need to be maintained through wear and tear, such as tires, brakes, brake pads and shocks. In fact, last industry numbers pointed out that .80 (cents) out of every $1. (one dollar) in auto repair is going to the wheel well and not the engine cavity.
Perhaps best of all, the tire business is Amazon-proof. This creates a great opportunity for our Big O Tires franchisees since very few people actually buy their tires online. The tire market has changed over the years and tires have become sexy. Customers are shopping their tires vs. just going with what was previously on the vehicle or what the manufacturer recommends. Customers overwhelmingly go with a “trusted” local tire retailer. At the end of the day, our business is about honest, ethical representation and recommendations with quality product delivery that a brand or franchisee will stand behind in a retail-friendly atmosphere.