MOUNTAIN VIEW, Calif.—Tire dealerships are in a “solid” position to grow in the auto maintenance service channel, according to the latest report by Frost & Sullivan Inc.
The auto service landscape will change from 2015 to 2021 as small repair shops close and are replaced by franchised chains and mass merchants, according to the report, “Strategic Overview of U.S. Automotive Aftermarket Maintenance & Repair Service Channels.”
Overall growth will be driven by an increasing average vehicle age. However, shops capable of repairing and maintaining foreign vehicle models will enjoy higher growth than those specializing in domestic brands as the vehicle population shifts in favor of Asian automobiles, according to by Stephen Spivey, Frost & Sullivan's automotive and transportation program manager.
The analysis includes results of Frost & Sullivan's annual vehicle owners' maintenance survey, combined with secondary data and insights from the analyst team.
Other key factors that will impact the auto service channel, according to the study, include:
c Growth will be concentrated in the maintenance and repair of foreign nameplates. The number of domestic brand vehicles will remain stable or decline slightly in the coming years. Sales of foreign models, including Honda, Toyota, Hyundai/Kia and Mazda, are expected to grow several times faster than domestic brands, increasing the demand for technicians who can service these brands, according to Frost.
c Tire dealers are in a solid position to grow as multi-service providers. Tires represent about 20 percent of all aftermarket parts sales, the study said, so tire dealers can boost their sales by adding services, such as transmission flushes, windshield repair and tire rotation—and additional products, such as spark plugs and wiper blades.
Auto dealerships will add more aftermarket parts to their service departments to offer lower-priced maintenance to owners of post-warranty vehicles, Frost predicted. Some OEM dealerships, such as Ford and Volkswagen dealers, are expected to expand the number of quick-lube lanes at their locations.
c Changing consumer behavior will increase the degree of competition within service channels. Do-it-yourself activity will continue to decline over the medium-to-long term as vehicle designs evolve and fewer consumers have experience performing routine maintenance, Frost predicted. In addition, oil change intervals will lengthen due to increased use of synthetic lubricants and premium filters. This will increase the importance of each job to the service repair industry, Mr. Spivey said.
In addition, the skilled labor shortage for auto repair shops will intensify in the coming years, the report predicted. The U.S. aftermarket industry needs about 50,000 more technicians over the next seven years to meet the demands of vehicle maintenance and repair, Mr. Spivey said.
He noted that technician training remains an ongoing challenge for many service providers. Most of the continuing education available to installers is offered by manufacturers to garages that install the company's parts, but additional industry resources are needed, he said.
c Independent repair facilities will increasingly install private-label brand parts. The expansion of auto parts retailers selling discounted, private-label brands to independent repair facilities will result in the closure of traditional jobbers selling brands from manufacturers, Mr. Spivey said. He predicted about 60 jobber stores will close every year, mainly because of competition from the three large auto parts retailers: AutoZone, Advance Auto Parts and O'Reilly Automotive.
c Technology investment is needed to maintain average bay productivity. The number of service bays has declined over the past decade while the number of vehicles in service has grown, according to Frost. Technicians will increasingly need to use mobile technologies, such as tablets and apps, to receive training and information, with a goal of reducing service bay downtime and increasing the number of vehicles repaired, Mr. Spivey said.