A recent survey found that nearly two-thirds of automotive aftermarket shop owners plan to retire in the next 10 years.
But how many of them have a proper plan to transition? That uncertainty has some industry experts worried.
Of those looking to retire, 37 per cent plan to sell their business while 48 per cent plan to pass it on to family or friends — a number that took panellists of a recent webinar by surprise as that number was higher than they’ve generally been used to.
Another 13 per cent of respondents to the survey, conducted by shop software company AutoLeap, said they simply plan to lock the doors and walk away.
“I think we’re in trouble,” said Cecil Bullard, chief executive officer of the Institute for Automotive Business Excellence and RLO Training, during a recent AutoLeap-hosted webinar when assessing the number of people willing to close the business when they retire.
That’s a significant number of shop owners who don’t have a plan moving forward and the loss to the industry could be significant, he added.
“And so I think we’re going to see a real drop in shops,” Bullard continued. “Combine that with the cost of education and the need for education in schools and there are going to be quite a few shops, probably, that don’t exist in the future if they don’t make some changes today.”
Chris Cotton. owner of AutoFix-Auto Shop Coaching, compared the future of the auto repair industry to the agricultural sector during the panel.
“If we don’t have people to pass these businesses along to or sell them out, big corporate entities are going to come in and buy the shops up, or the three-bay, four-bay, five-bay shops are going to get completely bulldozed and turned into car washes,” he said.
Instead, there could be 20-bay super repair centres that could be owned by dealerships, he predicted. “So it is definitely disconcerting,” Cotton said.
Or look at the collision sector, Bullard pointed out. The same situation that’s been playing out there with large networks scooping up independent outlets over the last 15 years could creep into mechanical repair.
“And it’s almost scary because now in auto body, most mom-and-pop shops are gone and there aren’t that many left,” he said.
Diane Freeman, executive director of the Automotive Aftermarket Retailers of Ontario, noted that she’s “definitely” seeing shop counts decline as Baby Boomers begin to retire.
“I know that a lot of our members are definitely trying to find an employee who may be interested in taking over the business and doing that,” she said.