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Why the aftermarket is ‘in trouble’ as retirements loom
Image credit: Depositphotos.com
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.
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As much as you hate to see it, it’s somewhat inevitable. From an owners perspective, the red tape and costs of doing business seem to grow exponentially every year, staffing is a constant battle, and cars are more of a pain in the rear end to work on with every new model year.
And how can we reasonably expect to find suitable buyers when the up and coming generation can’t even buy houses? Besides that, most of us are barely hanging on by a boot string in regards to finding reliable (subjective) staff, let alone on savvy enough to take on the business and a mortgage.
When I’m done, the unfortunate reality is my shop will be bulldozed to become condominiums, as has happened to most of the other local shops in my particular urban area over the last decade.
Even if I wanted to relocate after such a scenario, I’m running out of motivation to constantly be doing battle with the city, CRA, WSIB, and all the rest we all know all too well.
I do really still enjoy this trade, and it saddens me that this is where we’re at. But it’s the unfortunate reality we are faced with.
As one who just retired, my plan fell into place. Do we ever really have a plan? Can you have a plan? Will I miss the shop, I think I will, in time. I will miss my customers, they were great and the day to day interaction with my staff, they were awesome. Will I miss the day to day running of the business, not so much. My issue was I was just getting angry, at the cars, at the day to day management issues, at the technology that just didn’t work, at the crime that was a constant worry, at the ever present possible phone call, “Help Me, I need to go (blank) today”. It’s all fading into the back ground. LOL I had turned my first wrenches in 1976, I had started well before that but was totally ignorant of what I was really doing. So I have put in my time. Will I be around, of course, the young crew that took over will need my cynical mentoring for a few years yet. For them, I see lots of opportunities going forward but they will need lots of energy to make it happen. Expansion into the new reality is how this trade will survive.