Published: July 07, 2009 11:45 am      

Tuned up: One segment of auto industry is thriving

Everyone is trying to stretch a buck these days. For some business owners, that means massive losses in revenue; for others, it means big business.

The disparity is especially evident in the automotive industry.

With General Motors and Chrysler receiving government bailouts and virtually every automaker across the globe posting losses, one side of the industry is thriving.

General automotive repair shops are predicted to post an increase in business of 5.5 percent from 2007 to 2009, according to the Automotive Aftermarket Industry Association digital factbook. The trend is expected to continue into 2010.

Other types of automotive repair shops also have seen increases of between 4 and 5 percent, according to the report.

Customer-pay services for repairs and maintenance at Coyle Chevrolet, in Clarksville, are up 5.3 percent, said Ed Sorrels, fixed operations director. However, warranty services are down, but they have been down for the past five years, he said.

“Business is up, but this is our busiest time of the year,” he said.

Nationwide, U.S. residents spent more than $33 billion in general automotive repairs in 2008, the aftermarket association says. The forecast for 2009 is more than $34 billion and nearly $37 billion in revenues is expected in 2010 for the market.

The rush to auto repair shops is a result of people trying to squeeze a couple thousand miles, months or even years out of the vehicle they would have traded in or scrapped a few years ago.

“We are fixing older cars, period,” said Tim Harbin, owner of Voignier’s Auto Air in Jeffersonville.

The average age for a car in the country is about 10 years old, said Tony Molla, spokesman for National Institute for Automotive Service Excellence. With an older car comes more problems and more maintenance in order to keep it on the road.

Harbin said his shop routinely has to repair three things to fix the one problem that prompted the customer to bring the shop his or her car in the first place.

“Business has definitely changed,” he said.

In addition to making repairs on older vehicles he may not have normally seen, Harbin said his shop has started offering extra services. He is doing little things such as vacuuming out the cars he is repairing, doing free oil changes with other services and is sometimes providing courtesy transportation to try and keep a competitive advantage over other auto repair shops fighting for business.

Harbin is looking to capitalize on the market while the demand is high, because according to the aftermarket association’s factbook, the spike in customers may not be a long-term trend.

“Lowered new automotive sales add short-term boost due to greater need to repair older vehicles that are no longer being replaced,” the report said.

When the economy starts to recover, the demand to keep an older car running may change, but that shift may be several years away.

“As the economy rebounds in 2010, there will be significant pent up demand for aftermarket related products and services and growth of 4.5 percent is forecast, which is significant,” the report said.

The aftermarket trade group also measures goods and services from aftermarket products such as tires, automotive accessories, parts stores and even new car dealers.

While the overall industry is expected to grow, the greatest percentage of gains will still be in shops that are providing general types of maintenance, at least through the 2010 forecast.

But that brings up the question, how much is too much as far as repairs?

Harbin said the problem of over-fixing exists and sometimes he’ll try and talk people out of repairing their cars. If the car is worth less in total value than the price for repairs, it may be more cost-effective to get rid of the clunker.

Sorrels said he has also seen customers shelling out more money to repair a car than what it’s worth. However, he said it is usually because the customer really likes the car and feel it’s worth saving.

Over the long-term, people may be losing money by getting their old car fixed over and over. Most of the time, customers insist on repairing the car instead of junking it or buying a new vehicle, Sorrels said.

“You tell them it’s $1,500 [for repairs], but I wouldn’t spend $30 on [fixing their car].”

The alternative to fixing an old car, of course, is investing in a new one. But for many people, buying a new car is not an option, even if repairing their old vehicle will cost them more in the long run.

“Even if they can ride on the car for another six months, it’s cheap,” Harbin said. “Cheaper than a car payment, at least.”



General automotive repair sales:

• 2007 — $32.4 billion

• 2008 — $33.4 billion

• 2009 — $34.2 billion*

• 2010 — $37 billion*

* Projected

— Automotive Aftermarket Industry Association