Over the years, working around the auto industry I had noted how intertwined the auto manufacturing industry and auto sales sector is with all the subsectors. When car sales are robust the carwashes do better, as well as the auto aftermarket accessories, oil change quick lubes, auto insurance, and even fuel sales. Okay so, that probably doesn’t surprise you does it, but it is an interesting tidbit of information for your business memory repertoire. Perhaps you are in the automotive sector so you know this already?
The Wall Street Journal on September 5, 2012 published an article; “August US Car Sales Surge – Double-Digit Gains for US Auto Makers; Honda Jumps 60%, Toyota 46%,” by Christina Rodgers explaining an surprise in car sales, which they attributed to owners having no choice but to replace their used cars with new ones, plus new economy models saving them at the gas pump. Still, I believe there might be another big reason – new financing programs – just look at all the ads in the newspaper for low payments and easy credit qualifying.
I’ve always said over the years that the auto service sector is one of the safest industries in the US. Perhaps because everyone drives a car, but also because if people keep their cars longer they will need more auto services, and if they buy new cars and the economy is good that they are going to want to protect that new car and take very good care of it. It turns out that consumers take better care their cars when they are new, even though they probably don’t need it, and over time they take less care of their cars when they really should as they’re getting older.
It’s hard to say if the economy is going to recover here the United States, things haven’t done so well, and unemployment is still high. Nevertheless, with a little tweak in tax incentives for small businesses to buy vehicles, better financing programs, and newer fuel-efficient models we could see car sales continue. If so this will be very good for the auto sector all the way around, the entire industry, including all the aftermarket businesses and auto service companies.
Am I somehow suggesting that this might be a good business to get into right now?
Well, if we look at historical data auto businesses have always tracked auto sales quite well. Of course, that’s no guarantee because when the economy was doing really well for new home sales, we did not see the uptick in home improvement that we usually historically had. Thus, maybe we don’t want to call this an absolute buy signal or reason to start auto service company, but it is definitely something to think about, as it is a positive sign. Please consider all this.
Lance Winslow has launched a new series of eBooks on the Mobile Auto Services Business. Lance Winslow is a retired Founder of a The Oil Change Guys, a Nationwide Franchise Chain, and now runs the Online Think Tank; http://www.worldthinktank.net
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