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Service Executive Issue #11-13 (Full)

Driven Brands Picks Real Estate Services Firm

Driven Brands has entered into a national agreement with The CBRE Group for strategic real estate services. CBRE will serve as Driven Brands’ preferred national real-estate broker network and will work directly with the Driven Brands real estate team to find real estate for franchisees. CBRE will house a full-time alliance director at Driven Brands’ headquarters in Charlotte, NC, whose primary responsibilities will be to manage and coordinate all broker activities and to provide real estate and market analytics to Driven Brands’ sales and real estate teams.

Driven Brands is the parent company to Meineke Car Care Centers, MAACO and Econo Lube & Tune.

 

Georgia Most Expensive State To Operate Motor Vehicle

Georgia is the most expensive state to operate a motor vehicle and Oregon is the cheapest, according to a report from Bankrate.com. Bankrate — which factors in the costs of repairs, gasoline, insurance, taxes and fees — says a typical driver in Georgia spends $4,233 a year to operate his or her vehicle. That is almost double the cost in Oregon ($2,204). The national average is $3,201.

Georgians spend a lot of time in their cars due, in part, to Atlanta’s sprawling communities and a lack of public transportation. Those long commutes lead to above-average gasoline costs and insurance rates. Additionally, Georgia has the highest state automobile taxes and fees in the nation.

California ($3,966), Wyoming ($3,938), Rhode Island ($3,913) and Nevada ($3,886) round out the five most expensive states.

Meanwhile, Oregonians benefit from the absence of a state sales tax as well as relatively low car insurance costs. Also, the typical Beaver State resident drives 16 percent fewer miles than the national average.

Alaska ($2,227), South Dakota ($2,343), Montana ($2,660) and Indiana ($2,698) join Oregon among the five cheapest states.

Click here to view the findings from all 50 states.

 

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RepairPal Says Certified Shop Network Has Doubled

RepairPal says it has more than doubled the number of repair shops in its RepairPal Certified network, surpassing 430 qualified shops in 43 states. To qualify as a RepairPal Certified shop, auto repair facilities must pass a screening and be graded by RepairPal’s team of ASE-certified master mechanics. All certified shops also must agree to charge prices for repairs within the range of the company’s RepairPrice Estimator. In addition, these shops must guarantee the quality of their work with a minimum 12-month/12,000-mile warranty.

 

Leadership Change At Heartland Automotive

Brett Ponton is leaving as the president and CEO of Heartland Automotive Services, America’s largest Jiffy Lube franchise. Ponton has been president and chief executive since 2009. During his tenure, the Irving, TX-based company has refreshed all of its locations, revitalized its marketing efforts and introduced new services.

His background includes time with Veyance Technologies and the Goodyear Tire & Rubber Co.

Jim Marcum has been appointed interim CEO of Heartland. Most recently, Marcum was president and CEO of Central Parking Corp. He also has been CEO of Circuit City.

 

Record Attendance At Snap-on Franchisee Event

Snap-on Inc. reports that a record 2,850-plus franchisees attended its annual Snap-on Franchisee Conference, which was held Aug. 16-18 at the Gaylord Opryland Resort & Conference Center in Nashville. The event included a 150,000-square-foot product expo and nearly 160 new products.

 

Labor Day Auto Travel To Rise 4.3%

AAA Travel anticipates that 34.10 million Americans will journey 50 miles or more from home during the upcoming Labor Day holiday — a 4.2-percent increase above the 32.70 million who traveled last year. Notably, the expected number of 2013 Labor Day holiday travelers would mark a new post-recession high. The Labor Day holiday travel period is defined as Thursday, Aug. 29 to Monday, Sept. 2.

The increase in holiday travel is attributable to increased consumer spending and an improving housing market. “For many Americans, their home is also their biggest asset,” said AAA president and CEO Robert Darbelnet. “As home prices improve in many parts of the country, more families are feeling comfortable about traveling this Labor Day holiday.”

Automobile travel will remain the dominant mode of transportation, with roughly 29.2 million people (85 percent) planning to drive to their destination — an increase of 4.3 percent, according to AAA.

AAA says gas prices are unlikely to be a major factor for people in determining whether they will travel this Labor Day. As of mid-August, prices were on average down 2.7 percent per gallon compared to the same time last year. The average price for gas on Labor Day 2012 was $3.83 per gallon — the most expensive average ever on record for the holiday. The national average price for a gallon of regular gas was $3.54 on Aug. 20 (the date AAA’s survey results were published). That’s $0.18 lower than a year ago.

AAA expects gas prices to remain less expensive than last year based on current trends.

The largest share of travelers (46 percent) on a single day will depart Friday, Aug. 30, and the largest share will return on Monday, Sept. 2 (43 percent).

 

Point Of View: Are We Ready For The HEVs?

“Hybrid vehicles are the fastest-growing segment of the light-duty vehicle market” 2011, National Research Council – Assessment of Fuel Economy Technologies

“The number of registered HEVs in the U.S. grew to nearly 2 million [in 2012]” – State Clean Air Index

“Nine of the 10 most fuel efficient vehicles today are hybrids or electric vehicles” – Fueleconomy.gov’s Top Ten EPA-Rated Fuel Sippers

Maybe it’s my age, but it is amazing to me how quickly and decisively things have changed in our business. Heck, it wasn’t that long ago that we were shocked that we were able to do a simple parts look up on a dedicated computer equipped with electronic cataloging capabilities. And now I’m seeing detailed ads for parts look ups on my smartphone with pictures, related sales opportunities and information on how to install the part.

Not that long ago, cars were being equipped with 8-track tape players, then CD drives, and now vehicles are Internet capable with Pandora, Sirius and iTunes dominating our entertainment possibilities, while that connectivity allows the car to communicate with service centers, sending diagnostic information and helping to set up an appointment.

And, just as quietly and quickly, alternative fuel vehicles have entered the aftermarket fleet, and this industry has begun the daunting task of preparing our shops and technicians to service vehicles beyond the usual internal combustion powered vehicles we have been dealing with for more than a century. The U.S. Energy Information Administration estimates that, in 2011, there were nearly 11 million alternative fuel vehicles in the United States. This total includes nearly 10 million ethanol-flex fuel vehicles, of which about 1 million actually used E85.

For example, the Automotive Maintenance & Repair Association in conjunction with its Motorist Assurance Program is having its Fall Tech Committee meeting at DePaul University’s O’Hare campus in Chicago Sept. 10-12, and one of its major technical presentations is titled “Retail Service Opportunities For Hybrid-Electric Vehicles,” addressing this growing need and what our industry may need to do to act upon this prospect.

As the AMRA/MAP info on the event states: “Many of the HEVs on the road today are old enough that they are no longer covered by the OEM warranty. And, the owners of those vehicles are looking beyond the OE dealer – to find reputable repair shops that can perform all the same basic repairs and maintenance services that they’ve trusted our shops with in the past … Maybe that 6-year-old HEV needs a coolant pump replaced. Certainly you don’t [need] specialized training and tools related to high-voltage electrical motors and batteries to change a coolant pump … or do you?” The presentation promises to answer that question and others related to this cutting-edge issue facing today’s service shops.

So, as with other changes in our industry paradigm, are we ready for these vehicles that can become part of the service mix? Or will we fumble the ball in the early stages, missing opportunities that could be there for the taking?

I remember when the flood of Asian imports hit our industry back in 1980s and into the 1990s, when we were less than responsive to a burgeoning opportunity sitting on our doorsteps. We were at best reactive in providing the parts and trained service needed to support that significant market segment, when a more proactive approach could have been beneficial.

We have since caught up in that import segment, but we need to stay on top of this alternative fuel vehicles opportunity so not only are we able to cash in on the additional business possibilities, but so we are serving the American motoring public as we always have.

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Gary A. Molinaro
Publisher

 

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AfterMarketer Club Blends With Its Parent Company

AfterMarketer Club, an automotive industry digital marketing agency, is now doing business under the same name as its parent company, Right On – No Bull Marketing. The business helps car dealerships and aftermarket companies with lead generation, sales and customer retention. It specializes in Internet, social media and mobile marketing.

 

Lift Institute Plans ‘All-in-One’ Inspector Certification Event

The Automotive Lift Institute (ALI) has scheduled its first “all-in-one” session to provide Lift Inspector Certification Program participants with the opportunity to complete multiple key program requirements in a single location over a three-day period. The event will be held Nov. 6-8 in Las Vegas in conjunction with the SEMA Show. Interested participants must register by Sept. 20.

ALI staff members and factory-designated trainers will open the session with a participant’s orientation on Wednesday, Nov. 6. Attendance at a six-hour orientation is mandatory for all Certified Lift Inspector candidates.

On Thursday, activities will include group study for both the pre-course exam and the course exam. The group study sessions are open to any enrolled participants who have attended an orientation. On Friday, participants may take the pre-course exam. Those who have previously passed the pre-course exam will be given the opportunity to take the course exam.

The previously scheduled participant’s orientation on Friday, Nov. 8 will still be held as a standalone event for those who do not wish to take advantage of the “all-in-one” package.

Registration for the “all-in-one” event’s participant’s orientation and group study activities are included in the Lift Inspector Certification Program fee, which is discounted to $1,000 through Dec. 31. The fee also includes a candidate handbook and course material. Additional fees will be required for those taking an exam.

To reserve a seat at the “all-in-one” event, email info@autolift.org or call (607) 756-7775 by Sept. 20.

 

ATD Reports $5.84M Net Loss For Q2

Huntersville, NC-based American Tire Distributors (ATD) reported a $5.84-million net loss for the second quarter of 2013 — down from $5.13 million in net income a year ago, despite a 9.2-percent year-over-year increase in net sales.

ATD’s income tax benefit for the 2013 second quarter came in at $1.70 million, based on a pre-tax loss of $7.60 million, while the income tax benefit from the second quarter of 2012 was $10.30 million, which was based on a pre-tax loss of $5.20 million.

Cost of goods sold for the quarter was up 9.7 percent. Selling, general and administrative expenses rose 7 percent, while interest expense increased 2.4 percent.

Net sales rose $80.71 million (or 9.2 percent) to $955.08 million in the three months ended June 29, 2013. The increase was primarily driven by the combined results of new distribution centers, as well as the acquisitions of Consolidated Tire & Oil (CTO), TriCan Tire Distributors and Regional Tire Distributors (RTD). These growth initiatives added $113.40 million in incremental sales in the second quarter of 2013. This increase was partially offset by $26.70 million in lower net tire pricing, primarily driven by manufacturer price repositioning and an overall softer sales unit environment.

ATD is billed as the leading replacement tire distributor in North America. It operates a network of 133 distribution centers in the United States and Canada, and boasts roughly 72,000 customers (62,000 in the United States and 10,000 in Canada).

 

Baldwin Filters To Supply Speedco

Baldwin Filters has announced a deal to supply filtration products to Speedco locations across the United States. Speedco operates a network of more than 50 quick lube and tire service locations for the trucking industry, serving both owner-operators and fleets. Baldwin’s full line of lube, fuel, air, coolant and hydraulic filters will be available at all Speedco locations.

 

AIA Canada Announces Partnership With Newspaper Group

The Automotive Industries Association of Canada (AIA Canada) has entered into a media partnership with Newspapers Canada to educate the driving public about the need for regular vehicle maintenance to improve car safety. Newspapers Canada is a joint initiative of the Canadian Newspaper Association and the Canadian Community Newspapers Association. The two groups represent more than 850 daily, weekly and community newspapers in every province and territory in Canada.

AIA’s “Be Car Care Aware” website is providing free editorial resources — stories, photos, fact sheets, market research, videos and more — to reporters and editors on automotive care and repairs, environmental issues, and road safety.

 

ASRW Mobile App Available For Download

The new Automotive Service & Repair Week (ASRW) mobile application is now available for download. The free app — which is available for iPhone, Android and Blackberry users — can be found by searching “ASRW2013” in the applicable app store.

The app allows participants to search the exhibitor list and access the floor plan in addition to searching all educational sessions and events taking place during the week. It’s also integrated with registration. Other features include a calendar, show alerts during ASRW, and social integration with Twitter and Facebook. Additionally, users can access their hotel reservations and information on local restaurants and attractions.

 

Nominations Open For Female Service Shop Owner Of The Year

The Car Care Council Women’s Board seeks nomination for its Female Service Shop Owner of the Year award competition. The award is given to an outstanding woman who has a proven record of excellence in the automotive service industry. Click here to nominate somebody. Nominations are due Oct. 4. The award will be presented during the WB Reception at AAPEX in November.

 

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AutoNation’s Parts, Service & Collision Gross Profit Up 10.6% In Q2

AutoNation’s parts, service and collision business (its customer care unit) came through with sales up 8.9 percent at $655.90 million for the second quarter of 2013. Same-store sales were up 6 percent. Customer care gross profit rose 10.6 percent to $282.20 million, while gross margin expanded from 42.1 percent to 42.7 percent year-over-year. Same-store customer care gross profit was up 7.4 percent.

Management reported growth across all aspects of the customer care business — customer-pay, warranty, wholesale parts and collision — both in revenue and gross profit.

Fort Lauderdale, FL-based AutoNation is America’s largest automotive retailer, owning and operating 266 new vehicle franchises that sell 32 brands across 15 states.

 

Group 1’s U.S. Parts & Service Sales Up 7.1% In Q2

Group 1 Automotive saw its parts, service and collision sales increase 18.4 percent to $260.95 million in the second quarter of 2013, driven by increases in all aspects of the business: collision, customer-pay, warranty and wholesale parts. Gross profit rose 17.3 percent to $137.07 million, while gross margin slipped from 53.1 percent to 52.5 percent.

Same-store sales growth was a record 8.8 percent.

U.S. parts and service sales grew 7.1 percent to $224.08 million in the quarter (same-store sales up 8.7 percent). This breaks down as a 15-percent increase in warranty revenue, a 23-percent rise in collision revenue, a 4.5-percent increase in customer-pay parts and service sales, and a 5.4-percent rise in wholesale parts revenue.

U.S. parts and service gross profit increased 8 percent to $119.90 million.

Houston-based Group 1 owns and operates 139 automotive dealerships, 178 franchises, and 35 collision centers in the United States, United Kingdom and Brazil that offer 33 brands of automobiles.

 

Lithia Motors’ Customer-Pay Sales Up 8.9% In Q2

Lithia Motors (Medford, OR) reported double-digit gains in its service, body and parts business in the second quarter of 2013. Sales increased 10.5 percent to $94.46 million, while gross profit rose 12 percent to $46.69 million. Service, body and parts gross margin increased 60 basis points to 49.4 percent.

Same-store service, body and parts sales increased 7 percent to $91.45 million.

Lithia’s customer-pay business saw sales climb 8.9 percent to $53.24 million (same-store sales up 4.9 percent). This marked the 16th consecutive quarter of gains. Wholesale parts sales rose 8.8 percent to $16.92 million (same-store sales up 5.9 percent), while body shop sales increased 2.9 percent to $8.60 million (same-store sales up 2.9 percent). Warranty sales grew 24 percent to $15.71 million (same-store sales up 19.4 percent).

Same-store service, body and parts gross profit rose 8.2 percent to $44.10 million.

Lithia is the ninth largest automotive retailer in the United States, selling 27 brands of new vehicles and all brands of used vehicles at 91 stores in 11 states.

 

Asbury’s Q2 Parts & Service Gross Margin Hit 61.3%

The Asbury Automotive Group (Duluth, GA) saw its parts and service revenue rise 8.8 percent to $153.90 million in the second quarter of 2013. Management attributed the $12.50-million increase to a $5.60 million (or 6 percent) increase in same-store customer-pay revenue, a $3.40 million (or 17 percent) increase in same-store warranty revenue and $2.20 million from acquisitions.

Parts and service gross profit rose 13.9 percent to $94.30 million in the quarter, while unit gross margin increased 270 basis points to 61.3 percent. The year-over-year gross profit improvement was driven by a 26-percent rise in reconditioning work, a 6-percent bump in customer-pay and a 26-percent increase in warranty work.

Asbury operates 97 franchises (76 dealership locations) in 18 metropolitan markets within 10 states, in addition to 23 collision repair centers.

 

Sonic Automotive’s Parts Revenue Rose 2.8% In Q2

Charlotte, NC-based Sonic Automotive saw its parts, service & collision repair (fixed operations) revenue increase 4 percent to $307.05 million and its unit gross profit rise 4.5 percent to $151.13 million in the second quarter of 2013.

Parts revenue grew 2.8 percent to $160.54 million in the period, while service revenue increased 6.4 percent to $134.84 million and collision repair revenue decreased 6.6 percent to $11.67 million on a year-over-year basis.

Overall fixed operations customer-pay revenue increased 3.2 percent, while warranty revenue rose 12.5 percent. Wholesale parts revenue was up 5.3 percent, and used vehicle reconditioning revenue decreased 0.2 percent.

Customer-pay gross was up 3 percent, while warranty was up 19 percent.

 

Penske’s Same-Store Service & Parts Revenue Up 6.6% In Q2

The Penske Automotive Group (PAG) saw its service and parts sales rise 8.1 percent to $391.55 million in the second quarter of 2013. The $29.36-million increase breaks down as a $23.70 million (or 6.6 percent) increase in same-store revenue during the period, coupled with a $5.70-million increase from net dealership acquisitions. The increase in same-store revenue came from …
• A $9.90 million (or 3.8 percent) increase in customer-pay revenue;
• An $11.30 million (or 15.6 percent) rise in warranty revenue;
• A $2.10 million (or 9.4 percent) increase in body shop revenue; and
• A $500,000 (or 9 percent) increase in vehicle preparation revenue.

Service and parts gross profit grew $23.20 million (or 10.9 percent) to $235.20 million. This breaks down as an $18.80 million (or 8.9 percent) increase in same-store gross profit, coupled with a $4.40-million increase from net dealership acquisitions.

Bloomfield Hills, MI-based PAG operates 324 retail automotive franchises, representing 39 different brands, as well as 30 collision repair centers. The company has 172 franchises in 18 states and Puerto Rico, in addition to 152 franchises located outside the United States, primarily in the United Kingdom.

 

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Penske Buying Commercial Vehicle/Parts Distributor In Australia, New Zealand

The Penske Automotive Group has signed an agreement to acquire Western Star Trucks Australia, a distributor of commercial vehicles, related spare parts and aftermarket support across Australia and New Zealand, as well as portions of Southeast Asia. The seller is Transpacific Industries Group Limited, and the total purchase price is expected to be roughly $200 million. Penske anticipates that transaction will close this quarter.

The business to be acquired primarily distributes heavy- and medium-duty trucks for Western Star, MAN and Dennis Eagle through a network of more than 80 independent dealers, while serving customers across a number of industries, including on-highway, logistics, construction, mining, manufacturing, agricultural and waste/refuse collection.

 

Truck Vehicle History Reports Business Launched

Specialty Reports Inc., a subsidiary of Sparta Commercial Services, has launched Truckchex, an online source for history reports on commercial and heavy-duty trucks. Purchasers of Truckchex vehicle history reports receive information on any reported damage, last reported odometer reading, salvage or rebuilt titles and more. The company says reports are available for virtually every type of pre-owned truck, from semis to flatbeds, tow trucks to dump trucks.

Truckchex joins Cyclechex, an online source for motorcycle history reports, and RVChecks, an online source for recreational vehicle history reports.

 

Tire Industry Association Unveils New Hall Of Famers

Three industry executives will be inducted into the Tire Industry Association Hall of Fame at a ceremony Nov. 4 in Las Vegas. They are:
Dick Johnson, the retired chairman and CEO of American Tire Distributors (ATD). Johnson, who retired in 2009, led ATD though 10 years of rapid growth, both organic and via acquisition. Prior to becoming ATD’s chairman and CEO in 2003, he was the company’s president. Before that, Johnson led the Heafner Tire Group’s Southeast division.
Bob Dunlap, president and CEO of the Dunlap & Kyle Co., which also operates the Hesselbein Tire Co. and the Gateway Tire Co. and has a total of 56 stores across seven states. Dunlap was a founding member of the TBC Corp.
• The late Lex Brodie, founder of the Lex Brodie’s Tire Co. chain in Hawaii. He died in January at the age of 98.

Additionally, the association will honor Modern Tire Dealer publisher Greg Smith with the Ed Wagner Leadership Award. Smith is a 33-year automotive trading publishing veteran.

 

People Watching 8/28/13

• Herb Anderson is now a sales executive with AutoVitals. His background includes time as a field sales rep for Alldata.

David Byrd of Goldsboro, NC is the Mitchell 1 2013 Educator of the Year. Byrd has been an automotive instructor in the applied technologies division at Wayne Community College in Goldsboro for 14 years.

Kevin Borchert from Racine, WI is the 2013 Mitchell 1 Automotive Technology Outstanding Student. Borchert is enrolled in the automotive technician associate degree program at the Milwaukee Area Technical College and is expected to finish in 2014. His career goal is to work as a professional technician at an aftermarket repair facility that installs and repairs performance equipment.

AAMCO Transmission and MAACO Collision Repair & Auto Painting founder the late Tony Martino is being posthumously inducted into the International Franchise Association Hall of Fame. Martino died in 2008.

Cygnus Business Media has named Tom Neil publisher of Fleet Maintenance magazine. Neil most recently was group director of integrated sales at Penton Media, where he led sales efforts for Fleet Owner and American Trucker.

 

News Briefs 8/28/13

NAPA has named Hennessy Industries as its supplier of the year. Hennessy is the first company to receive the ward six times.

• Ireland-based Wheelcare Ltd. has become a Ken-Tool distributor. Wheelcare serves the tire service industry in Ireland, as well as the United Kingdom, Germany, Spain, Italy and Greece.

• The Coordinating Committee for Automotive Repair (CCAR) reports that more than 500,000 S/P2 online tests have been completed so far this year.

Mitchell 1 has updated the maintenance module of its ProDemand repair, diagnostic and maintenance information program with an improved user interface.

Four Seasons has added an A/C compressor installation video to its YouTube channel.

Carstar Auto Body Repair Experts has become the first corporate member of ASA.

CarProof, a Canadian vehicle history report provider, has sold a minority stake in the company to Hellman & Friedman, a San Francisco-based private equity firm.

• The MACS online store now carries Motor Information SystemsHeavy Truck Specification Guide.

Universal Lubricants has trademarked its re-refined base oil as EcoClear.

 

Event & Trade Show Briefs 8/28/13

Bob Stewart, General Motors’ manager of aftermarket service support, will discuss counterfeit tools at the fall general meeting of NASTF on Nov. 6 during Industry Week in Las Vegas.

• The NASTF Spring General Meeting will precede the Automotive Training Expo (ATE) on March 20. ATE, billed as the West Coast’s largest automotive training venue, will be held March 21-23. Both events will take place at the Doubletree Hilton Seattle Airport.

AMI will honor its 20th class of Accredited Automotive Managers (AAMs) during Industry Week 2014, set for July 29 to Aug. 2 at the Cobo Center in Detroit. AMI will not hold a graduation ceremony during the upcoming Automotive Service & Repair Week (ASRW) in October.

• The Chrysler Group — through its Mopar service, parts and customer care brand — will exhibit at Automotive Service & Repair Week this fall in the new OEM Rotunda area on the show floor. Chrysler/Mopar will join Ford and I-CAR in this new venue.

MACS will hold a weekend technical training “blitz” Oct. 18-19 at its training center in Lansdale, PA. Click here for more information.

 

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