Memorial Day: AAA Forecasts Record Holiday Road Trippers
Nearly 43 million Americans will get away over Memorial Day weekend, according to AAA. And, the long holiday weekend will see the second-highest travel volume since the motoring club began tracking in 2000. Overall, an additional 1.50 million people will travel compared to 2018 — a 3.6% increase.
Despite rising gas prices, which are inching closer to the $3-per-gallon mark, the vast majority of holiday travelers (37.60 million people, or 88% of all travelers) will drive to their destinations. That’s 3.5% more automobile travelers than last year and a new record.
AAA expects to be called on to rescue more than 353,000 motorists at the roadside over Memorial Day weekend. Dead batteries, flat tires and lockouts will be the leading reasons.
Valvoline Instant Oil Change Same-Store Sales
Up Double Digits
Total quick lubes sales at Valvoline Inc. rose 26.6% to $200 million in the fiscal second quarter ended March 31, 2019, attributable to organic system-wide same-store sales growth of 10.8% and the addition of 186 net new stores when compared to the prior year.
The year-over-year increase in the number of Valvoline Instant Oil Change (VIOC) locations came from 76 net shop openings and 110 acquired locations. For the quarter, 26 net new shops were added: 12 company-owned and 14 franchise locations. Valvoline ended the quarter with 1,327 total VIOC shops.
VIOC company-owned same-store sales growth was 10.2% on top of an 11.2% gain a year ago for a two-year stack of +21.4%. Franchised same-store sales increased 11.2% on top of an 8.5% gain a year ago for a two-year stack of +19.7%.
According to management, same-store sales growth came from both increased transactions and average ticket. Marketing investments made in customer acquisition and retention programs sent transactions higher, while premium mix, pricing and an increase in revenue from non-oil-change services led to the improvement in average ticket.
Quick lubes gross profit margin decreased from 40.1% to 39.6% because of the reclassification of certain costs in connection with the adoption of a new revenue recognition standard. Nonetheless, segment operating income rose 15.8% to $44 million. Earnings before interest, taxes, depreciation and amortization (EBITDA) grew 15% to $53 million.
On April 12, Valvoline acquired 12 service centers in the Las Vegas area.
Management has increased its full-year same-store sales guidance for VIOC. The previous range was +7% to +8%. The new expectation is for +8% to +9%. The company still expects between 27 and 32 new company-owned VIOC shops this fiscal year, as well as between 60 and 70 new franchised VIOC locations.
Car Maintenance App BUKL Launches In Toronto
Toronto-based BUKL, which started as a website for instant price quotes on specific auto work, has released a new app that allows users to schedule vehicle maintenance and compare prices at more than 120 service shops in the Toronto area.
The free app allows drivers to select a shop, schedule a service appointment and lock in a price. The app also delivers live notification of work progress.
Participating shops pay a service fee on the total invoice amount. The fee covers curated parts delivery before the customer’s arrival, all work orders and invoices, and payment processing.
BUKL reviews shops on an individual basis.
“The reason we directly onboard these auto shops is to ensure best practice is always maintained on the site, and so that we can personally review the facilities they operate from,” said Jesse Sahlani, BUKL CEO and founder and the son of a longtime shop operator. “We have a dedicated partnership manager for the auto shops to ensure that we can promptly respond to any questions or issues.”
Parts distributors are chosen in a similar manner.
“We work with certain brands of parts, and choose the best part for a repair based on the make of car, price of the part, and availability,” Sahlani said. “It is important to curate these relationships with distributors on a territory-to-territory basis, as we tend to work with local businesses.”
The company is expanding aggressively and plans to move into new markets soon, according to Sahlani.
“Our goal is to expand within Canadian cities to start,” he said. “We have our roots established in Montreal and Vancouver for a soon-to-be announced launch. Ultimately, we do have our eyes on the U.S. market, though it is a matter of strategic timing to ensure effective coverage.” — Sarah Hollander
Mach1 Building A National Roadside Assistance Provider Network
The makers of Mach1, a roadside assistance app in the final stages of beta testing, are recruiting service providers for a nationwide network. Mach1 will dispatch the closest service provider in real time through an automated process and dispatching system.
The app will offer eight services: tow truck, out-of-fuel, lockout, dead battery, flat tire, mobile mechanic, trip inspection and a local non-emergency police connection. Service providers can offer any combination of those services and are not required to have a tow truck.
The provider chooses the price for services, and payment is processed in the app, which includes direct text and call communication with customers. The app is free to download.
Service providers pay an operating fee at the time of transaction that averages 15% across the United States, according to the company.
The first consumer launch is scheduled for San Antonio in late June or early July, with all of Texas next on the expansion list. More launch locations will be based on provider sign-ups.
“We have been growing large networks in other areas as well that we can expect to launch in, in tandem with parts of Texas or shortly thereafter,” Co-Founder and President Laura Narpaul said.
Thus far, more than 350 providers have signed on in 24 states, Narpaul said.
Mach1 is using a multi-channel marketing approach — including social media, email, phone calls, direct mail, trade show booths, and in-person meetings, as well as grass roots efforts — to spread the word.
Provider vetting includes background checks and safety training check lists. Businesses provide primary contact details, business information and proof of insurance.
The company has almost completed its pre-seed round funding and will be looking to go directly into the seed funding round by the third or fourth quarter of this year. — Sarah Hollander
Discount Tire Launches New Brand Campaign
Discount Tire (Scottsdale, AZ) has launched a new brand campaign. The tagline “Let’s Get You Taken Care Of” will be woven throughout all brand messaging going forward.
Campaign pieces include digital advertising, print and radio ads, billboards, in-store signage, and web banners. The first TV commercial, titled “Lewis & Clark,” debuted April 29.
The overall message is meant to convey a culture of helping drivers feel at ease, according to the company.
“‘Let’s Get You Taken Care Of’ is at the very core of our DNA,” Vice President of Marketing Lisa Pedersen said in a statement. “We like to say we’re in the people business; we just happen to sell tires and wheels.”
New York Adds Recall Checks To Vehicle Inspection Process
New York has implemented checks for open recalls during the vehicle inspection process. More than 10,000 inspection stations now have the ability to search for unfixed safety and emissions recalls through a free search tool developed jointly by Carfax, the Alliance of Automobile Manufacturers and the Association of Global Automakers. Drivers of vehicles with open recalls are notified at the time of inspection, and recall details are included on the state inspection report. According to Carfax, over 2 million vehicles on New York roads (one out of every six) have open recalls.
Mitchell 1 SocialCRM Gets Google Partner Status
The Mitchell 1 SocialCRM shop marketing service is now a Google Badge Partner. The certification recognizes expertise in managing high-performing Google pay-per-click (PPC) campaigns, as well as demonstrated Google Ads skill and expertise by passing assessments and earning certifications through the Google Academy for Ads. Mitchell 1’s badge includes specializations in search advertising and mobile advertising.
This partner status brings with it special access to Google Ads staff and tips that can help to improve the Google PPC ad campaigns. In addition, the SocialCRM team can attend Google Ads training, learn about upcoming updates, work with a dedicated Google representative for strategy consulting, and access new Google Ads features and services before they launch to the public.
SocialCRM launched its Google Ads service in February, offering paid search advertising to help repair shops attract new business and maintain an effective online presence.
Mitchell 1’s ProSpect App Now Compatible With Android Devices
Mitchell 1’s ProSpect mobile vehicle check-in and inspection application now offers a version that supports Android mobile devices. This expands ProSpect’s compatibility across virtually all Android and Apple iOS smartphones and tablet devices. Either app can be installed on an unlimited number of devices, according to Mitchell 1.
ProSpect is integrated with the company’s Manager SE shop management system and is used to greet customers, identify vehicles by scanning VINs or license plates, and perform digital inspections with notes and photos to document vehicle complaints. The results are recorded and visible on Manager SE computer screens.
ASA Introduces Mobile App
The Automotive Service Association (ASA) has launched a new app to provide a quick way to reach its members and others with industry news and association information. Other features include a shop locator, event information and business tips.
The association partnered with MobileSoft to develop the app. MobileSoft, ASA’s newest sponsored benefit provider, also will now provide special pricing for ASA member shops that want to build their own apps.
To download, search for “Automotive Service Association” in Google Play for Android users and the App Store for iPhone users.
TechForce Foundation Recognizes 2019 ‘FutureTechs Rock’ Winners
Jonathon Miranda, an automotive student attending Ohio Technical College, a post-secondary technical school in Cleveland, is the 2019 TechForce Foundation “FutureTechs Rock Awards” grand prize winner, having received the largest number of online votes. He gets his choice of a $1,000 TechForce Foundation tuition scholarship or a Snap-on tool voucher of equal value.
The awards competition recognizes and celebrates students’ commitment to and passion for the technician profession and the transportation industry. More than 25,000 votes were cast among 10 national finalists. Each finalist receives a tool voucher from Snap-on, a gift certificate to Cengage’s online educational library, and a Haynes online manual.
The nine other finalists were …
• Ryan Adkins of the Collins Career Center in Chesapeake, OH.
• Angelle Vanderwarf of the Kankakee Career Center in Bourbonnais, IL.
• Antonio Yepez Cervantes of Ventura College in Ventura, CA.
• Liam Thompson of Delgado Community College in New Orleans.
• Noah Salo of Joliet Public School in Joliet, MT.
• Felyciti Alvarez of Fallbrook High School in Fallbrook, CA.
• Aaron Smith of the Schuylkill Technology Center in Frackville, PA.
• Wyatt Mote of Wake Forest High School in Wake Forest, NC.
• Riley Prince of Gateway Community College in Phoenix.
The “FutureTechs Rock Awards” is part of the foundation’s “FutureTech Success” initiative to help inspire and support tomorrow’s technician work force. For additional information, visit TechForceFoundation.org/FutureTechsRock.
TravelCenters Registers Diesel Tech Apprenticeship With Labor Department
TravelCenters of America (TA) has registered its longstanding diesel technician apprenticeship program with the U.S. Department of Labor (DOL).
“One of the benefits … is to help TA gain national and industry recognition for our commitment to technician training,” TA Lead Recruiter Chad Estle said.
Having a DOL-registered apprenticeship program should attract more veterans, Estle added. TA also is pursuing a benefit that would allow veterans to tap into their G.I. Bill aid for cost-of-living expenses while enrolled.
The program offers guided, hands-on experience, teaching trainees to maintain and repair technologically advanced heavy-duty vehicles. Participants work full time at a TA truck service facility while completing their training, which can span from 12 months to 36 months, depending on the technician’s skill level.
The tech receives recognition by the DOL as a Journeyman Diesel Technician upon successful completion of the training.
TA developed the program in partnership with FASTPORT Inc., the DOL industry intermediary for the transportation and logistics sector.
“The apprenticeship program provides a tangible starting point for men and women seeking a new career, members of the military looking for a second career, or for current technicians wishing to advance their skills,” Skip McGary, TA’s executive vice president, said.
Dynamic ADAS Recalibrations Come To Mitchell Diagnostics
Mitchell has updated the dynamic special test coverage within Mitchell Diagnostics through a partnership with Bosch Automotive Service Solutions that allows Advanced Driver-Assistance System (ADAS) calibrations. Features of dynamic special tests available on Mitchell Diagnostics include …
• Built-in dynamic calibration routines for forward-facing collision avoidance systems.
• The ability to pause and resume routines if driving is interrupted during calibration.
• Step-by-step instructions to assist technicians.
Vehicle makes addressed by the dynamic special tests include BMW, Chrysler, Jeep, Ford, General Motors, Honda, Hyundai, Kia, Mazda, Mitsubishi and Volvo. There is no additional subscription charge for these capabilities, and all Mitchell Diagnostics users will automatically receive them with their next update.
AutoNation Posts Rise In Parts & Service Revenue, Gross Profit
For the first quarter of 2019, AutoNation’s customer care (parts and service) revenue increased 2.1% to $876.70 million, and its customer care gross profit grew 3.5% to $398.90 million. As a percentage of revenue, gross profit rose from 44.9% to 45.5% on a year-over-year basis.
Same-store customer care revenue increased 2.4% to $859.10 million. Same-store customer care gross profit rose 3.9% to $391.10 million, primarily because of increases in gross profit associated with customer-pay service (up $7.70 million) and warranty (up $5.40 million).
According to management, customer-pay gross profit benefited from an increase in higher-value customer-pay repair orders, the company’s parts initiatives and price increases. Warranty gross profit benefited from improved margin performance, largely attributable to a shift in mix toward higher-margin service work and improved parts and labor rates negotiated with certain manufacturers.
Ft. Lauderdale, FL-based AutoNation, America’s largest automotive retailer, owned and operated over 325 locations as of March 31, 2019.
Sonic Turns In Gains In Same-Store Fixed Ops. Revenue, Gross Profit
Sonic Automotive’s fixed operations business (parts, service and collision repair) posted $341.43 million in revenue for the first quarter of 2019 — a decrease of $10.33 million, or 2.9%, compared to the previous year. However, on a same-store basis, fixed operations revenue increased 2.3% to $335.19 million. This breaks down as …
• Same-store customer-pay revenue grew 4.1% to $136.09 million.
• Same-store warranty revenue rose 5.0% to $67.44 million.
• Same-store wholesale parts revenue declined 3.6% to $38.58 million.
• Same-store internal, sublet and other revenue increased 0.5% to $93.08 million.
Fixed operations gross profit decreased 3.8% to $163.24 million but increased 2.0% to $160.01 million on a same-store basis. This breaks down as …
• Same-store customer-pay gross profit rose 5.2% to $73.44 million.
• Same-store warranty gross profit grew 4.8% to $37.61 million.
• Same-store wholesale parts gross profit declined 2.3% to $6.64 million.
• Same-store internal, sublet and other gross profit decreased 4.6% to $42.33 million.
As a percent of revenue, total same-store fixed operations gross profit slipped 20 basis points to 47.7%.
For the full year, management maintains its outlook calling for +3% to +5% same-store sales growth for fixed operations.
Charlotte-based Sonic is one of the largest automotive retailers in the United States as measured by total revenue. As of March 31, 2019, the company operated 92 stores in its franchised dealerships segment and eight stores in the EchoPark segment. The franchised dealerships unit consists of 104 new vehicle franchises (representing 23 different brands of cars and light trucks) and 15 collision repair centers across 13 states.
Group 1 Reports Record U.S. Parts & Service Revenue Growth
Group 1 Automotive’s total parts and service revenue rose 5.6% to $369.17 million in the first quarter of 2019, primarily driven by growth in the United States and United Kingdom that was partially offset by a decline in the company’s Brazil business. Total same-store parts and service revenue growth was 6.1%. In constant currency, total same-store revenue growth was 7.7%.
Same-store U.S. parts and service revenue climbed 6.8% to $293.98 million, reflecting …
• A 7.6% increase in customer-pay parts and service revenue (a new record).
• A 12.2% rise in warranty parts and service revenue.
• A 2.8% uptick in wholesale parts revenue.
• A 3.1% increase in collision revenue.
A key factor in the company’s customer-pay parts and service revenue growth was the rollout of a four-day work week schedule. This has, according to Group 1, increased capacity and efficiency in a “significant number” of its service departments, and allowed them to improve recruiting and retention of technicians and service advisors. Management expects to have roughly 85% of its U.S. parts and service operations (by revenue) on the four-day work schedule by the end of the third quarter.
Same-store U.S. parts and service gross profit rose 7.5% to $158.03 million, while gross margin increased from 53.4% to 53.8% on a year-over-year basis. While the company reported growth in all sectors of the business, the increase came primarily from improvements in customer-pay and warranty.
For the full year, management expects Group 1’s U.S. parts and service revenue to grow in the mid-single digits.
Houston-based Group 1 owns and operates 181 automotive dealerships, 233 franchises and 47 collision centers in the United States, United Kingdom and Brazil.
Penske’s Same-Store Service & Parts Revenue
Up 5.6% In Local Currency
The Penske Automotive Group (Bloomfield Hills, MI) generated $559.80 million in service and parts revenue from its retail automotive dealerships in the first quarter of 2019 — an increase of 3.0%. U.S. revenue was up 3.4%, and international revenue increased 2.2%.
Same-store service and parts revenue rose 3.0%. Excluding unfavorable foreign currency fluctuations, same-store service and parts revenue increased 5.6%. The same-store service and parts revenue increase came from a 9.8% rise in warranty revenue and a 1.2% increase in customer-pay revenue, partially offset by a 2.3% decrease in vehicle preparation and body shop revenue.
Gross profit from service and parts increased 4.2% to $331.40 million (also up 4.2% on a same-store basis). Excluding unfavorable foreign currency fluctuations, same-store gross profit increased 6.8%. The same-store gross profit increase came from a 9.8% rise in warranty gross profit, a 3.0% increase in customer-pay gross profit, and a 1.6% uptick in vehicle preparation and body shop gross profit.
Service and parts gross margin — both reported and on a same-store basis — grew from 58.5% a year ago to 59.2% for the three months ended March 31, 2019.
Penske, one of the largest automotive retailers headquartered in the United States, operated 339 retail automotive franchises as of March 31, 2019 — 149 of which were in the United States and 190 of which were located outside of the United States (primarily in the United Kingdom).
Lithia’s Same-Store Customer-Pay Revenue
Rose 7.2% In Q1
Lithia Motors’ service, body and parts revenue rose 11.1% to $317.40 million in the first quarter of 2019 primarily because of acquisitions, combined with more late-model units in operation.
Total same-store service, body and parts revenue increased 6.4%. Same-store customer-pay revenue was up 7.2%, while same-store warranty revenue grew 12.2%. Wholesale parts revenue was flat, and body shop revenue declined 2.0%.
Service, body and parts gross profit rose 15.2% to $159.50 million. On a same-store basis, it was up 10.5%, attributable to a mix shift toward higher-margin customer-pay work.
Medford, OR-based Lithia has 182 locations nationwide.
Asbury’s Same-Store Parts & Service Gross Profit Rose 6%
In the first quarter of 2019, the Asbury Automotive Group’s parts and service revenue rose 9.2% to $217.60 million. Same-store revenue increased 6.9% to $212.60 million.
Parts and service gross profit rose 8.2% to $135.30 million; however, gross margin slipped from 62.8% to 62.2% on a year-over-year basis. Same-store parts and service gross profit increased 6.0% to $132.30 million, attributable to …
• A $5-million (or 7.1%) increase in customer-pay gross profit.
• A $2.30-million (or 12.2%) rise in warranty gross profit.
• A $200,000 (or 3.4%) increase in wholesale parts gross profit.
As of March 31, 2019, Duluth, GA-based Asbury had 106 new vehicle franchises (87 dealership locations) and 25 collision repair centers in 17 metropolitan markets across nine states.
AAA: Many Consumers Interested In EVs, But Reluctant To Buy
While consumer interest in going green remains steady, adoption of electric vehicles lags, AAA found in its annual survey tracking opinions of electric and hybrid vehicles.
Americans may not have a solid understanding of electric vehicle performance, which may be giving them pause when it comes to considering electric for their next purchase, according to AAA.
“Today, more than 200,000 electric cars can be found on roads across the country, as almost every manufacturer sells them,” AAA’s Director of Automotive Engineering and Industry Relations, Greg Brannon, said. “But, like other new vehicle technologies, Americans don’t have the full story, and that could be causing the gap between interest and action.”
For example, the survey found that 59% of Americans were unsure of whether electric vehicles have better range when driving at highway speeds or in stop-and-go traffic.
When asked if most vehicles will be electric by 2029, four in 10 survey participants said “yes.” Although most Americans don’t believe electric vehicles will be on the road in masses in the next 10 years, the survey extrapolated that 40 million Americans would likely consider an electric vehicle for their next car purchase, with Millennials leading the pack, followed by Generation X.
Concern for the environment and lower long-term costs remain the leading reasons to buy electric (74% and 56%, respectively), according to the survey.
Specific objections to buying electric remain but have trended down. Concern that there are not enough places to charge or of running out of charge while driving were both down 11% from 2017, the survey showed. Anxiety about higher costs for battery repair or replacement was down 8%, and higher purchase price was down 6%.
Results were based on 1,000 telephone interviews of adults 18 and older conducted April 4-7.
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Interest In Self-Driving Cars On The Rise Globally
Consumer acceptance of self-driving cars in the United States will increase over time, and preference for riding in self-driving cars is set to double within the next 10 years, according to a report from the Capgemini Research Institute.
About 36% of U.S. consumers surveyed had positive emotions about self-driving cars, seeing benefits in terms of fuel efficiency (73%), reduced emissions (71%) and time savings (50%). More than half of consumers (56%) said they would be willing to pay as much as 20% more for an autonomous vehicle over a standard one, according to the report.
Chinese consumers and Millennials were particularly positive toward autonomous cars, Capgemini reported.
However, despite the surge in positive consumer sentiment, excitement and anticipation, barriers to adoption remain. Respondents said that purchase or adoption of a driverless vehicle would be dependent on vehicle security (73%) and system security (72%).
The findings point to a changing perception of mobility, with consumers believing autonomous cars will take on a larger role in their daily lives, according to Capgemini.
49% of all global respondents to the study would be comfortable with self-driving cars running an errand on their behalf. 54% would trust an autonomous vehicle to drop off or pick up non-driving friends and family members. 50% expect self-driving cars to help them save time to pursue other activities, such as socializing, entertainment, working or simply enjoying the journey.
The report was based on 5,538 consumer surveys across six countries in Europe, North America and Asia in December 2018.
Automatic Labs Introduces New Connected Car Assistant
A new connected car assistant from Automatic Labs Inc., a SiriusXM company, is now available via such retailers as Amazon, Best Buy and Crutchfield.com. Each Automatic purchase includes three years of free “select” service, which includes crash alert, engine light diagnostics and more, as well as six months of free “premium” service, such as roadside assistance and real-time location monitoring and sharing. The Automatic assistant includes an adapter and app that allows most vehicles model-year 1996 or later to be transformed into connected vehicles.
News Briefs 5/21/19
• Felix Canestri has joined Belle Tire as its director of procurement. He has been with Tire Discounters for the last 15 years, most recently as vice president of purchasing.
• Goodyear Auto Service and Just Tires is offering special discounts, including free car care checks, to current and past U.S. military members in observation of Memorial Day. And, for the first 2,000 free car care checks scheduled, Goodyear will make a $5 donation (up to $10,000) to Honor and Remember, a military support organization that recognizes the sacrifice of fallen military members and their families.
• NTB Tire & Service Centers and Tire Kingdom Service Centers, which are TBC Corp. companies, are offering all customers a free tire care check for National Tire Safety Week (May 20-27).
• More than 800 Big O Tires franchise owners, managers, corporate associates and suppliers attended the franchisor’s annual convention last month in New Orleans, according to Big O Tires. Participants raised $205,000 for the Big O Tires Scholarship Fund.
• The Car Care Council has released a new video that explains the Tire Pressure Monitoring System (TPMS) found on newer vehicles and why motorists should not ignore the TPMS warning light when it illuminates. The video was produced in conjunction with AutoNetTV Media.
• Carstar added 23 new shops to its network in April.
• Collision repair equipment and technology provider Spanesi has expanded its reach with the addition of Industrial Finishes & Systems Inc. (Eugene, OR) as its exclusive distributor in Idaho, Oregon, Utah and Washington.
• Spanesi has earned global certification from the Ford Motor Co. This includes collision repair benches, electronic measuring systems, welding equipment, self-piercing rivet guns and all other Spanesi body repair support products.
• The Alliance of Automotive Service Providers of Minnesota is awarding $16,000 in scholarships ($1,000 individual awards to a total of 16 people) to help automotive service and collision repair students pay for tuition or tools during the 2019-‘20 school year. The funds come from a fundraising drive within AASP-MN’s membership, as well as donations from the Minnesota State I-CAR Committee and the Bill Smith Fund.