Franchises in the Automotive Industry
The majority of Americans rely on cars to travel from one place to another. Even larger metropolitan cities like Los Angeles and Miami do not have enough public transportation for people to commute without a car in a time efficient manor. Cars are a valuable asset that require maintenance and care to keep in good condition for the long-term.
Americans are very fond of their cars. Most families today have two cars or even more. Whether it is your commute to work, picking up/ dropping off your kids to school, buying food from supermarkets, or planning a family trip to the nearby city, car ownership is indispensable for most Americans. People need their cars to be comfortable and dependable. Therefore, the reliance for automotive maintenance and repair shops are always increasing.
Visa Franchise Industry Analysis
Many of the businesses and franchises Visa Franchise works with a focus on the repair and maintenance of motor vehicles or specialized in certain automotive parts, including but not limited to oil maintenance or tire repair. At Visa Franchise, we have reviewed over 2,900 franchises and businesses. Of the automotive industry concepts that we have updated on our platform, the total investment amounts can start as low as $5,950 all the way up to $12,494,000. In our analysis, we saw the average royalty fee takes up 6.8% of gross revenue, and the average marketing fee is 3% of gross revenue.
Automotive Franchising Trends
Drivers are trying to increase their cars’ age: the average age of a car on the road in the U.S. is a record-high of 11.5 years old. The number of vehicles on the road that are at least 25 years old is estimated around 14 million. Older cars are still very functional and usable with proper maintenance and regular repairs to ensure quality and safety. Moreover, the automotive industry is constantly evolving, with an increased demand in the electric vehicle market and more cars being used for ride-share apps such as Uber and Lyft.
Automotive franchises cover a range of car-related services, including auto parts retailers, rentals, repairing, car washes, oil changes, and other related businesses.
The global automotive aftermarket industry is expected to hit $722.8 billion by 2020. U.S. automotive franchises generate about $41 billion of global revenue. Major services within the automotive industry include mechanical repair (about 50% of industry revenue), collision repair (30%), car washes (10%), and oil change and lube (10%).