People used to say that the three best friends you can have are a doctor, a lawyer, and an auto mechanic.
The doctor keeps you healthy, the lawyer keeps you safe and the auto mechanic keeps you going.
I was blessed with an amazing Italian doctor for most of my — mostly healthy — life. My lawyer is phenomenal, but I truly only appreciated the importance of an auto mechanic when I moved to Oman.
I remember one day when I brought my Jaguar to his workshop for repair and I was complaining about having to replace my radiator.
He looked at me with sympathy, then looked behind him at the various Porsche, BMW and Mercedes Benz waiting to be fixed. He then told me: “My friend, this is the Middle East… cars break down.”
Indeed the weather in the GCC is a “car killer”, especially if we look at it from the point of view of us paying for the repair... it can get very expensive quite quickly.
But what about the other side of the coin? Is it profitable to run a car repair business nowadays?
Everything we own needs some degree of maintenance once in a while including cars. Over 90 per cent of Omani households own automobiles.
So, we can safely say that this business is here to stay. Lacking local data, I have asked my friend Bharat R Kanodia to provide me with some numbers and figures from his market of specialisation, the USA.
According to Bharat there are over 260,000 auto repair shops in America, employing over half a million people, and generating revenues in excess of $70 billion every year. 80 per cent of such shops are privately owned by individuals.
In order to understand the business value it is important to understand the customer mindset and the evolution of the product.
In the USA there are four trends that are reshaping this business. We will see two of them in this article.
Leasing versus Buying
Millennials are one of the largest projected consumers of cars, and they prefer to lease from the dealership or use rideshare services.
If they lease, the services and repairs are also done at the dealership. This might take a longer period of time to happen in the Middle East, given the lower price of vehicles, but in the long run, especially after many jobs were lost during the pandemic, it is not completely unimaginable that consumers will be more careful with the investment on their favourite 4 wheels.
So, one point in favour of the car repair business.
Cars last longer
Useful lives of cars have increased dramatically allowing people to retain cars longer, requiring more service, repairs, and parts for older cars.
This is certainly one point down for the car repair industry. However, in some regions such as the GCC, repair parts are not readily available, therefore the workshop can apply higher margins.
So, let us count this as half point down instead.
In the next part of the article, we will see the other 2 trends and 4 tips to make the business more appealing and profitable.
(The writer is a member of the International Press Association)
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