AUTOMOTIVE FRANCHISING FEATURE BY GINA GILL
Car ownership has become an essential part of life in America. With fully developed towns, transportation is needed to strive and survive in this country. In fact, the U.S. is home to the largest passenger vehicle market in the world.
According to the Department of Transportation, there were 254 million registered passenger vehicles in the country in 2007. The number of vehicles has continued to rise since the 1960s, with the exception of the recession, which was the only time the sales decreased since the introduction of vehicles into the everyday lives of American families. Automotive franchises are available from coast to coast and widespread throughout the country, offering locations in a variety of fields almost anywhere.
To gain understanding on the business of automotive industry, consider the life cycle of a car, which includes pre-sale and manufacturing, initial sale of the vehicle before it begins running and then the after sale, which provides several businesses for upkeep.
An automotive franchise would guarantee a continuous increase in demand as time goes by and a product that has become a staple within the average household. It’s inevitable that people will need transportation and consumers would prefer to be behind the wheel and in control of their own destination.
This concept is tempting for new franchise owners because it establishes a brand, an in-demand product and well recognized business model. Though the industry took a public hit during the recession, sales have since increased.
In 2009, during the economic crisis, car sales experienced its largest decline in sales in 27 years. That being said, Americans still purchased 10 million units that year. In 2014, there were 16.5 million units sold, though there has been an increase, it’s a slow incline to how quickly the market used to grow before the crisis.
People need more: more choices, more colors, more options- the consumer expects to get what they want and they know the industry allows them to browse the market from the comfort of the own home on the screen of a laptop. Therefore, manufacturing has become more evolved, more elaborate focusing on the many needs of Americans. In 2003, the U.S. was the largest producer of vehicles in the world, followed by Japan and Germany.
Manufacturing cars is a part of its economic history, everyone remembers Henry’s Ford famous assembly line on the cusp of the industrial revolution. Therefore, becoming a franchisee within this field is partnered with a deep sense of patriotism, as well as knowing you’re creating jobs for people within the community. Motor vehicles and part manufacturers directly employed 786, 000 people at the end of 2012 with 13 auto manufacturers.
There are numerous options for franchisees, including foreign manufacturers that are now established in the States. Manufacturers are also exporting vehicles out of country, creating even more opportunity for profit. In fact, in 2012, approximately 2.6 million vehicles were exported to more than 200 countries. Manufacturers are also at the forefront of new innovations and products, making for a continuously evolving field of business.
What is a car without all of its parts? A machine needs everything in working order to function properly and because people are dependent on their vehicles, they will easily purchase parts, which creates an automatic consumer base. There are numerous parts suppliers in the automotive franchising industry and account for nearly 4 per cent of U.S. manufacturing and account for more jobs than any other manufacturing area.
With Americans owning cars for an average of ten years, they need to keep their vehicles functioning and rely on parts to easily update their cars to working order. Again, this field is usually well established with recognized brands that easily support owners in marketing. Though this area slowed down during the economic turmoil, it has been reestablishing itself and slowly increasing. With more cars on the road, there is more opportunity for more parts.
As a retail industry, technology has increased opportunity for sales and a lot of customers can purchase and browse even ore from online, helping reach a broader fan base. Providers offer replacement parts, performance parts, maintenance parts and other accessories and usually offer services and repairs as well. Parts are not only sold to consumers but other businesses and on an international level. According to the Department of Commerce 2001 industry annual assessment, U.S. automotive parts exports increased 36.2 percent to $58 billion in 2010 from the previous year. Which was impressive, considering the industry was just recovering from a recession.
Providers offer replacement parts, performance parts, maintenance parts and other accessories and usually offer services and repairs as well.
People rely on professionals to maintain their vehicles because it’s an expensive investment that they do not want to see wasted, therefore they look to franchises as a reliable service industry. Compared to independent owners, franchises have a solid reputation and customers feel confident leaving vehicles in their hands.
Due to technical advancements, people are less likely to service their cars themselves compared to the past because it necessitates specialized knowledge and talent.
Effects from the recession
The most highlighted trade affected by the economic turmoil of this decade was the automotive industry. One of the most significant effects is the increase in length of car ownership, which in turn has changed how to industry functions overall today. People are willing to pay more for services and products to ensure the life of their vehicle is lengthened, and that change in attitude affected the pricing and type of vehicles sold. There is a higher standard than before and a concern for longevity.
Though car sales were truly hit during the recession, it’s still an industry that has a large affect on the American economy. Dealerships changed their strategy and products to adhere to the new demands of the consumers.
This field has proven that it will always remain a staple in the American economy, even when it falters, it will always be in demand. It’s an ever growing field that can adapt to a variety of requests that is continuously advancing and changing.
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