Opportunity Alert: Clunkers Rev Up Revenue

Posted on | February 10, 2009 | No Comments

Given a choice between a brand new Beamer and a 2001 Chevy whatever I’m sure we’d all be in line for a Beamer. Well, maybe. Believe it or not, I’m going to give you one reason to choose a 2001 Chevy, or just about any old clunker you can think of, over a sexy, new BMW.

Hint: It’s not the price tag.

It’s the fact that clunkers are actually revving up revenues in the automotive, service and retail sectors. As more people are forced to hang on to their old cars instead of buying new ones, auto parts retailers, auto mechanics and auto dealerships’ parts and service departments are benefiting.

In response to a recent survey by the Automotive Service Association, 60% of independent auto mechanics reported that sales were up. Only 14% reported a sales decline, and 76% said they expect increased business in the coming year.

According to the National Automobile Dealers Association, parts and service departments are expected to see a 3% increase in sales. Some dealers are experiencing far greater sales growth in their parts and service departments. Ballweg Chevrolet of Middleton, Wisconsin reported a 17% sales gain over the past 12 months.

The entire retail sector is down, as are large auto retailers. But, analysts have begun to upgrade stocks of auto retailers like Advance Auto Parts and O’Reilly Auto Parts based on the fact that consumers’ are buying fewer new cars, which in turn drives up the average age of cars on the road and ramps up the need to purchase low-cost replacement parts (see Forbes article).

Others capitalizing on this opportunity include AAA and other providers of roadside assistance (AAA added 500,000 memberships last year), quick lube operators, brake and muffler shops and battery resellers.

How You Can Capitalize on This Opportunity

1. Get a job at an auto retailer (They’re filling sales, management and other jobs):

• Advance Auto Parts

• AutoZone

• CarQuest
• NAPA Auto Parts
• O’Reilly Auto Parts

2. Get a job at a Tire Store/Manufacturer:

• Big O Tires
• Bridgestone

3. Get a job at a Car Care Center (fancy name for auto repair shop):

• Firestone Complete Auto Care
• Sears Auto Centers

4. Get a job at an auto dealership parts and service department

5. Get a job as an auto mechanic

6. Work for a roadside assistance provider:

• AAA
• Automobile Club of America

7. Buy an auto parts/tools franchise:

• Matco
• Snap On

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