Jim Evans has more than 28 years experience in auto dealerships, having worked for AutoNation, Penske and most recently as divisional chief operating officer for Sonic Automotive in Charlotte, where he was responsible for 70 dealerships. He recently joined Driven Brands Inc., the parent company of Meineke Car Care, Maaco and Econo Lube N' Tune, where he heads up the new Jump Start program, which is aimed at turning disenfranchised auto dealerships into Meineke Car Care centers.
What kind of impact will the recent dealership closings have on the aftermarket?
There are a couple of key points here. This will inevitably push more people into the aftermarket. That benefits everybody in the space.
Hold times on used cars are now much longer. The average used car on the road has been between eight and eight and a half years old. As of 2009, the average age is over 10 years old.
That's due to a couple of things. Many people are in a personal capital preservation mode, and of course lending restrictions have increased, so the ability to get new car loans has been hampered. Another factor is that between the end of 2007 and the end of 2010, anywhere from four to five thousand new car dealerships will be closed. We're going from around 21,000 dealers to around 16,000.
You put that all together, and people with used cars have fewer places to go. They are holding on to their cars longer. They are looking for short- and long-term maintenance solutions for older cars, and those cars have traditionally gone to the aftermarket because owners perceive it to be less expensive than going to a new car dealer.
How are you reaching out to dealerships for the Jump Start program?
We are using different qualifying specialist providers to contact all the Chrysler and Saturn dealers in the country, as well as the GM dealers. Our marketing approach is to use different companies to help us make that initial contact.
We've run ads in some of the trade magazines, and I've been utilizing the contacts I have within the industry. We have some broker relationships. We're getting the word out very aggresively. I've talked to over 300 dealers in the last six months, and visited probably 40 of them in person.
Ho do you handle the parts supply for the dealerships that join the program?
Driven Brands has national relationships with all the major parts suppliers and distributors. Virtually every Meineke center in the country has access to those suppliers through that network. Every franchise receives the same discount. Meineke doesn't brand or sell parts, so we rely on these relationships.
One of our franchises is going to have a much smaller parts inventory than an OEM dealership. From a cashflow standpoint, a Meineke inventory is between $15,000 and $25,000 at any point in time, because there is such a great level of availability with our suppliers. The fill rate is very simple to maintain. The dealers who join up with us have to manage a much smaller inventory. The average parts inventory for a dealership runs into the hundreds of thousands of dollars.
