Car Franchise & Business Opportunities
Automotive/ Car Industry
General Automotive Franchise & Business Industry
The U.S. has one of the largest car industries in the world. Auto manufacturing deeply depends on thousands of suppliers, materials, retail and vehicle maintenance. Thus, it is an industry that delivers economic benefits and creates jobs in many different sectors in all 50 states. The Auto industry supports a total of 9.9 million American jobs, about 5.1% of private-sector employment. In addition, it is an industry that provides great global trade benefits: $99 billion exports of car and parts were shipped from the U.S. ports in 2017.
The U.S. Automotive industry accounts for 2.7% of gross domestic product (GDP), or $545.4 billion. Of that, $327 billion was auto manufacturing and $218 billion was vehicle retail sales.
Automotive Franchise & Business Industry Trends
The Automotive industry is the forefront of innovation. In 2018, automakers spent more than $125 billion on research and development (R&D). New R&D initiatives are being created to adapt and transform the industry to better respond to the new opportunities of the 21st century. In addition, the rise of Internet of Things (IoT) and machine learning are opening the way for new designs and technologies in the Auto industry. The industry also needs to listen and adapt to consumers’ expectations. For example, the interest in electrifies vehicles continues to grow while connectivity, privacy, data security, and automation remain a concern.
Key Automotive Industry Numbers
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Paid-in-Full Rate
The Paid-in-Full Rate is when the SBA loan is fully paid off by the small business owner including interest, indicating financial strength.
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Charged Off Rate
The Charged Off Rate is the SBA loan default rate where loans have no confidence in being paid off by the small business owner.
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:1
SBA Loan Success Ratio
For every 10 SBA loans fully paid including interest, 1 SBA loan was unable to be paid back, or defaulted.
-SBA Loan Data from 2010-2019
-Non-Franchise Businesses taken into account: 24,273
Car Franchises 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.
Vetted Biz Car Franchise Industry Analysis
Many of the businesses and franchises we show on Vetted Biz 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 Vetted Biz, we have reviewed over 2,900 franchises and businesses. Of the automotive industry concepts 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 Franchise 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.
Car 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%)
Average Car Franchise Industry Percentage Fees
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Royalty Fee
8
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Stability Rate
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Marketing Fee
2
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Growth Rate
3
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Failure Rate
Standard Car Franchise Industry Investment
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K
This metric is the standard industry investment amount for a single unit franchise investment in this industry. Our research and analytics team analyzed over 55 franchise concept investment breakdowns in order to calculate this figure.
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%
Paid-in-Full Rate
The Paid-in-Full Rate is when the SBA loan is fully paid off by the franchisee including interest, indicating financial strength.
0
%
Charged Off Rate
The Charged Off Rate is the SBA loan default rate where loans have no confidence in being paid off by the franchisee.
0
:1
SBA Loan Success Ratio
For every 4 SBA franchise loans fully paid including interest, 1 SBA loan was unable to be paid back, or defaulted.
-SBA Franchise Loan Data from 2010-2019
-Franchise Businesses taken into account: 2,083
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