New User-Contemplating Quick Lube Opportunity

[richcase]

Hi Everyone,

I've just joined and been reviewing the forums and I'm looking for any input on the future viability of the light mechanical/oil change place like this.

I'm contemplating buying an existing oil lube/light auto mechanic location. They do quick oil changes, light mechanical (brakes/inspection/ alignment/tune ups) and are typically 3 or 4 cars wide and 2 deep (6-8 spots). They typically designate 1 bay to alignment, 1 to inspection, another one for mechanical perhaps, and the remaining 4 or whatever for the quick oil change.

All the locations are such that the owner owns the business and land, which makes the purchase price for a new start or existing re-sale very expensive so even contemplating this is a huge investment, but owning tangible land (which I'm not sure is good or bad).

I see in some of the forums saying this is a bad deal because the dealers try to use oil changes as loss leaders, cars don't do as much oil changes as in the past (and some come from the factory with lifetime maintenance), electric cars, crap environment making people not maintain cars, etc. I think my biggest concern is the economy over the next few years on top of all the above. But, these posts are a bit older, some are 2 and 3 years old. Are things getting worse, better?

I'm going to start reviewing the aoca.org and noln.net as well, but thought I'd throw this up as well to possibly restart some discussions, get some opinions, etc.

Anything is appreciated!

 

[robert roman]

Rich,

It has become very difficult to make money with a 2 or 3 bay stand-alone express lube facility. The market is mature, generally saturated with competition and there is less demand due to extended oil changes and the fact motorists are driving less.

It is less difficult to make money if you have a full-service oil change as the one you mentioned (oil change plus car-care maintenance and repair services) and/or full-service oil change with carwash.

On the other hand, auto repair bays have virtually disappeared at gasoline stations and convenience stores. In addition, the development of lube/repair franchises with or without carwash has slowed considerably. However, new cars dealers have turned up the wick.

Many new car dealers have added “express” oil change to provide a no appointment necessary capacity. More car dealers are adding carwash and automatic vehicle polishers to complement things. All of these things are designed to take your customers off the street. The why is because the goal of new car dealers is create customers for life.

If your strategy for the business is long-term, buying land would make the most sense where property values have dropped least. Otherwise, leasing might make more sense because rents have plummeted where real estate values have dropped the most.

A full-service oil change/auto maintenance repair shop is even more of a contact sport than express lube because a higher level of trust (management and skill) is required.

Mom and pop businesses like this often succeed based on the reputation of the owner who is often a master mechanic. In other words, “Joe” at Joe’s Auto Repair is the business.

Consequently, quality of transition after the sale and the buyer’s ability to provide a customer-centric operation can greatly affect business value and stability of earnings for the continued operation of the business.

 

[richcase]

Thanks!

Thanks Robert, this is great information to contemplate!

 

[packerscw]

How long has the oil change center been in business and does the place have a good reputation?

 

[richcase]

Hey Packerscw

Thanks for the reply. The individual unit is at least 3 years old, but I believe it is much older, probably at least ten years. I have reviewed several resales in the area so they vary, and I have a meeting coming up this week with the broker on a new listing.

The brand seems to be pretty known here, it is Kwik Kar, Kwik Industries and they have the oil change/light mechanical as well as car washes and dry cleaning (unsure how that synergy occurred?). They appear to have many units in this immediate Texas/Oklahoma area.

All units that are put up for resale when done thru Kwik are totally freshened up and brought up to date. Not sure the details yet fully, but it should be totally repainted, cleaned, software updated, and I'd assume would have latest emissions and alignment machines.

Any feedback is appreciated.

Rich

 

[KWIK]

I got your email Rich and I left you a message. Give me a call anytime and I'd be glad to talk with you.

Thanks
Jordan Mosley