Being able to keep in touch with reality and shoot straight without seeming like a pessimistic scrooge is an art lost on many. But if you can conquer the masterful mindset it takes to be both a realist and an optimist, you’ll be leaps and bounds ahead of the pack. This is the balance we hope to strike every year as we set out to help you prepare for the 12 months ahead.
In the midst of anticipating an election, ISIS headlines and falling oil prices, there was no shortage of news — good and horrific — in 2015. Despite all the drama going on in the world, most operators reported an upward trend on their bottom lines and 2015 turned out to be a solid year for the automotive aftermarket.
Now that we’ve made it through the holidays and ushered in the New Year with due fanfare, it’s time to turn our attention to 2016.
Significant Issues
Government Regulations
Obama Care is like the big bad wolf that won’t go away. A few years ago, operators were concerned with costs and how they would afford the fees associated with it. They’ve since adapted but that doesn’t mean its not affecting operations at all.
“Just the reporting of the Affordable Care Act is a nightmare. Coming up with a form that will organize all the information [the government] wants us to provide is difficult. When the Affordable Care Act first came out we were concerned about the costs involved. It turned out the costs are what they are and we learned to live with it. Now, it’s almost like I have to hire another full time person to keep up with all the paper work it’s requiring,” said Ron Morrow, owner of 17 Grease Monkey franchises and six lube/car wash combination stores in Colorado, our 2015 Operator of the Year.
Rising health care, insurance and taxes are all things National Oil & Lube News industry advisor, Ragan Holt predicted will impact 2016 but those aren’t the only issues he’s keeping a close eye on.
“I think negative impacts will come from additional regulations and higher minimum wages,” Holt said.
Morrow agreed with him saying, “I think changes to the minimum wage could impact us a lot as well.”
Holt expects positive impacts to come in the form of affordable technology creating additional profit centers in the shops and motivated consumers who are seeking to take care of their vehicles with hope of them lasting longer.
Oil Prices
This time last year, operators were optimistic for a variety of reasons but the biggest was falling fuel prices. As we saw, gas prices continued to fall throughout 2015 and as of press time, are still at a low. Cheaper gas prices mean more people on the roads. More people on the roads translate to more cars needing service, all good news for the industry.
“In 2015, more people traveled for Thanksgiving by car for distances over 50 miles than I have seen since 2008. With that being said, plus the fact that people aren’t going the 7,000 – 8,000 miles between oil changes like the manufacturers suggest, I think we’re going to have a better year than we’ve seen in the past five or six years simply because of gas prices,” said AOCA vice president, Dave Haney.
Haney also brought into question the price of motor oil.
“Now, if only oil prices would come down a little bit. They haven’t budged since January 2015 and it doesn’t make sense to me. In the past seven years, oil prices went up because transportation costs went up but now the price of the barrel of oil is at the lowest it’s been since the mid 2000s and motor oil prices still haven’t dropped.”
It makes you wonder, “What gives?”
Dealerships
Alas, the time has come, dealerships have figured out what makes our industry so great and they want to get in on the action. It’s something Ted Sage, operator of LOF-Xpress Oil Change in Ankeny, Iowa, our 2015 Best Looking Lube winner is thinking about.
“In the central Iowa area, we’re experiencing dealerships becoming much more aggressive in trying to get into the oil change business,” Sage said. “We’re going to have our eyes on the customer who traditionally goes to the dealership or has been wooed by the dealer to come back and start to use their quick lube and other repair services.”
Employee Retention
The operators we talked to weren’t as concerned this year as they have been in the past with retaining employees. Rather, they were very comfortable with the staff they have and their ability to keep them happy. They shared how they’ve gotten to this point and their formula for retaining good employees.
“I think quality employees, the guys that make this a career, are looking for reasonable pay, benefits, and it’s very important they feel of value to the company,” Morrow said. “I want to make them feel valued so I give them pats on the back and when their hire date anniversary rolls around I give them an anniversary card. It’s the little things that make a big difference.”
Everyone shared Morrow’s philosophy.
“No matter what anybody says, I still feel like if an employee is getting a good hourly wage and is part of an incentive or commission program, by the time they add everything up and divide it by the hours they work, if its competitive or better than someplace else they’ll stick around,” Sage said.
Most of Haney’s employees have been with him as long as he’s owned his business.
“I have very low turnover. I’m a big fan of training. I have 10 employees but I offer medical insurance. I’m closed on Sundays and all major holidays. I’m a hands-off owner, not a micro manager, and I treat my employees with respect, not like they are replaceable,” Haney said.
If you read any of Holt’s columns in 2015 titled, The New Normal, you’re familiar with where he stands on the subject of employee retention already.
“The shop environment that includes a positive shop culture, good training and a good work/life balance will always allow for happier, more productive employees who perform at a higher level and want to stick around for the long haul,” Holt said.
Shooting High
Just as each year brings about all new unknowns, it also teems with opportunity. 12 new months, untouched, waiting to out preform the one prior. Optimism tied this group of industry professionals together and so did their reasoning, more cars on the roadways.
“I think 2016 will be a better year in the shops. During 2015 we saw a rebound that created momentum for 2016. It has also been another record-breaking sales year for new cars. In theory, more new cars means more used cars have new owners. New used car owners will spend more on their “new” used car,” Holt said.
Everyone had small and large goals in mind for 2016. They included tightening down on unnecessary expenses, uniformity among new stores, improving customer relationships and of course, growth — something, hopefully all those new cars on the roads and lower fuel prices will help them achieve.
“I wouldn’t mind expanding a couple more stores if the right opportunity is there. I’d also like to stay focused on getting five to 10 percent growth for our existing shops,” Morrow said. “I also want to stay focused on our customer service and building relationships. It’s a small thing but big in scope.
For Sage who’s recently opened his second location, he hopes to continue to move towards uniformity across bay procedures and inventory placement.
“We’re real close but it would be great if we could close in on that 20 percent we have left.
Haney will be maximizing his spend by figuring out where he can save. He’s got a pretty savvy way of doing it too.
“Every year I take my expense report and see where I can save $100 a month. I usually can’t find anything so I look at what I can save between $50 and $100, then $25 and $50 and finally, less than $25 a month. What I find is I find 10 things where I can save $10 a month a lot easier than I can find one thing I can save $100 a month on. When you start adding everything up, it’s more than you think,” Haney said.
As we look to the past to anticipate the future, the excitement for what’s to come in the industry gives us confidence in a bright future. We’re looking forward to what is ahead and hope you are too.
