Today, the speed of innovation in the auto industry is happening at a more accelerated pace than ever before. The market is undergoing a profound transformation in response to a variety of factors—from advancing technology and a robust economic to changing consumer demands. Given this landscape, it’s no surprise that a growing number of businesses are taking advantage of the auto repair SBA loan (and other funding options) to remain on the cutting-edge.
Here’s a look into four factors driving growth in the auto industry.
Big data and connectivity are impacting the entire auto industry ecosystem. The global connected car industry is predicted to be a $141 billion market by 2020, and businesses that embrace these innovations will gain a competitive edge. (The latest innovation in the auto industry was on display this month at the 2019 Consumer Electronics Show, where self-driving cars and autonomous vehicles dominated the showroom floor.)
Thanks to IoT, engineering/production timelines are accelerated and car parts are able to be optimized on an unprecedented level. This tech-forward approach is also letting manufacturers gain valuable insights into a connected car’s condition throughout its lifetime. Similarly, IoT is opening up a new playing field for the industry when it comes to both consumers and commercial applications. For dealerships, GPS-enabled trackers supported by IoT help salespeople and supervisors manage inventory quickly and efficiently—all the while delivering a better user experience.
The Rise of Car Washes
The car wash industry is booming. With an expected continued growth rate of 1.2% year over year (and the rise of automated car washes that minimize human labor costs), it’s never been a better time to own and operate a car wash. The industry’s growth is fueled by a number of factors, which Carwash.com describes as “consumers with more disposable income and investors who are interested in our industry’s minimal labor, high volume and quick return on investment business models.”
To embrace this trend, many auto repair owners are getting in on the car wash game, and using SBA funding for car wash businesses to realize their growth plan. (The SBA is currently affected by the partial government shutdown, but our pros can still help you get the ball rolling with securing the right SBA or conventional loan for your car wash business’ needs.)
The Electric Vehicle Era
While the promise of electric cars is an exciting one, it also poses a threat to the income stream of auto repair shops. (One study, for example, found that 97% of auto repair techs aren’t well-equipped to service electric vehicles.) Electric engines have fewer parts, rarely break down and often have no need for the minor repairs that sustain auto repair businesses.
But rather than dash the dreams of auto repair business owners, the EV opportunity is a unique chance to be on the cutting edge of their industry’s future.
The industry is currently underprepared to service electric vehicles. However, auto repair shops that focus on expanding their service offerings to increase their value will have a competitive edge in the coming electric evolution. Repair shops will need to prepare for the EV exodus by gaining tech skills, or risk being wiped out by service stations that do so. SBA and other funding options for auto repair businesses can help make this happen.
Capitalizing On Market Growth With Small Business Loans
Over the last five years, the U.S. auto repair industry saw a 2.5% growth rate, and its profitability likewise is on the up and up. This trend is estimated to continue through 2022. Meanwhile, the average of age of vehicles on the road is also on the rise, with a historic high of around 10 years old. This current economic climate offers a growth opportunity for future-facing auto repair business owners.
Small businesses are looking to capitalize on this opportunity and invest in upgraded tech and machinery, real estate and the capabilities needed to service EV and autonomous vehicles. Given this landscape, auto repair businesses are increasingly choosing to take advantage of commercial loans in order to make long-term investments and pave the way to a profitable future.
Working with an expert commercial finance partner can make all the difference in the process, helping to ensure you’re making the right decisions for your auto repair loan needs.