Quick and Dirty Auto Repair

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Auto Repair Service Business Plan

Market Analysis Summary

QDAR has a focus on meeting the demand of a regular local resident customer base, as well as towed vehicle drop-ins from local and freeway traffic traveling on nearby freeways. QDAR has established relationships with a few major local tow truck companies for referral business of stalled vehicles requiring a tow to an auto repair facility.

The company estimates that about 80% of revenues will come from the established local clientele and 20% from the local and freeway traffic tow-ins. The table below further estimates the total market potential of type of services rendered by QDAR in the Portland metropolitan area.

4.1 Market Segmentation

QDAR focuses on the middle and upper income markets. This market looks for high quality, rapid service with as much convenience as possible. Most individuals in this market segment are willing to pay an extra premium within the pricing of auto repair services to avoid the common inconveniences of having a vehicle tied up in a repair shop.

Local residents regular customer base
QDAR wants to establish a significantly large regular customer base. This will establish a healthy, consistent revenue base to ensure stability of the business.

Emergency towing local and freeway traffic
Emergency towing of local and freeway traffic comprises approximately 20% of revenues. Convenience, regular referrals from tow truck companies, and high quality, rapid service are critical to capture this segment of the market.

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Local Residents 15% 50,000 57,500 66,125 76,044 87,451 15.00%
Freeway Traffic 10% 20,000 22,000 24,200 26,620 29,282 10.00%
Other 0% 0 0 0 0 0 0.00%
Total 13.64% 70,000 79,500 90,325 102,664 116,733 13.64%

4.2 Target Market Segment Strategy

QDAR will focus on its target market, the middle and upper class market, and establish a reputable image from that target market's perspective, by offering convenience, expedient auto repair services, customer service excellence, and by working with local towing companies.

4.2.1 Market Needs

Between having a high level of commuting traffic, and an equally high level of tourism traffic on local highways, there is a constant significant demand for auto repair services and auto parts. Convenience is a must for most middle and upper class consumers and travelers.

4.3 Service Business Analysis

The market of auto repair services and parts sales is very fragmented. The majority of auto shops usually offer either repair services or parts inventory. The niche where QDAR positions itself represents auto centers that offer both auto services and parts at one convenient location. Middle and upper class customers to whom QDAR will cater its services are less price sensitive as they value the convenience of quick turnaround (on any model/make of car) and high quality of services.

4.3.1 Competition and Buying Patterns

QDAR faces over 400 auto repair and auto parts competitors in the local area. Only a quarter of these competitors offer both auto repair services and auto parts inventories. Among these, only a few are major national chains. The remainder are small privately-owned establishments. QDAR will compete well by focusing on convenience and offering a high level of customer service. Additionally, its honest reputation will be a major factor in repeat business and building a large base of regular, loyal customers.

Primary competitors are engaged principally in the retail sale of automotive parts, tires and accessories, automotive maintenance and service and the installation of parts. Larger competitors have adopted the "supercenter" store model, a freestanding, "one-stop" shopping automotive warehouse that features state-of-the-art service bays. These "supercenters" carry thousands of stock-keeping units and serve the automotive aftermarket needs of the "do-it-yourself," the "do-it-for-me" (automotive service), tire and "buy-for-resale" customer sectors.

Large competitors' stores typically carry the same basic product line, with variations based on the number and type of cars registered in the different markets. A full complement of inventory at a typical supercenter includes an average of approximately 25,000 items.

Automotive product lines usually include:

  • Tires.
  • Batteries.
  • New and remanufactured parts for domestic and imported cars, including:
    • Suspension parts.
    • Ignition parts.
    • Exhaust systems.
    • Engines and engine parts.
    • Oil and air filters, belts, hoses, and air conditioning parts.
    • Lighting.
    • Wiper blades.
    • brake parts.
  • Chemicals, including oil, antifreeze, polishes, additives, cleansers and paints.
  • Mobile electronics, including sound systems, alarms, and remote vehicle starters.
  • Car accessories, including seat covers, floor mats, and exterior accessories.
  • Hand tools, including sockets, wrenches, ratchets, paint and body tools, jacks and lift equipment, automotive specialty tools and test gauges.
  • A selection of truck, van, and sport utility vehicle accessories.

Many competitors have adopted point-of-sale systems in their stores, which gathers sales and gross profit data by a stock-keeping unit from each store on a daily basis. This information is then used to help formulate pricing, marketing and merchandising strategies. Electronic parts catalogs are available in many competitor stores along electronic commercial invoicing systems that offer commercial parts delivery.

Additionally, a number of competitors have electronic work order systems available amongst their various service centers. This type of system creates a service history for each vehicle, provides customers with a comprehensive sales document, and enables the service center to maintain a service customer database.