How Our Remanufacturing Facility Helps Franchisees
AAMCO franchise owners can now purchase high quality remanufactured transmissions with faster turnaround times for the customer
As automobiles get increasingly complex, so do transmissions. In the past, our AAMCO franchise owners have had to hire builders to specifically work on transmission repairs to keep revenue rolling in. Expert builders, however, command big salaries and are hard to find. It’s a challenge that has bedeviled the auto repair industry for decades, but AAMCO has solved the problem for its franchisees.
When we made the decision to get into Total Car Care, we knew that we had to make our business model simpler. Rather than hiring a builder, our franchise owners can now purchase a high-quality remanufactured transmission from our state-of-the-art transmission remanufacturing facility. We can get a remanufactured transmission to over 70% of our franchisees the next day. This gives our franchisee immediate access to a vertically integrated supply chain with preferred pricing on our core transmission category, and helps our franchisees keep their costs low while they are focusing on increasing their profitability in the Total Car Care segment.
“There are several strategic reasons we decided to open our own remanufacturing facility,” says Jim Gregory, President and CEO of AAMCO. “Our first objective was to simplify the business model. Then, we recognized that as the industry evolves and the labor pool with it, it is becoming increasingly more difficult to find as many technicians who can rebuild a very complex transmission as we could 15, 20, or even 30 years ago.”
GPS partnership is a huge benefit
AAMCO partnered with sister company Global Powertrain Systems (GPS) to build the remanufacturing facility and solve the core problem our franchisees faced in finding and hiring well-trained builders. This allows our owners to stay focused on taking care of our customers, which improves the overall economics of their centers.
“One question new franchisees ask us is where they can find a transmission re-builder,” Jim says. “And then what happens if the builder takes vacation or gets sick? Now they have an option; the remanufacturing facility takes that pressure off franchisees. The overall automotive repair industry is about $200 billion annually. Of that, aftermarket repair services generate over $63 billion. Transmission work is $5 billion annually by itself, and we are the dominant player there. That leaves $58 billion for Total Car Care, and we are going after it. There is a significant opportunity for us to accelerate the growth that we have enjoyed in this area of the business. With GPS supplying remanufactured transmissions it helps free up bay space to allow the franchisees to capitalize on the other Total Car Care work that is out there.”
Enabling franchisees to increase the volume of cars
Transmission revenue is still 65% of our business, but since we expanded our services into Total Car Care beginning in 2004, we have begun to experience a sea change. In 2016, 66% of our customers visited us for Total Car Care, and we expect that number to rise as we continue to advertise in national and local markets.
Transmissions are a high-ticket item, but they are also an infrequent customer purchase. AAMCO’s average ticket, thanks to a big boost from transmission work, is $855. That’s a huge and impressive number in the automotive repair industry, but transmissions represent just 6% of total auto repair and maintenance spending. Total Car Care allows us to go after the other 94%, and our Total Car Care revenue is increasing at a double-digit pace. GPS allows you to build your labor model around certified mechanics rather than transmission builders, which allows you to build deeper inroads into Total Car Care. At the same time, franchisees who use GPS for transmission work are able to sell more transmission work. Rather than having a car stuck on a lift for several days while its transmission is being repaired, the car goes up, the transmission comes out, and the car is moved into the parking lot to wait for its new transmission to be delivered. In the meantime, that lift can be used for other repairs.