Last night I had a conversation with a lifelong family friend named Ron. Ron and my Dad became friends in the mid to late 70s and worked together on quite a few projects at the church. I didn't know Ron's professional employment was involved in the production of automotive computer systems and test systems for production output and high level diagnostic testing devices for the global automotive industry. How did I not know this information?
Ron and I had a two hour conversation about the automotive and transportation space spanning current state, where the industry is headed, the adoption obstacles and the longevity and viable of an auto repair shop for the next 20-80 years. I came away feeling like I participated in a masterclass in automotive technology landscape of the 21st century.
We discussed electrification, autonomous vehicles, the evolution of transportation and how the automobile fits, global production, energy sources, legislation, inflection points and a myriad of other points relating to the long term viability of owning an auto repair business.
This morning I spoke to Charlie who owns the shop we currently use. Inquired about the long-term viability of someone in the trenches vs Ron's perspective being on the forefront of transportation technology. The average vehicle is 12.6 years old. Cars on average are 14.5 years old and light trucks are nearly 12 years old. American's are keeping their cars longer. In Charlie's estimates average length of ownership to expand to 18 years with the tiding turning in 50-80 years to mass adoption of autonomous electrified vehicles.
Ron seems to think the inflection point is sooner that 50 years and he's thinking 15-25 years.
The reality is technology will continue advancing while the adoption rate will lag behind the technology. Combine the evolution with the role the automobile has played in American culture. The heartbeat of America. The best way to discover and explore America is in a brand new chevy SUV. The Dukes of Hazzard. The highway. Look at the reality of transportation density in metropolitan areas leading to unbearable congestion. Tunnels. Self driving cars. Sit in an autonomous car while staring into a phone watching AI generate slop.
Realize as the technology advances, auto repair shops need to evolve to meet demand and be able to solve vehicle/transportation problems, maintenance and breakdowns. There is a tension between manufacturers, independent repair shops and consumer desires. A tension between manufacturer information and technology remaining proprietary or being made available to third parties. Consideration to how the future looks to service the fleet of vehicles going forward in this complex environment, capacity of manufactures, dealers and independents with servicing and maintaining fleets of vehicles by manufacturer, the manufacturer mix in geographic location and ultimate what is the future of transportation.
Transportation is becoming slowly becoming cost prohibitive. Average cost of a new car exceeds fifty thousand dollars. Luxury vehicles and trucks nearing 100,000 dollars. Automakers are steering the market towards leasing and subscription based features. As the car becoming too expensive for average citizens, perhaps there will be an evolution to subscription based services. You own nothing but you pay a fee to summon an autonomous vehicle to provide transport from point A to point B. While the car would traditionally be parked in a space or a garage, it is out and about providing transportation to other people.
Who repairs, maintains and cleans the fleet? Do you purchase a transportation service contract from a manufacturer (Tesla, Ford, GM) or a service provider like waymo or robo-taxi?
How to determine the long term viability of an independent auto repair shop in my lifetime as well as the next generation and beyond. While there is opportunity for the next 50 years, how does that affect my exit strategy? So much to consider.
All being said, the conversation about the future of transportation is fascinating. I continue moving forward in my pursuit of auto repair shop ownership.