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Franchises succeed despite tough times for automotive industry

Date Added: January 21, 2010 02:39:54 AM



The grave problems in the American car industry are common knowledge. The US auto industry is in deep financial crisis. In recent cars the big three auto manufacturers GM, Ford and Chrysler, have been struggling survive with collapsing sales, plunging share prices, steep losses in their operations and depleted cash reserves. The credit crunch delivered a double whammy. Car manufacturers cannot get credit to complete their restructuring while lenders refuse to fund car loans to enable consumers to purchase brand-new automobiles.

Yet Franchise Direct has learned that the endemic crisis in the automotive industry, coinciding with America’s worst recession since the 1930s, has actually manufactured some opportunities for aftermarket and car rental and sales franchises.

The reality is Americans are not buying brand-new automobiles as readily as they once did. Franchise Direct estimated that estimated new car sales for this year are 9.7 million units. This represents a 40% decline over the last 3 years. But America’s love affair with the automobile is undiminished. Because of the recession, more drivers are becoming reliant on services offered by automotive franchises as they need to get more miles out of their automobile.

Aftermarket automotive franchises are most likely to succeed from this trend, as consumers seek necessary maintenance more regularly. They will probably turn to a company with a trusted reputation. Used car and rental franchises will also benefit from this new frugality.

Profitable new side sectors are also growing for franchised businesses to profit from. In recent times, drivers have chosen cars with elaborate technology. This will mean high-tech engine systems, microprocessors and high-tech safety and entertainment furnishings. There has also been an industry-wide development of environmentally-friendly technology in automotive manufacturing. With these technologies becoming suddenly mandatory, a novel franchise business is being created to provide for this trend. Drivers currently lack the ability to do such complex automotive work and rather turning to trusted franchise brands.

Also, Franchise Direct recently released a study where they studied the Franchise Disclosure Documents (FDD’s) of 30 automotive franchises and found that more car lovers are relying on franchises to keep their car functioning. So the future for franchises working in the car industry is good. The growing price of cars versus income means that drivers will spend more on car servicing and reconditioning to help keep the drivability of their vehicles. The increased demand for navigation systems, car safety systems and entertainment and systems has also made for growing niche markets for auto franchises.

Franchising succeeds because it allows entrepreneurs to work for themselves, but not by themselves. With an automotive franchise, you’ll be working with a franchise with an established brand name and a trusted reputation. Franchising will set your dreams of owning a small business and put them in motion.

It is ironic that the global recession and the decimation of America’s car industry have created the conditions for the recent success of automotive franchises. America’s attachment to the automobile is undiminished, but American attitudes towards car buying have radically modified. Franchise Direct’s research shows that consumers are turning to automotive franchises to keep their cars functioning. With the government’s stimulus plan providing some economic positivity, Franchise Direct believes that this is a top moment to consider franchise opportunities in the automotive sector.