The combination of shuttered dealerships, fewer repair bays and more cars on the road for longer periods of time is driving a chain of auto care franchises to see the wisdom of expanding in the Greater Hartford area. AAMCO says it expects to open 10 new shops in the region over the next three years.
Since the onset of the recession, Horsham, Penn.-based AAMCO Transmissions, Inc. has seen an uptick in the demand for new locations.
Franchisee Mike Tarr opened an AAMCO Transmissions in Manchester four years ago. The shop owner says business has jumped in the past two years.
“People are driving older cars and keeping them for longer periods of time,” said Tarr. “They would rather repair them than put a great deal more money into buying a new one.”
According to a report published earlier this month by Gerson Lehrman Group, 54.1 percent of those polled said they planned to hold on to their cars for 10 years or more. In comparison, that percentage was 44.6 and 46.4 in 2008 and 2007, respectively.
AAMCO Transmissions opened 31 stores last year and has signed 32 new franchise agreements already in 2010. Tony Padulo, vice president of franchise sales and development, says the bullish company has a goal to open at least 60 new sites nationwide in 2011 and another 90 in 2012.
AAMCO Transmissions, which has 900 transmission centers throughout the U.S., Canada and Puerto Rico, is eyeing the Bristol, Enfield, New Britain and West Hartford areas for possible expansion.
The transmission repair franchise, which can cost $225,000 to $300,000 to outfit, generally employs three to five workers. AAMCO Transmissions doesn’t provide in-house financing, but the company networks with smaller banks on behalf of potential franchisees and offers marketing, real estate and sales support.
An estimated 30 percent of all franchisees who signed agreements in 2009 and 2010 tapped into some form of a retirement account, such as their 401(k) plans, to finance their new AAMCO Transmissions business, according to Padulo.
Historically AAMCO has been associated with transmission work, but the company branched out with a wide range of same-day car repair, including brakes, air conditioning, tune-ups, tires and other aftermarket services.
“Transmissions are repaired once every seven years on average,” said Padulo. “So we might only see a car once or twice. We figured if customers trusted us with one of the most important parts of the car, the transmission, they would certainly trust us to handle their total car care.”
Padulo says the Total Car Care component of AAMCO has seen double digit increases over the last five years. Revenues average around $500 million company-wide and $575,000 per unit.
