If you have been thinking of buying or selling an automotive business, you are probably concerned about how these businesses are going to do after the shutdowns end. In the Northeast, the amount of driving is lower -- with a big impact on the revenues of auto repair and auto body businesses. What does the future hold?
- With the concern about the coronavirus continuing, people will want to continue social distancing. There is no form of transportation that is better at social distancing than the personal automobile. It is likely that many commuters will switch from public transportation to their personal automobile. That is likely to continue for at least several months – until the coronavirus threat goes away.
- It is likely that people will decrease the amount of travel on airplanes to far away destinations for vacations. There is likely to be more travel by car to nearby locations. This will create more travel also.
- The price of gasoline – and the cost of travel by car – is a factor in the amount of travel by car. With the price of gasoline at historically low levels and a return to much higher prices not expected soon, this will increase the amount of travel by car.
- Having been cooped up in their homes for several weeks, it is likely that people will want to get out – by driving somewhere.
Today, thinking with Google published this:
People are finding comfort in car ownership
“Amid a nearly full halt to everyday modes of transportation, from flying to ride sharing, we’re starting to see a rise in consumers’ desire for their own personal mode of transportation. The personal spaces where people find comfort include their homes and their own automobiles.
A study from Ipsos in early March shows that, in China, people’s attitudes toward vehicle ownership, public transportation, and mobility solutions like ride hailing have shifted in the wake of the pandemic. Usage of personal or private cars nearly doubled after the outbreak, while reliance on public transportation has fallen by more than half, with taxis and ride hailing each seeing significant declines in usage.
With commuters in the U.S. relying less on public transportation and ride-sharing services, 93% of people said they are using personal vehicles more. But among people surveyed in China who do not own a car, most responded that they intend to purchase a vehicle for health and safety reasons. And we are seeing this shift play out in the U.S. A recent Cars.com survey reported that 20% of respondents who didn’t own their own car were considering purchasing one.”
If you are a business owner thinking of selling an automotive business, all of this may be fine, but what about the selling price of your business? And, can a buyer get financing? The outlook for both is good. Lenders, and buyers will disregard the results of the business during the shutdown when all businesses were affected the same way. If the business has returned to its previous level within a reasonable time after the shutdown ends, a buyer should be able to get financing to buy the business.
I specialize in selling auto repair and collision repair businesses. If you want to know more about buying or selling a business, contact me. I’ll be happy to talk to you and give you an estimate of what your business is likely to sell for.