Imagine being known as the “cheap repair option in town.”
That’s exactly how one of the shops that American Pride Automotive was known before the Virginia MSO acquired it.
That reputation comes with a lot of baggage–none of it good. It scared away the right kind of customers and attracted the type of people who wanted to get a state inspection sticker–without an actual state inspection.
American Pride Automotive has a stellar reputation for all of its locations and this one is no exception. Find out how the MSO was able to take a “cheap repair option” and bring it up to standards while increasing profits 400%.
Backstory:
American Pride Automotive has six locations in Virginia and has a unique way of growing. Rather than focusing on numbers and profits, the MSO decides it's ready to grow based on talent. Andrew Marcotte, American Pride Automotive’s vice president, says that the company’s trigger for acquiring a new location is when someone on the team is ready to take the next step in their career and move up to store-level leadership.
“Employee retention is high so acquisition is the necessary route if you want to keep people on the team,” Marcotte says.
In 2020, a service advisor was ready to move into a leadership position and a shop, right across the street from where he lived, went up for sale. It seemed like the perfect fit for American Pride Automotive’s fourth location–but it wasn’t necessarily easy.
Problem:
The shop in question was known around town as “cheap” and also a place where you could get a not-so-thorough state inspection. Because of that, the first year involved a lot of weeding out customers who weren’t necessarily the type of people that American Pride Automotive wanted. The shop also overstocked low-level inventory and had many aspects that Marcotte would describe as an “eye-sore.”
Solution:
Turning around the old shop’s reputation in the community took around a year to fully do, Marcotte says. Here are the key steps that the American Pride Automotive team took to successfully revamp a “cheap repair option” into an auto repair shop with a stellar standing in the community:
Have a Sense of Ownership
“He has pride in that community because it’s his,” Marcotte says of service director Brock Lewis. Living across the street from the shop makes the customers Lewis’ friends and neighbors, which helps customers trust the shop and also makes the team want to provide the highest level of service possible.
Not only that, but the team and their families were a part of the demo and remodeling of the shop, which made them even further invested. “They have a stamp on it,” Marcotte says of the shop.
Get the Word Out
Nothing formal was done to let the community know that the shop had switched ownership. The sign on the outside was changed, which made it pretty clear, and the team also used its social media presence and its connections within the community. Two of American Pride Automotives then three shops were close to the new location, so the footprint was roughly seven miles. Talking with its current customers made it easy to build up a customer base for the new location, as one of the close shops was already busy.
Make it Your Own
The shop, as it was, was not up to American Pride Automotive standards and a lot had to be invested to make it look like its other locations. The team inherited a lot of low-quality parts inventory. It was, to put it nicely, an eye-sore, Marcotte says. The new location underwent an exterior and interior remodel, had the parking lot re-done, and had the carwash from the previous owners gutted and turned into a production space. “It’s a high bar facility now,” Marcotte says.
Find Your Customer
The customers who had been visiting the shop before were not the kind that American Pride Automotive wanted to inherit. They were the type of customers who were looking for price and price alone, Marcotte says. Weeding them out happened naturally, he explains.
American Pride Automotive is more expensive, he says, because of its quality. The previous customers were getting upset when they found out that their oil change would now cost $70 instead of $50–it didn’t matter that it was because American Pride Automotive uses synthetic.
“We focus on value,” Marcotte says of its services.
The people behind the counter at American Pride Automotive don’t talk about the price. Instead, they talk about the fact that they use original quality parts, the certifications their techs have, the quick turnaround time, and the use of digital inspections. The type of customers that they want will want that over the cheapest price in town.
Aftermath:
Since taking over the shop, profits have increased close to a full 400%, rising from $600,000 per year at the time of acquisition to a projected $2.4 million for 2024.
Takeaway:
Marcotte says that there are two ways to go about an acquisition. You could get an already fully profitable business or a business in need of some work–either way, you’re going to pay, he says. The profit ceiling is higher for the latter, as long as it has the demographics you want and the potential to be something different. “I like a challenge,” Marcotte says of this acquisition.
It really was a challenge, he says, but with the profit increase, he says that the ‘juice was definitely worth the squeeze.’
“Don’t be afraid,” Marcotte says. “We’re actively looking for operations like this because when you turn it around, there’s so much pride with the finished product.”
