An Obstacle Course of Challenges

2. An Obstacle Course of Challenges • As the auto glass repair & replacement industry attempts to drive forward, the slowing of new-vehicle sales, autonomous vehicles and their effect on insurance rates and new glass technology is likely to cause stagnation in revenues through 2020. • After almost a record-breaking year in sales for 2015, new-vehicle sales were still able to increase 1.3% for the first half of 2016; however, August, September and October all recorded decreases, forcing YTD sales to decline for the first nine months by -0.3%. • Autonomous vehicles are forecast to operate in tightly spaced groups. According to a study, this is likely to cause even more damage to windshields, which is good for auto glass repair shops, but this opportunity may be 10 to 20 years in the future.

3. Safelite Pulls Far Ahead • SafeliteAutoGlass continues its dominance of the industry, with $1.5 billion in 2016 revenues, compared to $825 million for 2015, and an increase from 540 locations to 800+, much of which occurred through acquisitions of local chains. • By comparison, JN Phillips, the #2 auto glass repair retailer, generated “only” $70 million in 2016 revenues, or more than 20 times less than Safelite’s revenues. Boyd Group, #3, has half or fewer locations than Safelite. • Although most of the top 10 auto glass repairers in Automotive Repair and Replacement Magazine’s 2016 rankings have been in business for decades, newcomers Arrow Auto Glass and Belle Tire, with less than 10 years, were able to maintain their positions.

4. Peril on the Pavement • Although new-vehicle sales have likely peaked, Americans are driving more – 9.19 billion miles during August 2016, a 3.15% increase from August 2015 –, which increases windshields’ exposure to pebbles, road debris and even wildlife. • The worst of this exposure is poorly secured loads and objects in other vehicles. Recent incidents included lumber, sheet metal and even a porta-john. According to the AAA, dangerous debris contributed to 200,000 crashes during a four-year period. • Collisions with a deer, elk or moose during 2015–2016 resulted in an average cost per insurance claim of $3,995.08. The top 5 states for deer, elk and moose collisions are West Virginia, Montana, Pennsylvania, Iowa and South Dakota.

5. Auto Glass for Dummies • According to the industry standard, there are 6 basic auto glass damage types: bullseye, no larger than 1” in diameter; crack, no longer than 14”; star break, no larger than 3” in diameter; combination break; partial bullseye; and surface pit. • Even small windshield nicks or chips should be repaired because they lose much of their protective integrity in case of a front-end collision and 80% of windshield replacements have been found to fail proper safety and installation standards. • In addition, a windshield repair, if possible, is safer than a replacement because the factory seal of the windshield will remain intact and is more airtight and less likely to leak than a replacement re-sealing.

6. Add Services, Add Sales • According to articles in in 2015 and 2016 issues of Automotive Repair and Replacement Magazine, auto glass repair & replacement shops can add various services for a relatively small investment to cross-sell their glass customers. • These include headlight restoration, a $1,500 to $3,000 investment; glass restoration, less than a $5,000 investment; and paint protection film, a $3,000 to $6,000 equipment investment and $1,500 for technician training, plus monthly software fee and materials. • With an average 150% profit for each headlight restoration job, an auto glass repair & replacement shop could recover its $1,500 to $3,000 investment in the service with as few as 60 jobs. The next 60 jobs could generate approximately $6,000 in pure profit.

7. Advertising Strategies • For local or regional chains with the ad budgets for TV, recommend flights during the first quarter of the year to coincide with the winter weather, which could cause more damage, and the third quarter when there are more people on the roads, especially vacationers. • Develop a promotion with your station’s promotional department and a repair shop that offers a discount or coupon for an ancillary service when customers donate cans of food at the shop for the local food pantry, toys for Toys for Tots or similar giving opportunities. • Show smaller shops how an ad with a coupon on your station’s weather Website page, or those with driving-related stories, will provide them exposure to much of the same audience viewing your local TV newscasts.

8. New Media Strategies • A local chain that uses mobile marketing aggressively could dominate that channel. Photos and videos and links to articles or “Did-you-knows” will strongly engage with consumers and encourage them to drive to the shop for a free inspection. • Shops who already have or plan to add some of the ancillary services cited in the Profiler have many topics for a blog or social media content: photos of examples of the benefits of these services, explanation videos and customer testimonials. • Since consumers respond better to businesses that post valuable information to social media instead of product/service pitches, a topic that shops should emphasize in their posts is the safety aspect of OEM windshields and why a repair is better than a replacement.