Some mobile mechanics gearing up, while others hit the brakes

It’s a busy time in Canada’s emerging mobile mechanic sector.

While one big player is backing out of the industry, there are now more than two dozen mobile auto service businesses in cities across Canada, several of them operating in multiple locations.

Their offerings range from the basics like oil, fluid and tire changes to more complex work, including brakes, shocks and power steering repair.

It’s a lucrative sector to get into: the auto repair industry in Canada is worth $17 billion Cdn a year and supports more than 27 000 businesses.

Mobile auto service companies have just a fraction of that revenue, but their growth is being driven by offering convenience.

“It’s one less thing you have to do in your day,” says Cody Peskelewis, who with his partner Kristen Gayowski booked a company called Go Oil to do oil changes on two vehicles at their home in Calgary last month. “Especially on a weekend, and there are things you have to get done, the last thing I want to do is go to a lube shop.”

The ease of booking a mechanic via smartphone to come to a customer’s home or office is hidden behind a complicated business behind the scenes.
“It’s had its challenges,” says Jonathan Sparrow, founder of Go Oil, based in Winnipeg. “The technical aspect was a big deal to build.”

The operating software that is the backbone of his business was designed by college students, who began working on it as a co-op placement before some were hired as the business expanded.

The custom oil-vacuum system found in company vans was designed by Sparrow himself. Just 24 years old now, Sparrow started the business in 2017 and has 10 Go Oil franchises across the country.

Cross-country trend
Mobile auto repair services can now be found from Victoria to St. John’s. They’re trying to win over private car owners and also capture business maintaining company owned fleets.

In Calgary, more than half a dozen companies will come to customers’ doors to service cars.

Ottawa has a similar number, while in Toronto there are more than 10 mobile operators.

Their rapid proliferation over the past few years should have caught the attention of auto dealerships, and chains like Mr. Lube, Midas, Jiffy Lube and Great Canadian Oil Change.

“I always tell executives, when you’re looking for disruptive innovation, don’t look for one company doing something, look for a cluster of companies,” says Darren Meister, a professor at the Ivey Business School of Western University in London, Ont.

“It means a whole bunch of people have seen there’s a potential opportunity here.”

Though auto glass replacement companies do have mobile services, the major auto service chains have so far not started up mobile divisions.

Are the big players like Mr. Lube missing out? Not yet, says Meister.

It’s still too early to say just how disruptive the mobile mechanic trend will be, or which companies will win enough business to be worth investing in or trying to acquire.

Leading player Fiix sells business
One high-profile Canadian company has just hit the brakes on its business after being scooped up by a U.S. company.

Four years after opening, Toronto mobile mechanic operator Fiix has sold its business to a Seattle-based mobile auto service company called Wrench.

Fiix was founded by a group of friends in their twenties, Arif Bhanji, Khalil Mangalji and Zain Manji.

The trio raised $2.5 million Cdn in funding from Silicon Valley investors, and attracted 8,000 customers in the Toronto area, also winning contracts to service cars for Uber drivers and Car2Go, a car-sharing business.

Fiix had a team of three full-time mechanics and 10 part-time ones, and network of independent contractors. Bhanji believes the company was getting close to capturing one per cent of the area’s auto repair market.

Despite the success, Fiix found itself at a fork in the road.

The team was looking for a business that could become a so-called unicorn company.

After crunching the numbers, Bhanji said they asked themselves a tough question: “Do we think we can take this to $100 million?”

They weren’t happy with the answer. “We all came to the conclusion that it wasn’t something that was easily scalable.”

Recognizing Fixx’s growth rate would never be explosive, the young partners decided to pay back their investors and plan to use their experience to start a new company.

Wrench, the company that bought Fiix, isn’t expanding into Toronto right now. It acquired Fiix because the company’s website has very strong traffic: About 70 per cent of Fiix’s online visitors are Americans, whom Wrench plans to turn into their own customers in U.S. cities.

Wrench co-founder Casey Willis says the company’s ambition is to become “the Starbucks of auto repair,” and it is interested in the Canadian market.

Another large American player called Your Mechanic is already in Canada, with a pilot operation in Toronto.

That company has raised almost $40 million US in investment with a Canadian connection; a big chunk of that money is from RBC Ventures.

The road ahead
For now, the Canadian mobile auto service sector remains one Canadian entrepreneurs can test and develop.

It’s not clear whether a model offering only simple services like oil and tires changes will prove viable, or if providing a longer list of services will be more sustainable.

Many moving into the sector see the brick-and-mortar chains as their primary competition, as opposed to other mobile players.

Some industry watchers believe the long-term challenge facing these innovative companies is another innovation: electric cars, which have fewer moving parts and fewer service needs.

“As soon as the electric car market takes off,” says Jean-Baptiste Litrico, a professor with the Smith School of Business at Queen’s University, “if I were in the mobile mechanic business, I would wonder what is going to be left for us to do.”

Sparrow is focused on a more immediate future.

A Pricewaterhouse Coopers report cites an estimate that by 2020 about 60 per cent of vehicles in Canada will be seven or more years old, and those old combustion engines need a lot of lubrication.

Last year, Canadians spent $2 billion on oil changes, and in the U.S. that number was more than $7 billion.

Go Oil wants to grow, and quickly, Sparrow says. “Going to the end of the year, our goal is to get past 20 franchises or more.”

Source: https://bit.ly/30x3JtD