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Uber Deal Points to Rise of Maaco’s Fleet Focus

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Frank PetraneIn November, Driven Brands—the umbrella company for a slew of auto brands, including Meineke and Maaco—announced  a strategic partnership with Uber, offering the ride-sharing service’s drivers exclusive benefits for preventative maintenance, paint and repair from both Maaco and Meineke throughout North America.

“Uber has revolutionized the experience for drivers and riders. A vision we share here at Maaco,” Artemio Garza, CMO of Maaco, said at the time.

The deal shows Maaco’s “unique approach to thinking outside the box,” Maaco vice president of fleet management Frank Petrane said. But, more than anything,
it shows the company’s unrelenting focus on cornering the national fleet market. 

Since 2002, Maaco has grown its fleet sales by 6,000 percent. Once an afterthought, fleet accounted for more than an eighth of the company’s $460 million in 2014 overall revenue. Maaco has roughly 340 fleet-certified locations throughout the U.S. and Canada, and is only looking to expand.

Petrane spoke with FenderBender about the Uber deal, others in the works, and the company’s overall vision for fleet’s place in the industry. 

How did the deal with Uber come about?

One of the things Uber requires of their drivers is that they have impeccable vehicles from a service, maintenance, and an appearance standpoint. Their vehicles have to pass inspection. If there are dents or scratches, but the car fits their program, it can be fixed up.

We had some Meineke centers doing some business with Uber on a regional level, just on some safety inspections. We leveraged that relationship on the Maaco side. So, Uber’s drivers who want to get on this program or who have an accident while on the program can utilize Maaco’s 320 certified fleet locations to get those repairs done.

Do Uber drivers get discounts with Maaco, and are discounts a good tactic in fleet business?

We absolutely give discounts on paint and body labor. It’s a national contract, and we have an operational directive in place. 

Generally, we’re working off volume with fleet work. And, generally, they’re quicker jobs. It always depends on the account, but giving discounts is common and can work well.

What makes a fleet account successful?

For Maaco, the No. 1 thing is that it needs to have a unique value proposition. We want a diverse fleet offering—that’s why we’re going to do business with insurance companies, dealers groups, businesses with vehicles, or with rental-car companies. 

Right now, we’re doing a rebranding campaign on all ground vehicles for U.S. Air and American Airlines. We’ve really adopted this “we’ll-paint-anything” mantra. So, when a company like Uber comes to us, it’s a slam dunk—you have a national fleet of vehicles, you have needs for national inspection and repair, so it’s a great fit.

How long has fleet been a priority for Maaco?

Back in 2002, we were doing about $1 million in total annual fleet work. We developed our fleet certification program in 2003, where our centers had to pass a set of standards to take on fleet accounts. We began doing work for some of the main rental car companies like Enterprise, Hertz and Avis, and it all just snowballed. By the end of 2014, we did $60 million in total fleet sales. It’s an entirely new segment of the company.

Why is fleet successful for Maaco?

A lot of it is based on what we value as a company—value and speed. We’re a production facility. You take an Enterprise rental car, where the average ticket including parts might be $650, that’s something we can get in our shop, fit into our production system and turn around really quickly. The Enterprise relationship has grown to $9 million a year, based on the fact that we’re performing. And because we’ve been so successful in that model, we’ve leveraged that relationship to the other majors as well. 

What is the future of fleet for Maaco?

We did $60 million last year. In 2015, the goal is $80 million. We believe by the end of 2016 or 2017, we’ll be a $100 million department. We’re investing resources in staffing. We have 60 centralized account managers/directors across the county and looking to add to that as well. This is going to be a large segment for us, and it’s a big focus. That’s not going to change.

Is it important to have a diversified work mix as a shop?

One of the biggest predictors of profitability within our Maaco system—for the top franchisees— is the number of fleet and trade units on a weekly basis. We certainly don’t want them subsidizing their retail or customer-pay business, which can be more profitable, but having a strong fleet segment leads to a more profitable business.

It really has to be incremental, though. It has to be an add-on. We always talk about the legs of the stool—and it has to be one of those legs. If you’re doing all fleet work, you can absolutely be profitable, but mixing in retail and mixing in customer pay and insurance customer pay will give you better margins. If you can layer fleet work on top of that, you’re covering all your fixed costs with the rest and the fleet work is gravy.

The most important thing is for our shops, operationally, to balance their business and not substitute their retail work with fleet. You have to incrementally grow your business with fleet.

Last year, Maaco began a pilot program of becoming a direct-repair location for specific fleet accounts—starting with a Hertz location in Chicago. Is that a model the company will continue to follow?

We are looking at partnering with some of the major rental companies at the Atlanta, Philly, Detroit and LAX airports. There are more than conversations going on; there have been site visits. We have an agreed-upon relationship in those markets, and we just have to make it happen.

Detroit should be up and running by April—that’s going to be a facility about an hour outside the Detroit airport. The franchisee found some space and he’s going to do rental car work for all the major companies.

What are companies with vehicle fleets looking for in a repair partner?

I think No. 1 is that they want a unique, diverse value proposition. We’re not just going out and going after fleet management and rental car companies. If there’s an opportunity, we will explore it and test it.

Our franchisees are always willing to think outside the box—the culture of our franchisees is to try any partnership. In the Raleigh-Durham area (N.C.), we had a franchise negotiated locally with a flat-bed company that’s constantly circling around RDU airport, picking up front loaders, luggage trucks, baggage carts and bringing them back to his shop. He started doing about three or four a week, and that was how this whole U.S. Air program was born—out of one franchisee saying, “Yes, I’ll try that.”

So, that’s our value proposition, that it is unique and diverse part of the business.

We have production shops that give faster turnaround, we provide good value and will price it nationally. This project with U.S. Air, the price is the same in California as it is in Georgia.

We’ll take all the billing for U.S. Air or any other company, we’ll centralize all the billing through the home office. We’re just trying to cover all the bases of what fleets need.

We do business with over 120 customers and not one of them is the same in how they do business. We’ve been able to adapt and model our processes to what they need.

 

THE UBER FLEET PROFILE

Uber provides a unique fleet makeup, as the company uses contracted drivers who individually own their own vehicles. Here is a look at what that customer mix looks like.

*Data from Uber’s study, “In the Driver’s Seat: A Closer Look at the Uber Partner Experience”

 

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