AAMCO Transmission shops expanding in Detroit area

Detroit Free Press - As people hold onto their vehicles longer and companies try to keep their fleets functional for an extra year, AAMCO Transmission is looking to nearly triple the number of its shops in metro Detroit.

More vehicles have been scrapped in the past 15 months than new vehicles sold, according to R.L. Polk, the Southfield-based automotive research firm. But the combination of flat incomes, falling housing prices and general economic anxiety is leading many consumers to hold on to vehicles longer, which leads to more maintenance work.

The average vehicle on U.S. roads is now more than 10 years old, the oldest in more than 20 years.

About 15 months ago, Tim Daley had just sold a software company he founded that served criminal courts and law enforcement agencies. Looking for a new opportunity, he bought an AAMCO franchise with the intention of opening a shop in Commerce Township.

Despite the transmission in its name, AAMCO services just about any part of a vehicle except tires and glass.

Securing necessary permits and financing has taken Daley more than a year. But earlier this year, AAMCO asked whether he would take over an existing shop at 10 Mile and Groesbeck Highway in Warren. He opened for business in early April.

Having worked on boat engines at a Mt. Clemens marina, Daley had some mechanical experience, but he applied for the appropriate licenses and took training to earn certification as a master mechanic.

While AAMCO does not require franchisees to be master mechanics, Daley said he thought it would give him credibility with customers and staff and help him make better hiring decisions.

While AAMCO helped finance Daley's purchase of the Warren shop, he is raising money on his own for the Commerce Township location that he expects to open in late summer or early fall. He said he would like to open a third location eventually if he can secure financing.

"What I've seen in the last couple months is more people saying 'I have to make my vehicle last a little longer,' " Daley said. "Last week, a woman brought in a 2002 Dodge Caravan that looked just like new. It's the opposite of what's happening in the housing market."

"Today, we only have six centers in metro Detroit. We could add nine new locations within a few years without cannibalizing our existing franchises," said Curt Hapward, AAMCO vice president of sales and development at the company's Horsham, Pa., headquarters.

Hapward said he is looking for real estate and more people like Daley for as many as nine additional shops.

"Just like with the national trends, people in Detroit are keeping their cars longer and the used car market remains strong," Hapward said. "And there are locations available in Detroit because of dealerships that Chrysler and General Motors closed."

Previous franchise experience is an advantage, but adequate financing is crucial.

"We're looking for liquidity of at least $65,000 and minimum net worth of $250,000," Hapward said." The total investment will vary from $232,000 to $299,000, depending on real estate costs and the number of employees to be hired."

So far Daley has hired five full-time and four part-time employees for his Warren shop.

"It takes a lot of money to get started with the equipment and everything," Daley said. "But once I opened the doors we started making money. I spent $2 million on my last company before we generated any revenue."

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