In Accord
The participants in our Executive Forecast feature (December 2011, page 30) were much of the same mind with regard to near-future economic growth: slow, if not completely flat. They are not alone. They are joined in this
assessment by the large and the small: auto executives — 51 percent of whom work for companies with annual revenues exceeding $10 billion — as well as small-business owners from across the country — 78 percent of whom employ fewer than five people.
The KPMG Automotive Executive Survey, conducted by KPMG LLP, the audit, tax, and advisory firm, found in its survey for the fourth quarter of 2011 that only 42 percent of respondents expected the economy to improve in 2012 (58 percent held that opinion in the previous quarter’s survey), while 73 percent did not expect full economic recovery until the end of 2013 or even later.
Similarly, the latest Merchant Confidence Index survey by MerchantCircle, the largest social network of local business owners in the nation, found that respondents’ hopes of near-term economic improvement have declined: the index for the fourth quarter of 2011 stood at 59.4 — 6 percent down from 63.2 in the previous quarter. In the latest survey, 48 percent of respondents believed the economy had declined compared with 12 months ago. That percentage in the third quarter was 36.
Nevertheless, the KPMG study found some measure of optimism among its survey participants, enough to tag its report with the following subhead: “Bullish on revenue despite pricing pressures, commodity prices.” Seventy-seven percent of respondents to the fourth quarter survey expected their companies’ revenues to increase in 2012. That lines up quite nicely with our own State of the Industry Survey (December 2011, page 28), which found that 78 percent of vendors to the car wash industry anticipated revenue growth in 2012.
The reason, in part, for the auto executives’ optimism, as identified by Booz & Company’s 2012 Automotive Industry Perspective, may not be to everybody’s liking. The global management consulting firm acknowledges the car-and-light-truck sales progress made over the last few years: up from 10.4 million units in 2009 to 11.6 million in 2010 to more than 12.5 million in 2011. This still falls far short of the 17.3 million of a mere 10-or-so years ago, Booz points out, but adds that U.S. automakers have restructured their operations to be profitable at lower volumes in the United States. Well, that’s very nice for the automakers, but what about the rest of us who depend on high volume to keep a decent stack going, for example, at the local car wash?
The answer may lurk in the same industry that prompted the question. Similarities between car washing and auto manufacturing go beyond economic prognostication it seems. The KPMG survey reports the following as the auto executives’ main agenda items for 2012: product innovation, cost management, and manufacturing efficiencies. Sound familiar? It may as well be a page from the car washer’s playbook.
Car wash equipment manufacturers are engaged in a constant quest for innovation, which has led, inter alia, to greater automation in the wash process. This in turn allows operators to reduce dependence on labor (a cost saving) and enhanced efficiencies. Turn to page 8 in this issue to read how creative menu packaging can fatten the bottom line. Starting on page 16, you’ll find information on how innovative pricing strategies can raise revenues. New approaches to changing consumer demands fill most of page 66. The key word: innovate.
