How to Start an Automotive Service Shop in the Philippines (2022)

The Philippines' automotive industry is growing. Last year was a “recovery year” for new car and truck sales. The used car market also has seen growth. As Filipinos buy vehicles, the need for automotive services increases as well. This is an opportunity for the automotive service shops. This article will guide you on how to start an automotive service shop in the Philippines.

The Philippines Automotive Market Overview

In their 2021 Annual Report, the Land Transportation Office disclosed that there were 13,022,483 vehicles registered. This is bigger compared to 2020 which had 11,851,192 vehicles registered.

According to the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Truck Manufacturers Association (TMA), the total car sales in 2021 reached 268,488 units. It is higher than the previous year which had 223,793 units.

The used car market is increasing as well. Experts predict it will grow at a compound annual growth rate (CAGR) of 8.9% during 2020-2025. They attribute the increase to two main factors, the pandemic and internet penetration.

During lockdowns, private vehicles could run as long as they were essential travels. As the government eased the restrictions, private vehicles could travel but not public transportation. Filipinos saw this advantage of having their own vehicle. Another advantage is that traveling in a car does not expose you to the Covid virus.

Moreover, the increased internet penetration made buying a used car an ease. Used car sellers have their own websites and social media platforms. This gives them a wider reach and easier communication with customers.

All these vehicles need servicing and repair. This gives the automotive service shops a huge opportunity.

Automotive Service Shop Business in the Philippines

In the last Philippine Statistics Authority survey (2017), there were around 2,020 automotive service and repair shops in the country. In the previous year (2016), there were only 1,418 automotive service and repair shops. That is close to a 43% increase.

This increase is a response to the increasing number of vehicles in the country. This proves that the automotive and repair shop business is a viable business.

Services Offered by Automotive Service Shops in the Philippines

Automotive service shops provide all or one of the following services:
Repair

• Rebuilding or reconditioning of motor vehicles or parts
• Collision service
• Painting
• Car detailing
• Car washes

Those focusing on one service are called specialty automotive shops.

Type of Automotive Service Shop Business

Size and structure categorizes types of automotive service shop business in the Philippines.

Size categories

As to size, automotive service shop business falls into four categories: casa (dealership service shop), talyer, branded specialist shop and gas station service center. 

Casa

For Filipinos, the dealership service shop is casa. Casa is the Spanish word for house. So, when Filipinos say casa, they are referring to the in-house service shop of the dealership. Toyota Shaw Service Center is a casa.

Talyer

A talyer refers to the unorganized and organized service and repair shop. ”Talyer '' is from the Spanish taller which means workshop. In the early days of the automotive industry in the Philippines, there were only two types of service shops, casa and talyer. Any shop which was not casa was a talyer.

Today, Filipinos applied the term talyer to unorganized, neighborhood service and repair shops. They also applied to organized service and repair chain shops. Rapide Auto Service Experts falls under this category.

Auto specialty shop

Auto specialty shops focus on a certain work on the vehicle. Some specialty shops focus on either body repair, painting or any other works. Other shops limit their services to certain parts like suspension, aircon, wheels and tires, etc. Goodyear Servitek is an auto specialty shop. Although they operate like a full-service shop, their primary expertise is tires.

Gas station service center

Many larger gas stations offer car services. However, many of them limit themselves to maintenance servicing and quick repairs.

These categories will help you understand the different automotive service shops. They can also help you in planning the type of automotive service business you want to enter. 

Structure categories

As to structure, there are two categories: independent and franchise.

An independent business is a privately owned business and free from outside control. A franchise business is a business where a business owner, the franchisor, allows someone, the franchisee, to use his brand, operation, products and expertise for a franchise fee. Many multi-brand chains offer franchises.

This article aims to help those who want to start an automotive service shop business as an independent and as a franchisee. The end section of this article will present five automotive service shop franchises.

Pros and Cons of Automotive Service Shop Business

Before jumping into it, knowing the pros and cons of the automotive service shop business is beneficial to you.

Pros

Lower rates offering

As a talyer owner, you can afford to offer lower rates because nobody obliges you to use original equipment manufacturer (OEM) parts only which are expensive. Regarding parts, you give the customer an option, OEM or aftermarket. The customer also has the option to buy the parts himself.

Multi-brand servicing

You have the freedom to serve all brands, unlike the dealership service centers. Your shop becomes a multi-brand shop.

Wide customer base

Aside from being a multi-brand shop, you can provide service to out of warranty and used vehicles. Owners of these vehicles look for cheaper alternatives to dealership service centers.

Local connections

You can build local connections. Being a multi-brand shop, you can serve all those with vehicles around your shop.

Cons

Electronic issues

Each new model is more high-tech than the previous one. Dealerships let their service mechanics and technicians attend a training offered by the car company whenever a new model comes up. You have to wait until this training is available to everybody.

High regards to dealership service centers

People have this high perception toward dealership serviced vehicles. This perception comes out when selling the car. A dealership serviced vehicles fetch higher resale value than non-casa serviced cars.

Challenges of an Automotive Service Shop Business

Every business has its set of challenges. For the automotive service shop business, the top five challenges are: 

Staying up to date with advances in diagnostics

This is quite a challenge for shop owners because car manufacturers are always coming up with new features in vehicles. Shop owners need to train their mechanics and technicians constantly. Going with that is the need to buy equipment and gadgets for diagnostics.

Lack of good, knowledgeable and motivated technicians

Finding the three ideal qualities in a worker is a challenge.

Funds for advertising

If you want to increase your revenue by bringing in more customers, you need advertising. The problem is where do you get the funds?

Diagnostic tools/software too expensive

To stay in the market, you must have the latest diagnostic tools and software. The challenge is the price of these tools and software.

The Importance of an Automotive Service Shop Business Plan

One important factor that leads to a successful business is the business plan. It is like your map to success. It provides you with the direction. Thus, it is important to write a business plan.

Automotive Service Shop Business Plan Sample Outline

To give you an idea of what the different elements found in a business plan are, here is a sample outline.

Executive Summary

This section gives you a picture of the overall content of the business plan. This would include:

• Overview of the business
• Goals
• Objectives
• Mission
• Vision
• Projects
• Teams
• Other departments

Opportunity

In this section, you answer these questions: 
What service are you offering? 
How does this endeavor help solve a problem in the market? 
Who is your target market and competition?

Execution

In the execution section, you lay down the plan of making a profitable business out of the opportunity you have seen. Here, you present the marketing strategies and plans.

Company and Management Summary

Here, you mention the teams and individuals that you already have and those teams that you are still to create or individuals that you are still to hire. Discuss how they make a good fit to your company. Also, mention how you will manage the business.

Financial Plan

This is a crucial part. In this section, you discuss financial forecasts and source funding for capital.

Appendix

The appendix should have references, diagrams, tables and others that support the business plan.

If you want to know more on how to create a business plan, Franchise Market Philippines has a blog to help you.

Facilities and Equipment Needed

Here are the basic facilities and equipment needed in an automotive service and repair shop:

Vehicle Lift

There are many kinds of lifts. The most convenient to use are the hydraulic lifts, which can be two-posts or four-posts. However, they are expensive. One good alternative is a ramp. Just ensure that it is safe and sturdy.

Air Compressor

An air compressor is not only for inflating tires but also for operating pneumatic hand tools.

Jack, jack stands, and pole jacks

Jacks come handy when lifting vehicles for certain work not needing vehicle lifts. Jack stands are also useful in supporting raised vehicles. Pole jacks are for support of axles and other parts of the raised vehicle.

Oil drain and oil caddy

When changing engine oil and transmission oil, oil drain and oil caddy are useful. These two ensure that oil does not drain and spread on the floor.

Battery charger and jumper

Battery charger and jumper are for dead batteries and charging issues.

Engine hoist

Sometimes you need to remove and install an engine to the vehicle. You need an engine hoist for this work.

Brake lathe

With a brake lathe, you can resurface brake discs or rotors and drums.

Strut compressor

When working on suspensions, your work will become easier with a strut compressor.

Air conditioning machine

If you accept air conditioning jobs, you need an air conditioning machine. An air conditioning machine can recover, recycle, and recharge vehicle air conditioning systems.

Press

A press is for removing and installing bearings and bushings. It is also useful for bending and straightening metal.

Transmission jack

When taking down and installing the transmission, it is safer to use a transmission jack.

Workbench with vise

A workbench for many jobs like when disassembling and assembling parts, wrenching, hammering, etc.

Hand tools

Some important automotive shop hand tools are: 

• Wrench or spanner sets
• Ratchet and socket set
• Screwdriver set
• Pliers
• Hammer
• Wire strippers and cutters
• Nut drivers
• Greasing guns
• Hand drill
• Angle grinder

Business Requirements for the Automotive Service Shop Business

To avoid legal inconvenience later, your automotive shop should comply with the different legal requirements for starting a business here in the Philippines.

Register your shop with the Department of Trade and Industry

There are three types of business ownership: sole proprietorship, partnership and corporation. For sole proprietorship, register with the Department of Trade and Industry (DTI) office.

For partnerships and corporations, register with the Securities and Exchange Commission (SEC).

Secure the Mayor’s business permit

To secure the Mayor’s permit, go to the city or municipal hall where you want to put up your business. Be aware that this permit has many requirements that you have to work on beforehand. They are the following:

• DTI Business Name Certificate for a sole proprietorship, SEC Articles of Partnership or SEC Certificate of Incorporation
• Barangay Clearance/ Permit
• Authorization letter of the owner with ID
• Contract of Lease or Land Title / Tax Declaration
• Sketch of Location
• Occupancy Permit
• Location Clearance
• Public Liability Insurance
• Community Tax Certificate (Cedula)
• Fire Permit
• Sanitary Permit

There are other additional documents or permits that the city or municipality may require from you.

Accreditation with the Department of Trade and Industry

Automotive service and repair shops have to get DTI accreditation before operation. The purpose of the accreditation is to show that your shop has passed the DTI’s personnel and operations standards. The accreditation is proof that your shop is competent and reliable. It gives the customer an assurance of your service.

You can go to this page on DTI’s website for the accreditation requirements and procedure.

Automotive Service Shop Business Tips

Get a good location

Your location is of utmost importance. To a great degree, a location dictates the success or failure of a business. Here are several helpful considerations when choosing a location for your automotive service shop business:

• Is that where your target market is?
• Is it accessible to your target customers, your potential workers and suppliers?
• Will it make your store visible?
• Can I afford the rent?
• Is it safe?
• Am I allowed to put up an automotive shop in the area?

Recruit the right people

Hiring the right people is a challenge as mentioned above. You have no other choice but to face this challenge. Employees can make or break your business. Qualities you want to see in employees are:

• Reliability
• Trustworthy
• Friendly
• Knowledgeable
• Motivated

Keep the shop clean and organized

Keeping your workplace clean and organized improves your efficiency. Dirty and cluttered workplace slows down your work. Clean and organized shops also attract customers.

Have social presence

It is essential that you build relationships with your customers. To address this, have social media pages. Creating a social media page is free but it brings several benefits to your business.

Five benefits that an online presence provides:

• Customers get to know your company.
• Customers engage with you on a personal level.
• Customers get to know what you offer
• Your online presence boosts your company’s brand.
• Your online presence boosts your credibility. People trust businesses with websites and social media pages. Post updates regularly.

Market through social media

Even without a website, you can still market your business online. Use of social media. It is not only for internet presence. It is wise to use it to market your business since it is free.

Referral program

Provide discounts to customers who can bring another customer. 

Reward your suki

Give your loyal customers or suki special deals. This will encourage them to continue patronizing and promoting your business more.

What special deals can you offer to customers? Here are several ways to offer special deals:

• Gift Vouchers
• 10% Off Discount
• Loyalty Points
• Random Rewards
• Package Deals

Five Automotive Service Shop Franchise in the Philippines

Rapide Auto Service Experts

Rapide Auto Service Experts is a chain of auto service shops in the Philippines. It started in 1998 with its partner, Midas International, the largest auto service center chain in the world. Midas provided them with the methods and procedures of servicing. Today, Rapide has over 50 shops all over the country.

Franchise Fee: ₱1.45M
Initial Investment: ₱4M-7M
Royalty Fee: 5%
Marketing Fee: 2.5%
Website: https://rapide.ph
Email: [email protected]
Contact Number/s: (02) 895 9486; 0951 923 8031

Car Crew Automotive Service Center

In 2018, a group of Overseas Filipino Workers (OFW) headed by Francisco “Bogs” Malbog opened the Car Crew Automotive Service Center in Imus, Cavite. They equip it with the latest diagnostic equipment and tools. Its crew are specialists in major automotive brands.

Franchise Fee: ₱1.3M
Initial Investment: ₱6.7M
Facebook: https://www.facebook.com/carcrew4103/
Email: [email protected]
Contact Number/s: 0920 302 2222

Value Plus Auto Service Express (VPX)

ValuePlus Auto Service, the casa alternative, started in 2013. They use modern equipment. Their crew came from major car brands.

They want to share their success with others by offering franchising. All franchise branches carry the name Value Plus Auto Service Express or VPX. 

The information below is for their VPX Starter Package.

Initial Investment: ₱4.5M-P7M
Space Requirement: 200 sq.m.
Website: https://www.valueplusph.com
Email: [email protected]
Contact Number/s: 632-3413-8888; 632-8521-8878; 0917-625-1132

Motech Automotive 

In 1997, Rommel Naguiat started Ride Center, Inc. in Pampanga. In 1994, Ride Center Inc. became Motech Automotive Education Center, Inc.. The name change was the product of the company’s vision to train mechanics. However, all their shops became Motech Automotive as well.

In 2006, they started offering franchises. Today, Motech has over 70 branches.

Franchise Fee: ₱1.5M
Initial Investment: ₱P7M
Website: https://motech.ph
Email: [email protected]
Contact Number/s: (02) 920 2799; 0917-5113818

Ziebart | CarSavers

Ziebart International Corporation is an American vehicle rustproofing company. Kurt Ziebart, Rudy Herman and Joe Selagi founded the company in 1959 in Detroit.

Ziebart came to the Philippines in 1972 through the Philippine master franchisee, Bathala Marketing Industries, Inc. (BMII). In 1981, BMII went into automotive repair and body shop services and named it CarSavers. Now, you can see the two names together, Ziebart | CarSavers.

Website: https://www.carsavers.com
Email: [email protected]
Contact Number/s: (02) 8818-7777

Filipinos will continue to acquire vehicles. Most people think the pandemic would slow down vehicle sales. But, it did not. Instead, it appeared to accelerate. 

Pandemic is one sales driver. Even during the strictest level of restriction, the government allowed private vehicles as long as they were essential travels. Then, there was a level when the government gave permission to private vehicles to travel but not public transport.

This made the Filipinos think of buying a vehicle. Depending on their budget, some bought new vehicles while some bought used ones. 

Another driver is technology. It is much easier now to buy because of technology. You can find new and old vehicles for sale online. Sales agents are ready to entertain your call or message.

Now, all these vehicles need servicing and repairing. All these vehicles need automotive service shops. This makes the automotive shop a viable business.

The startup investment is quite large. However, the potential income is great. Mark Saberola, the General Manager of ValuePlus Auto Services Philippines Inc. explains that the average car owner’s bill for preventive maintenance services (PMS) is P5,500. A car owner on average does two PMS visits in a year. Multiply that amount with the number of car owners that come to the shop.. 

That is only for the PMS. The shop has many other services as well. So, if you are considering starting an automotive service shop, go for it.

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