Matt Curry has been working in the auto service and tire business since he was a teenager, even taking the role as a store manager for a major dealer before he was 20. But it wasn’t until 1998 that he and his wife, Judy, stepped out on their own, creating Curry’s Auto Service in 1998 in Chantilly, Va., supported by 13 credit cards and $103,000 worth of debt. By the time they were done in June 2013, the business posted $18 million in revenue through 10 locations in the greater Washington, D.C., area, and earned countless awards for growth and community service, and honors as a 2009 Tire Review Top Shop Finalist.
Even before selling their tire and service business to Monro Muffler Brake Inc. in August 2013, the Currys partnered with Automotive Research and Design (AR&D) to provide battery pack charging and conditioning for hybrid vehicles. Within months, the investment in training and equipment became its own business, one to which the Currys are now devoting much of their attention.
We recently sat with Matt Curry to discuss The Hybrid Shop concept and his go-to-market strategy, including the recent hiring of Dave Crawford, formerly vice president of operations for American Tire Distributor’s Tire Pros program, as CEO.
Exactly what is The Hybrid Shop, what does it do and what does it offer to tire dealers?
“The Hybrid Shop is an international network of professional auto repair shops that are experts in the diagnosis, repair and maintenance of hybrid and electric vehicles. So, what we do at The Hybrid Shop is we give a turnkey package, that drives car count, revenues and profits by offering dealers the opportunity, the diagnostic equipment, the training, the education, and ongoing marketing, branding, sales and operations support and technical support to be able to service these vehicles.”
When you say it’s an international network, define as international?
“Well, we’re working on Australia right now. We have a couple people in Australia who we’re talking to. We’re filing a business license there. So, we’re going to have Australia, hopefully, by the end of the year. And we’re working with people in Canada. We’ve got some interest in Asia; I was in Japan talking with some people. So, all of our dealers right now are in the U.S. They have 24 stores open, and we’ll open another 11 by the end of the year. We’ve already got signed contracts. We hope to have, by the end of the year, certainly Q1, stores in at least Australia and Canada.”
If I’m an interested dealer, what am I paying and what am I getting, and how, in practical terms, how does this work for the independent dealer?
“The franchise price, including everything you need – and we’ve upgraded some stuff – is $69,000, and that includes all the equipment you need, which includes the battery discharge unit, the battery charger, and a laptop with proprietary diagnostic software. There are a number of other tools in the package. It’s a diagnostic tool that allows you to diagnose the electric transmission. The price is really not a huge investment, and there is financing available, as well. So, $69,000 for all that. And then, then there’s a 4-1/2 day training class, which you’ve got to do. We ship the equipment, and you’re in the hybrid business. We on board you through our website, and right now, we have generate about 300 leads a month for our stores directly off of our website, not including the leads that they have. So, we drive, right now, about $5 million directly in auto repair sales to our dealers from our website. Three hundred leads a month, it’s about $1,000-$1,200 per car average, and that’s directly off of our website. Dealers are obviously getting their own leads from their websites as well as from their local marketing efforts. So, dealers get all this equipment and they get the training and they get the branding, the marketing, all of that. Our dealers are doing an extra $20,000 to $40,000 a month in sales on hybrid and electric vehicles, service work they weren’t doing previously because they weren’t working the hybrid vehicles, they weren’t getting the leads, they weren’t advertising for them and they didn’t know how to work on them.”
So, you’re looking at Priuses, Honda Fits. What other type of vehicles?
“It’s any hybrid or electric vehicle. Our equipment works with nickel metal hydride and lithium ion. Toyota owns like 65% of the market. We do a lot of GM and Fords, some Nissans, Hondas of course. So, anything hybrid or electric. We can do a Tesla. I mean, Tesla does most of their own repairs, so, but we’ve had Teslas at some of our stores.”
The typical process right now is, and let’s say, I have a Prius, I take it into the shop and I find that the battery is not working properly. My only alternative in the past was replace it.
I know there is a private brand market for replacement batteries that are significantly less expensive than OEM batteries.
“Well, typically what’s happened is the hybrid vehicle owner brings their car to the aftermarket, and we say, ‘No, go to the dealer.’ That’s what happens about 96% of the time. We give our dealers an opportunity to say, ‘Yes, we can service, stock and maintain everything on your hybrid vehicle, not just the battery.’ Batteries are about 20% or 25% of what we do. I mean, there’s over 8 million hybrids on the road now. The batteries have 100% failure rate, so certainly there’s going to be an issue with their battery at some point. But there’s other things that go wrong with the cars, and there’s other revenue generating opportunities besides the battery. Right now when the battery goes bad, the repair shop can properly diagnosis it, because it’s not always the battery, but if it is the battery, they replace the battery, usually with an OE battery, which is anywhere from $3,500-$9,000 depending on your make or model, or they can try to buy an aftermarket battery. We’ve found, with all the aftermarket batteries that we’ve tested, they are not good. They’ve not been able to cycle energy back into the battery. A few of them have solved some of the power problems, but we’re the only people in the world that can give analytical proof with before and after power and energy tests. When you’re buying a battery from an aftermarket parts dealer, you don’t know what you’re getting. We’ve tested pretty much all of them, and they don’t hold up under scrutiny, under testing. With us, like I said, you get a before and after power and energy test. We give you analytical data. It’s like an alignment printout, right? This battery was bad before, but now it’s good.”
What is battery conditioning and what’s the process? How is this better than a replacement, and really, what should a dealer be charging for this service? What’s his upside?
“What makes us better and more unique than everybody else, we use a very scientific process. We’re not using Internet-based theory. We have one of the world’s foremost expert scientists in Dr. Mark Quarto, who worked for GM for 28 years, a PhD electrical engineer who’s been working with hybrid and electric vehicles for almost 30 years. So, we use a very scientific process to go through battery conditioning. It’s a process of basically bringing the battery up to 100% charge, back down to 0%, up to 100% several times, using a controlled process, and by doing that, it restores the power and energy in the battery. There’s no debate in the scientific community that nickel metal hydride batteries can be conditioned many, many times, but it has to be done right. You have to restore the power, the energy, and balance the pack properly, so that all the cells are around the same state of charge and are all working together.”
From a consumer standpoint, what am I looking at as a bill?
“Usually it’s about $1,500. Dealers charge anywhere from $1,200 to $2,000. It depends on the condition of the battery, other variables, the market, but around $1,500.”
How did you get into this? This is as much of a total left field thing as you could find.
“Well, I was at SEMA in 2012, and I’m involved in another company called AutoServe. And Jamie Cuthbert, the CEO there, made the introduction to Mark, and I went out to dinner with Mark and his wife, Chris. He was showing me everything he was doing, and it was like super cool but super technical. I really didn’t get it. You know, it’s funny because I don’t work on that many hybrids even though I own eight hybrid vehicles that we used as customer shuttle vehicles. Then I heard Mark talk the next month in New Orleans at another event, and we kept talking, and he said, ‘Look, Matt, I’ll come in and I’ll give you guys two days of free training. I’ll bring my equipment. I know you have eight hybrids. I’ll leave my equipment. You can work on them, fool around with it and then tell them what to expect. He came in in December 2012. I had my five very best technicians – ASE Master, Porsche, BMW master guys – and I also had my managers there for the first half day the training. I learned more about hybrid vehicles in the first three hours than I ever knew, and my technicians were blown away. By the end of the first day, they were conditioning hybrid batteries. By the end of the second day, they were conditioning and rebuilding batteries. And these are some of the very best technicians on the planet, and they were blown away about the quality of the training.
Not only is Mark a PhD electrical engineer, computer engineer, scientist and inventor, he’s also a professionally certified instructor, and he was an instructor for GM for eight years. So, he’s developed this modular training system where they take a very technical subject and make it really kind of easy to understand. And so he can teach you everything in four and a half days, everything you know to work on these vehicles, safely and properly and profitably. And, then again, we give the dealer the ongoing technical, sales, operational, branding and marketing support, as well. It’s a full turnkey package.”
How did the training get you to the business?
“We started working on the eight Priuses, and they were getting between 37 and 44 miles per gallon before we started working on the cars. After we conditioned the batteries, they were getting between 49 and 52 miles per gallon. If the battery goes out of condition and out of balance, the car’s going to run more on the gas engine and use more gas, so that reduces the performance of the vehicle. So, we were blown away with those results. We started working on family’s and friends’ and customers’ cars, and then started advertising a little bit. And then from January through April 2013, we were actually working on hybrid vehicles at Curry’s Auto Service. Instead of saying no, we’re able to say yes, and it was profitable. And so, I put together a business plan because I knew if Curry’s Auto Service, having hybrid vehicles but weren’t working on hybrid vehicles, probably nobody else was. So, I got exclusive rights to distribute their training, equipment and all that stuff, and put together a business model. We went through approval of concept from June to September 2013 in six or seven locations and really kind of had our debut at SEMA last year.”
What’s your goal?
“Right now we’re just blowing things up. We’ll have 35 shops opened by the end of the year and, hopefully, 106 by the end of next year. In three years, we would like 300 stores, and in five years, we’d like to have 500 or 600 stores. But we’re not looking to sign everyone up. We want to sign up people strategically, have strategic partners. We’re not just accepting anybody who’ll write a check, either. I mean, we’re looking at the higher end shops of the world. We give them an exclusive area of protected territory, which really, not a lot of people do that. We want good quality, high-end people that want to be experts in their area. I’ll tell you, I feel strongly that the people that show their community that they’re the experts are going to win the lion’s share of the market.”
Does the dealer pay anything after the $69,000 then?
“It’s $200 every time they use our machine. And there is a monthly minimum…it’s scaled, but I think it’s $1,000 bucks a month, but for the first six months there’s no minimum, and then their minimum goes to $750 and then it goes to $1,000. So, there is a minimum monthly, but it’s not significant when they’re doing 65%-70% gross profit and $430,000 a month in additional sales. And they can pay off their initial investment easily. We find some shops have been paying off their initial investment in six months, some within 12 months. It’s the least expensive, most profitable business asset you could buy right now. Compared to an alignment rack – that’s $60,000 or $70,000, and you’ll generate a lot more revenue from The Hybrid Shop, and you get a lot more. You get customers and employees that see that you’re keeping up with technology. It’s green. It’s better to condition a battery. It’s better for the environment. And it saves the customers thousands of dollars.”
How often, then, would a consumer have to have their battery conditioned? Is this a high repeat business service?
“Oh, it’s like a timing belt, really. We recommend every five years or 80,000-100,000 miles or when you start to see gas mileage degradation. Any of those things could be battery issues. But it’s not just the batteries. If you can fix the battery, you can fix everything else on their car, if there’s other maintenance. Like I said, there’s lots of other things that go wrong with these cars.”
And that’s not to mention new tires, new brakes, things like that, right?
“Absolutely. If the people that identify themselves as the experts in the market, there’s a demand. There’s a craving to go somewhere other than the dealer for customers with hybrid vehicles. And right now, customers really feel like they have no choice but to go to the dealer; those are the only people that know the cars, right? The aftermarket has not been aggressively pursuing this business. We give them the opportunity and ability to do that. The big message here is it’s not just batteries. There’s a lot of other things…brakes and tires and oil changes and maintenance and repairs that need to be done.”
Basically the only company in the globe that does this.
“Yeah, isn’t that cool? We’re the only people that have this comprehensive turnkey package that gives people everything they need to get in the hybrid business. We’re having a positive impact, creating jobs and creating revenues and profits for our dealers. It’s awesome.”
You had an extremely successful tire and service business. What drove you to sell the business?
“You know, I’ve been doing this for 32 years. I always said that I wanted to build and sell. I didn’t know when that was going to happen, but I got a really good offer. The timing was really good. We had The Hybrid Shop thing going. All the stars kind of aligned. The timing, everything worked out really well. The other thing is I feel strongly that this business is changing, and changing a lot with all the new technologies, so it’s getting harder and harder for repair shops to keep up. If you’re going to stay in business, you’ve got to be prepared for the future.”
How did you get hooked up with Dave Crawford?
“I’ve known Dave a long time, and I feel like we got our number one draft pick. I didn’t want to do the day-to-day stuff anymore. Quite frankly, I needed to bring on somebody who had better expertise in franchising than I did, and Dave is that guy. He’s built two big franchises before. He knows a ton of people, and he’s super-well respected. He was really the only guy I considered and talked to.”
Now you’re the chief visionary officer. What does the chief visionary officer do?
“Kind of sets the direction of the company. I began at the beginning. I did the first 500 pitches. I started The Hybrid Shop and I think I’ve got a pretty good pulse on what the market’s been doing. And so I set the direction of the company, help the messaging and the vision of the company and work in international markets. Be a spokesperson and advocate for it while keeping an ear to the ground. Things are changing rapidly in this whole business, and you’ve got to keep up. It’s all about staying on top of things, and that’s what we bring.”