At 80, Fred Beans is planning for a restless future in the car business.
Starting with a gas station, the son of a Bucks County Quaker farmer now owns 20 dealerships, plus Fred Beans Parts, which ships $200 million a year from a former clothing factory in Doylestown to collision centers and other clients around the East.
The Beans family has set up its own AutoExpress retail shop (“Better than Pep Boys,” Beans says) and Autorent vehicle rentals, and franchised Driving Brands’ Carstar body-repair shops. Fred Beans Group now employs more than 1,750, four times as many as 20 years ago.
But Beans knows electric cars — where the big design money is going — need less service and fewer parts.
New electric-car makers like Tesla sell vehicles straight to consumers and control their own parts supplies. Mainstream manufacturers like Ford, scrambling for profits, are taking back businesses once ceded to local dealers. Online car-sellers like Carvana and Vroom, and direct parts sellers at Amazon and Rock Auto, eat into profit margins. Car-sharing and ride-sharing have taught young people that cars can be picked up and disposed of on an as-needed basis.
All of that challenges the familiar regional auto sales-service-parts model. “Dealers are operating increasingly in a disruptive environment,” a team of analysts led by Detroit-based Srikant Inampudi wrote in a report to clients of the consultant McKinsey & Co. earlier this year.
There is “risk of a dramatic shock to the system,” as well-financed digital auto brands threaten “the century-old bond of ownership between Americans and their means of transport,” analyst Glenn Mercer added in a study for the National Automobile Dealers Association, which Beans has passed around in his office. The analysts predict fewer, bigger dealer groups squeezing tighter profit margins amid heavy automated competition.
Dealers may delay the shock of radical disruption, they conclude, by hooking up their own digital services and customer communications, granting return-customer discounts and other benefits.
So Beans is hedging his bets, recently adding a second parts warehouse in partnership with Advance Auto Parts’ CarQuest in Langhorne, a second AutoExpress retail store (now in Langhorne and Doylestown), plus drive-up service centers, and in-house John’s Driving School locations where your kid or a recently arrived resident can test for their Pennsylvania drivers’ license in the same place they shop for cars.
Beans celebrated his 80th birthday in April with his usual 100 push-ups, plus an extra 25 to mark the decade. Still, even as he diversifies the Beans auto kingdom in hopes that some pieces will thrive in the changes ahead, Beans is transferring more responsibilities to his daughter Beth, son-in-law Chris Gilbert, and daughters Barbara and Jennifer and key managers.
Detroit’s idiosyncrasies continue to puzzle him. “Why didn’t Ford or GM patent their parts?” Beans asks. Aircraft and jet engine makers like GE and Boeing, he says, make most of their money supplying parts, not original equipment. “But Detroit almost never patented a part. That’s why, in six months the Taiwanese can manufacture knockoff parts.”
Buying generic parts “is not as safe. But the average consumer doesn’t know any better,” warns Denny Loux, who runs Beans’ parts business.
Auto parts are still a surprisingly analog business, with hundreds of thousands of parts you won’t find in online catalogs. After 2010, Beans started paying people to move its own inventory online. Specialty businesses like Philadelphia-based RevZilla (motorcycle gear) and Malvern-based Turn5 (Ford Mustangs and other often-customized vehicles) have built profitable, fast-growing businesses by offering carefully promoted inventories to deeply loyal fans.
But the Beans group found online mass-market parts didn’t pay. “It’s very time-consuming. You are always answering questions. We found it wasn’t the best return on our investment,” said Loux. It made more sense to act as a"fulfillment center," moving car parts to shops for Rock Auto, sometimes Amazon, and other online giants.
“Our business was built on wholesale to repair [shops]. But I think the collision business is getting tougher,” said Beans. So his parts business has shifted its focus, to larger-ticket items — he ships an average 600 engines and transmissions a month, at roughly $2,000 each — along with truck parts.
Internal-combustion vehicles have hundreds of moving parts. All-electric cars “have about 20,” says Beth. You’d think that would make electric cars easier to fix. “But body shops [are reluctant] to fix those cars,” in part because electric makers like Tesla control their own parts distribution, and feel little incentive to cut prices or eat into their new vehicle sales.
So parts chief Loux expects fewer repairs for collision shops — albeit with higher bills per repair — along with electronic order systems to replace human ordering.
Finding people to staff today’s operations is a challenge.
“It’s getting harder. It’s like parenting,” said Beans.
Beans tells his managers to read more, learn about the fast-changing world, think about how to apply electronics or social media to the daily problems of matching car with drivers and bringing them back to Beans.