Auto-services disruptors face hurdles as they grow

SUNNYVALE, Calif. -- YourMechanic, a startup that will fix customers' cars in their driveways, thinks it's ready to grow up.

But first, it needs to solve one problem: finding enough skilled labor to meet demand.

"We need people who can do it," said YourMechanic CEO Anthony Rodio at an industry event hosted by the company. 

That's part of the larger problem of growth. Rodio is one of several automotive entrepreneurs who want to upend the repair, rental and retail industries, if they can figure out how to sustainably scale their services. 

"A lot of people are searching for what we do," Rodio told Automotive News. "The hardest part is figuring out how to do this at scale."

Silicon Valley companies are targeting common customer complaints in services ancillary to the automotive industry: high prices and long waits. However, these startups have begun to run into barriers to ensuring convenient and quality service on a wider level than their initial target cities. 

One solution: turning to fleet and other bulk-order customers. 

Companies like YourMechanic have proliferated in the past five years. There are at least 10 startups focused on auto repair, according to CB Insights, a venture capital database. In addition, there are more than 30 related to vehicle rentals and nearly 70 dealing with automotive retail, according to Crunchbase. 

Despite the high numbers and perceived consumer demand, none has successfully overtaken the older models of service to reach a wider audience. 

This scaling up is known as "crossing the chasm" from early adopters to mainstream customers, according to Robert Wolcott, a professor of entrepreneurship and innovation at Northwestern University's Kellogg School of Management. Startups need to have a strategy to make that transition at the outset, Wolcott said, or risk not being able to grow out of their early phases. 

YourMechanic, which launched in 2012, attempts to eliminate the trip to the repair shop, sending mechanics to customers' homes to fix their cars. 

Once a user submits the vehicle's issue, a price is quoted that includes the cost of parts and service, and a time is scheduled for a mechanic to come and perform the repair. YourMechanic can perform more than 600 repair, maintenance and diagnostic services. Users can search on the website for repairs the on-demand mechanics can perform.

The company has grown quickly under the on-demand model, operating in 3,000 cities since it launched. In December, founder Art Agrawal was replaced as CEO by Rodio, who holds a long resume in online commerce and developing startups.

The largest barrier to growth, Rodio said, is finding enough qualified mechanics to meet demand. Customers typically expect to have their car repaired within two days via YourMechanic, a deadline that can be tough to meet if parts aren't readily available and there are few mechanics qualified to perform the service.

One solution to these companies' issues could be the crutch some automakers have relied on for vehicle sales for decades: fleet customers.

"Having our mechanics repair 10 cars at one location is better than one car at different locations," Rodio said.

The need for fleet repair could rise as self-driving vehicles are deployed in ride-hailing services, eventually matching or outpacing single customer demand, Rodio said. This changing demand could relieve the pressure of supply, as fewer mechanics would be needed to address customer needs. YourMechanic is competitive with traditional mechanics by offering services that can be up to 30 percent cheaper, according to the company.

Turo also relies on fleets to help balance high levels of demand with a limited number of hosts. The company allows car rental agencies to list on their site, allowing one host to provide multiple cars. Stewart said the company hopes car owners begin to build their own businesses through the site, buying additional cars for the purpose of renting them out.

"Every car added to the Turo fleet enables more than one car to come out of private stock," Stewart said.

Menon said bulk sellers on eBay Motors have been the most consistent in providing quality, and have even helped the site collect data and develop new services.

"To some extent, we leverage each other's assets and become better and much stronger," she said.