AAction Transmissions of Pembroke Pines, Florida (in the Miami area) was founded 43 years ago by Al Petrassi. The shop became one of the largest in the area and acquired a strong reputation over the years.
Last year, Al Petrassi decided to retire at the age of 68, and sold the business to Luis Merchan, a private equity businessman. Merchan was fresh off a stint as chairman and CEO of a public company called Flora Growth Corp. before leaving that company in April 2023 and deciding to make a change to the auto industry.
“I believe in the auto repair industry,” Merchan says. “I especially believe in transmission. I’m going to continue to invest in this business, and I expect this to be my big project over the next decade.”
Opportunity in the industry
After reading that you may be asking, what makes a former CEO look to the transmission industry as his next move?
“I think the industry is poised for disruption,” Merchan answers. “When you look at the auto repair industry, there are about 280,000 auto repair shops in the United States and over 50% are independently owned. And it’s an industry where there’s not a clear market leader. When you look at the four biggest auto repair brands, they make up about 10% of all shops. So it’s an industry that is fragmented and there’s a tremendous amount of transition happening.
“When you look at the average age of a repair shop owner, they’re reaching 60 years old. So a lot of these repair shop owners are looking to transition into retirement. And there are great elements that have been imbued into the industry, like exceptional technical training, exceptional service. There are a tremendous number of associations that are supporting the skillset and development of both managers and technicians, whether it’s builders or R&R people.”
With that generational change comes another, Merchan notes: the emergence of generation Z (the generation of people born in the late 1990s and early 2000s) as customers. This is where Merchan says he sees opportunities.
“[Generation Z] are buying used cars; new cars are incredibly expensive and sometimes prohibitive for Gen Z. So there are a lot of used cars that are being bought and these customers like to be communicated in a different way. And that transition into the digital era is a tremendous opportunity that I see right now coming into the industry.
“I have owned the shop for about six months and we have made tremendous headway on a number of fronts. I’ll give you a couple of examples. Ease of scheduling, that’s number one. The new generation of customers is very used to utilizing online tools to either make appointments or have an initial intake form to diagnose their car. That is something that traditionally in the shops is done over the phone. At our shop we built an online scheduling tool where customers can go online and they can book their appointment at their time of preference in a format that is very familiar to them with everything else that is out there that they’re currently utilizing In other industries, whether it’s grocery shopping or scheduling a doctor’s appointment.
“The second component is just closing the loop in terms of service. We make sure that we explain to our customers exactly what we’re doing to their cars. We of course offer a 12,000 mile one-year warranty, which makes them very comfortable about the investment, since transmission repair usually is a high ticket repair. We also close the loop in terms of requesting feedback a few weeks later after their car has been repaired to understand how comfortable they feel with their repair. And I think this closing the loop, this feedback circle that we are completing for them is really helping not only increasing volume of traffic to the shop and repairs on the shop, which of course turn into increased sales, but also it helps solidify our position as an exceptional service provider.
“So that’s one. Number two is anything that has to do with marketing reviews, SMS reminders, all of these things that have traditionally not been in the independent auto repair industry.”
For Luis, it’s about meeting younger customers where they are.
“I like to put myself in the position of the customer. Usually when I go to an auto repair shop, I don’t want to feel like I don’t know what I’m getting into. So just making the environment a place that feels more familiar, that I feel comfortable, that I know somebody’s going to explain to me in my own language what is happening and I’m using tools that are actually available to me in other industries will make me lower my guard down and actually feel more comfortable about receiving the service that I need.
“We also incorporated a project management system,” he adds. “So when we come in every morning, the entire team knows exactly which car they’re working on. If there are any installers, they know which builder the transmission will go to, they know the next job and the one after that, there are screens around the store that lets them know exactly where they’re at. Customers can come in and they can actually see which cars are being worked on. It really provides a lot of transparency and improves efficiency.”
The wholesale business
AAction Transmissions’ business is about 40% wholesale and 60% retail according to Luis, who calls this “a nice healthy balance.”
When it comes to the wholesale side of the business, one of his early goals was to keep better track of the numbers—to understand how long repairs typically take, what turnaround time they can promise customers, and generally track more metrics about the shop.
“So there’s certain things that we’re tracking right now that we have incorporated into our daily operations. We know exactly how many cars are coming back and who was the installer and who was the builder on that car. We’re giving them feedback on what happened on that specific comeback and that specific warranty so we can actually train them and help them learn from possible things that we could have done better. Sometimes of course you can’t, but oftentimes just providing this feedback helps build the skillset of the builder. More importantly, it helps us provide better service times to our wholesale accounts, which are looking for high levels of efficiency. They’re looking for a fast turnaround.
“We understand that if we’re taking care of a pest control account, that we have several of those every day that goes by that their truck is parked in our shop is a day that they’re not making revenue. And we understand that the faster and the more accurately we can provide the service, the better they will feel about our business relationship.”
The team
Luis is quick to highlight the team at AAction Transmissions as a standout part of the business.
“When I bought the business, we kept the entire team intact,” he says. “Al did an incredible job at building a highly skilled technical team of mechanics, but also a highly skilled team of salespeople that know how to diagnose a car, that know how to properly estimate the repairs that need to happen, and that are great at customer service and communicating to customers what is happening. So that team was left in place and I think that’s very important to us to keep healthy relationships with our wholesale accounts and our retail accounts.
“We are known all over South Florida and people call us that have never been to our shop and they ask for a member of our team by name. They know the quality of work that these guys complete and they are recommended by word of mouth.”
There are 14 staff members at AAction Transmissions. Luis details them: “We have a quarterback, an office manager. Then we have three salespeople. We have three full-time builders and one swinger who’s both building and R&R. We have our tow truck driver, and then the balance of the team is installers.”
The strong reputation of the team is borne out by the shop’s online reviews; with more than 600 Google reviews, the shop has a 4.9 rating out of 5.
Last year, the shop also made news for giving a cancer patient whose car broke down on the way to chemotherapy a free transmission replacement.
Next steps
Looking toward the future and at additional improvements to the shop, Luis highlights digital marketing and inventory management as two targets.
“Over the last number of years in the industry, the cost of parts has increasingly gone up. And at this point it becomes a game of dollars and even cents and having the right parts stocked at all times and having a just-in-time system worked out with our vendors with our largest parts providers so we can service the customer at a faster rate is something that we’re actively working on.”
He also mentions additional services the shop could begin providing to its customers.
“This could be small things like if we’re already taking care of a car, could we replace the brakes? Could we replace the tires? Could we align them? Could we go even a step above and just give them a clean, washed car, and provide them a loaner car for those customers that need to immediately get back to work and don’t have a car. These are all adjacent services that may be perceived as a small thing, but they would make a huge difference in the customer’s lives, especially as they’re going to this period where their lives have been disrupted because the transmission is not working.
“And also there’s a lot of new transmissions out there that we’re just taking for the first time, and we just want to make sure that the technical skills and knowledge of our builders and our installers are put in place,” he says. “We are working on creating a pipeline of talent that is interested in this type of work. Putting out there the incredibly rewarding career that you could have as an installer and as a builder and eventually as a shop manager. That is something that is very important to me. I think we can have a big impact on younger generations that may be interested in automotive mechanic work and really do not understand not only the financial wellbeing that could come from working there, but also the rewarding career that you could have.
Being new to the industry
Luis shares what he’s learned being new to the industry.
“I think my recommendation for people that are getting into the industry is to be very humble,” he says. “It’s a very strange place to be when you are buying a business and you’re probably the least knowledgeable person about the business. So I think my advice would be: don’t speak too much, listen a lot. And I think that’s what I did the first 90 days was just listening to the team and watching them operate. Asking a lot of questions and just learning about the business and learning from each one of the members of the business was a tremendous amount of value for me.
“I think that process of learning and showing them that you’re not there to disrupt the daily lives, but actually enhance them, was the great foundation for us to be able to start to implement some changes that have improved the performance of the shop over time.”
