With a $10.2M Boost, YourMechanic Aims at Mobility Fleet Market
Every month, there’s news of another partnership among carmakers like GM and tech companies such as Uber, as they vie for dominant roles in a transportation future where individual car ownership may largely give way to rides-on-demand from fleets of autonomous and tech-enabled vehicles.
But whether Uber, Toyota, GM, Honda, or Google end up at the very top of this mobility industry, it’ll be good news for the companies that are developing services to support future high-tech car fleets, says Anthony Rodio.
Rodio is the CEO of YourMechanic, a six-year-old company that dispatches auto mechanics to carry out repairs where the car is located—whether that’s in the owner’s driveway, or the garage of a car-sharing fleet.
Mountain View, CA-based YourMechanic’s original mission, when it was founded in 2012, was to help individual car owners connect with mechanics who would come to them, with rates lower than at traditional car repair shops. More than 80 percent of YourMechanic’s revenue still comes from individual customers, Rodio says. But Rodio, like the leaders of many other companies involved in car-related services, is zeroing in on the large market expected to emerge from transportation fleets, whether they’re ride-hailing companies, car-sharing outfits, or car rental businesses.
“We don’t care who owns the future of mobility,” he says.
With all the growth in the sector, Rodio says he expects that fleets will deliver 50 percent of YourMechanic’s revenue within three years. The company launched its fleet-oriented services last year.
YourMechanic now operates in more than 5,000 cities in the United States and Canada, and it announced a fundraising round Tuesday to help propel its drive to land more work from fleet managers, and a further expansion in Canada. The company raised $10.2 million to augment a Series B funding round from 2016, bringing its total fundraising to $38.5 million. The new funding round was led by Royal Bank of Canada Ventures, with participation from other investors including SoftBank Capital, Verizon Ventures, American Family Ventures, Data Point Capital, and Rick Wagoner, former chairman and CEO of General Motors.
YourMechanic is part of an entrepreneurial movement that was first based on the mobile connectivity of vehicles as well as individuals, as Uber and Lyft built their ride-hailing services. As those companies went on to explore the potential of self-driving cars, major auto manufacturers piled in as developers of mobility fleets. The field was then ripe for third-party tech companies as creators of marketplaces to organize and support all that activity.
For example, San Francisco-based Stratim made a pivot in early 2016 to match car fleet managers with repair shops in its online network. Stratim had raised a total of $36 million from investors, including Bessemer Ventures, BMW iVentures, Norwest Venture Partners, and Trinity Ventures, when it agreed to be acquired by the big Indiana used-car auction company KAR in a deal announced in February.
YourMechanic, rather than matching car and fleet owners with repair shops, arranges appointments with individual mechanics who are either entirely independent freelancers or employees of repair shops who take outside jobs in their off-hours, Rodio says. He sees the mobility of these mechanics as a selling point for fleet owners who won’t need to drive a car to a repair shop or take it out of service for longer than necessary. YourMechanic operates seven days a week, and tries to schedule service calls within two days or less.
To make its model work for independent mechanics, YourMechanic takes on some of the support services they would usually rely on as repair shop employees, such as payments. Mechanics and customers are connected via the company’s app, which also schedules the job and manages the work order the customer signs if the repair is done to their satisfaction. Customers share their credit card numbers only with YourMechanic, Rodio says.
The mechanics own their own tools, but YourMechanic buys the needed parts online. The worker assigned to a particular job picks up the parts at the “home store” of their choice.
For the time being, YourMechanic doesn’t handle tire replacements, collision damage repair, lengthy engine overhauls, or transmission jobs, Rodio says. But it arranges for about 800 repair, maintenance, and diagnostic services that cover about 90 percent of what commonly goes wrong with a car, he says. The most frequent demand is for a breakdown diagnosis, which costs $70. Customers get a discount if they proceed with the job after the diagnostic visit, such as replacing a battery or alternator.
“We warranty the work for a year,” Rodio says.
The company checks the backgrounds of prospective mechanics, not only to certify their skills, but also to evaluate their potential in customer relations as they carry out jobs at the homes or offices of car owners, Rodio says.
“We reject more people for soft skills than we do for turning the wrench,” Rodio says. “A lot of mechanics haven’t had a lot of customer interaction.”
YourMechanic makes money from a markup on both labor and parts. Rodio says the markups are less than at traditional repair shops, which need to pay for garage rent and other infrastructure costs. As a result, he says, YourMechanic’s charges to customers can be lower than a shop’s, and the mechanic’s pay is higher. The pay range in a large city could be $40 to $50 an hour, but is less in outlying areas, Rodio says.
YourMechanic is aiming to scale up quickly, adding cities where there’s sufficient demand. Rodio says he doesn’t see competitors in the mobile repair space at a comparable size, so far. In Canada, the publicly traded Toronto-based company Element Fleet Management is offering a fleet maintenance and repair management service that connects fleet owners with thousands of independent repair shops and dealerships in its provider network.
A Grand View Research report pegged the global fleet management market size at $291.1 billion in 2016. Aside from maintenance, fleet managers are using software to enhance a range of operations, including vehicle tracking, route planning, real-time traffic detours, energy consumption analysis, and compliance with pollution regulations.
Rodio says the overall auto repair market in North America amounts to as much as $140 billion, with about $70 billion to $80 billion in the United States that could be served under the current range of repair jobs offered through YourMechanic. He says he hasn’t found data on the percentage of that market attainable by mobile repair services. In the future, the company might expand into new areas such as collision repair by forming partnerships with outside outfits, he says. The eventual aim could be to make YourMechanic “the Amazon of mobility car repair,” Rodio says.
In the meantime, YourMechanic is grappling with interesting marketplace challenges as it scales up its network of mechanics to match customer demand. The company has to keep mechanics busy enough that they don’t peel away in search of work elsewhere, Rodio says. Adding new mechanics to the network might sometimes defeat that goal, by diluting the work for current ones. But that means the company may be less able to meet a surge in demand, such as flurries of calls for vehicle air conditioner repairs during a heat wave, he says. YourMechanic can’t expand its workforce as quickly as Uber or Lyft can hire new drivers.
“I can’t just get 50 new skilled mechanics,” Rodio says.
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