Notes from meeting with a leading Automotive Styling Center’s National Franchise Sales Manager
- About 45% of topline for franchisees comes from Auto window films tinting + Vinyl (wrap on top of existing paint – small business advertisement wrap OR affordable replacement of paint option without the expensive repaint cost) + PPF + Architectural Tints
- Best performing franchisee makes about 75% gross margins and 34% EBITDA
- About 75% of all auto vehicles would have Sun Control Film applied. They didn’t have such numbers for PPF penetration.
- PPF market would be about $400mn.
- Wraps, PPF, Solar Films – all have good demand tailwinds and better prospects ahead for them.
- Recently self-healing (from a small dent) PPFs and vinyl wraps have been the latest innovations in the industry.
- 100% of their tinter franchisee locations would be using software and cutting machines. There is a one-time fixed cost of ~$10k and then $100 a month for a film cutting software license. (there are film cutting machines available in the market for about $3k to $5k)
- Around 10% of new cars are sold with pre-installed window films and these films are just for privacy purposes and not UV protection. However, on high-end cars the quality of pre-installed films is better than starting range cars.
- All films are ordered through franchisor’s platform. Franchisor aggregates all orders from multiple franchisees and then sends orders out to the vendor.
- They get Solar Window Films and PPFs from Suntek, 3M, and XPEL.
Notes from meeting with a Neutral Industry Insider who has covered Film Industry for last 10+ years
- According to him, it is a level playing field between Global and US manufacturers. Lower production cost for Global gets negated by direct sales reach for US manufacturers.
- Top 5-6 brands control about 50%-60% of the market; 3M, Eastman, XPEL, Garware (Global), Madico, Johnson. And the rest of the market is with many smaller players and most of them are catching-up. It’s a highly competitive market.
- Global is definitely part of the top tier brands/manufacturers in the US. And Global provides good quality products. Global has been more of a silent player 4-5 years back but lately they have upped their game in terms of marketing and growing the business.
- Solar window film market is growing at a slower rate than PPF. Solar would be growing about 5%-8%.
- Price is not the main factor. It’s the quality of the product, relationship with the tinter, TRUST built over several years, standing with the tinter when there is something wrong with the product (warranty service), providing more offerings to the tinters to serve their customers better, providing training – these things are of utmost importance in this game and makes Tinters stick to the brand.
- There would be about 6000 tinters (auto + architectural) in the US. Market is very fragmented. About 20% of tinters would be exclusively offering only one brand. Remaining tinters would be offering multiple brands. XPEL and Tintworld people are trying to have a professional structure in this line of business by offering franchises. But it’s going to be a long affair for them to be able to grab a bulk of tinters because it’s so fragmented. It is expected that this industry will remain fragmented.
- Eastman’s architectural window business would be almost similar in size to its Auto window film business.
- Penetration of PPF in new sold cars would be below 20%.
- There is opportunity for brands to work directly with new car dealers to have films applied at the showroom level when the car is sold.
- PPF market shall grow at a faster rate than Auto Window Film market in the future.
Scuttle-butt observations after meeting 20+ tinters in and around Charlotte, NC
- Most tinter shops were owner run, mainly a one-man army or at the max 2-3 helpers, serving people in their local community for the last many years. So these are mainly blue collar workers, very passionate about cars, who are mainly selling many services like car detailing, wrapping of vehicles, paint correction, window films, PPF, audio enhancement, other interior accessories, etc. But for most of them the bulk of their revenue comes from sun control window films and PPF.
- They deal with the customers of their local area often and take pride in delivering quality products with exceptional craftsmanship service. They stand by the quality of the product and ensure that they keep delighting their customers. They know that customers living in their area are going to come back to them if anything goes wrong with the product and customers can leave bad reviews for others which would harm their business. So they ensure that the job is done right all the time.
- Most of them in my area had an exclusive relationship with the film brand and some of them were selling/offering only a single brand for 10+ years. Selling only one brand for 10+ years was telling me loudly about the tinter’s loyalty with the brand.
- More training is needed for getting better at PPF application than Window Film application. However, moving/switching between brands for final application is not a problem for an experienced tinter.
- Most of them used software and film cutting/plotting machines. It makes them efficient and the job gets done faster with minimal wastage of the film. At the same time, for PPF, certain areas of the car like fenders, they prefer to apply the PPF themselves rather than a pre-cut PPF because the edges of the fender get better covered. Most of the PPF customers opt for doing just the front portion of the car (hood, fender, and side mirror) and hence covering the edges of the fender well becomes critical.
- Most customers walking in the shop don’t ask for a particular brand of film. Their main concern is to get a film whose Visible Light Transmission (VLT) number is allowed in their state according to the state law. So it’s all about the service, warranty, and cost of service that the tinter offers.
- I was also lucky enough to visit SunStoppers (the biggest franchisee of XPEL) located in my city. They have about 5 locations in Charlotte metropolitan city. Very professional and customer centric approach as compared to mom&pop tinters. More products/services offerings, big on social media marketing. Since I googled XPEL, their advertisements started showing up on my Chrome browser and FB news feed. XPEL has clearly been a big winner in gaining market share and has disrupted this industry by having direct tie-ups with the tinters in the form of franchisees and having them sell exclusive XPEL branded products to their customers.
- I wasn’t able to find a single tinter selling Global brand in my area. It seems like Global has zero presence in Carolina states. However, I checked a few tinters in Texas, Arizona, California, and Maryland states and found tinters who were offering Global brand along with other brands as well.
- I also noticed that a few tinters in my area were running July 4th, independence day PPF specials – where Full Front package was offered for $699 which usually goes for $1400+ regular price. I called-up that tinter and asked how long the special would last. He said just the week of 4th of July but he shall have a similar special for Labor Day long weekend in September. With such promotions the affordability level will increase drastically and the market will not be limited to just Teslas and high-end cars.
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