Auto Body Shops

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 33,000 auto body shops in the US provide structural and interior repair, paint, and customization services for vehicles, such as passenger cars, trucks, vans, and trailer bodies. Major customers are insurers, vehicle owners, and auto dealerships. Some auto body shops are members of insurers’ Direct Repair Programs (DRP) and receive referrals from insurers whose clients have filed damage claims.

Increasing Technological Complexity

The technological complexity of modern vehicles creates operational challenges for body shops.

Collision Claims Stabilize, Severity Rises

While the incidence of collision damage insurance claims has remained steady over the last few years, the severity of claims has risen.

Industry size & Structure

The average auto body shop operates out of a single location, employs about 8 workers, and generates just over $1 million annually.

    • The auto body shop industry consists of about 33,000 firms that employ about 250,000 workers and generate almost $40 billion annually.
    • The industry is highly fragmented; the top 50 companies account for 20% of industry revenue.
    • The industry includes multiple location operators (MLO)/multiple shop operators (MSO)/chains, franchises, and independent operators. In 2019, independent shops accounted for 54.1% of total body work sales, while chains and franchises accounted for 26.6% (car dealerships accounted for the remainder).
    • Large firms include ABRA/Caliber Collision, Gerber Collision & Glass, and Service King. Large franchises include Fix Auto USA and Driven Brands (CARSTAR, Maaco).
                                Industry Forecast
                                Auto Body Shops Industry Growth
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Nov 10, 2022 - EV Repair Risks
                                • As electric and hybrid vehicles go mainstream and constitute a larger part of a collision repairer’s business, the dangers – including fire and electrocution – posed to technicians by EV high voltage systems are increasing. Auto techs working on EVs are at risk if they don’t follow safety procedures diligently and thoroughly, warns Dirk Fuchs, director of technical programs and services for the Inter-Industry Conference on Auto Collision Repair (I-CAR), who’s been touring the country warning body shops of the dangers associated with EV repair. “Every procedure and every recommendation from I-CAR and the original equipment manufacturer (OEM) must be followed exactly every time to avoid either the loss of life and/or the loss of your entire shop and your customers’ property from a thermal event,” Fuchs cautions. However, with proper training collision repair shops can grow by picking up business from shops that turn it down.
                                • Hazardous driving conditions created by snow and ice storms can be a boon for collision repair businesses, but threaten to overwhelm body shops that aren't prepared to deal with a sudden influx of customers, Fender Bender warned in November 2022. Challenges presented by surprise winter storms include making room in the shop’s schedule for unexpected new business, having enough staff to cover the sudden influx of work, and setting customer expectations around wait times. Winter events can also overwhelm shops with calls for tows or drop-offs of non-drivable vehicles. Suggestions from a Minnesota collision repair shop owner in an interview with Fender Bender include leaving room in schedules for the unexpected, communicating honestly with customers about wait times, and even turning away work when accepting more than the shop can efficiently handle sets it up to disappoint customers and overstress staff.
                                • Auto body and paint shops may experience increased demand for their services as record high new car prices and soaring interest rates on car loans make repairs an economical alternative to replacing aging vehicles. The average price of a new car topped $48,000 in September 2022, according to data from Kelley Blue Book (KBB). That figure represents more than 80% of median income in 15 US states, reports YAA Car Search. Moreover, industry insights from KBB and TrueCar indicate that new car prices have yet to peak. Adding to buyers’ pain, interest rates on auto loans have soared, with the average annual percentage rate on financed new vehicles in the third quarter at 5.7%, up from 4.3% at the same time last year, and up from last quarter's 5%, according to Edmunds.
                                • The Midwest region commonly known as “hail alley” is expanding, putting more properties, vehicles, and crops at risk for hail damage, according to Verisk’s 2022 Hail Report. With more hail storms impacting eastern states and more populous areas, insurance claims on cars, houses, and crops damaged by hail reached $16.5 billion in 2021 — the highest ever -- The New York Times reported in September 2022. Hail can damage a car’s paint job and dent the body, spurring demand for paintless dent repair (PDR) and other services provided by body shops. Texas – the nation's second-largest auto market – remained at the top of the list of states affected by hail in 2021. However, risk for hail damage is growing in other major auto markets like Pennsylvania. and New York.
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