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 31,800 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 less than 10 workers, and generates just $1.4 million annually.

    • The auto body shop industry consists of about 31,800 firms that employ about 248,700 workers and generate $45 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

                                May 4, 2023 - Car Owners Facing Steep Car Payment and Repair Costs
                                • Car owners of older vehicles often face substantial repair costs on top of big monthly car payments, leading to loan delinquencies, according to the Wall Street Journal. Car buyers paid more for vehicles during the pandemic after prices surged due to the constricted supply of new and lightly used vehicles. As cars need repairs, owners have faced tough decisions about how to manage expenses. Some are defaulting on their loans. In February 2023, the delinquency rate on subprime car loans climbed to its highest level in more than a decade. The cost of maintaining or fixing a car is also rising. The Bureau of Labor Statistics found that the US consumer-price index for vehicle maintenance and repair increased 12.5% in February year over year. IMR estimated that consumers spent $800 per car in 2022 for maintenance and repairs, which is $200 more than the average before the pandemic.
                                • New electric vehicle (EV) safety standards and certifications have been released by the National Institute for Automotive Service Excellence (ASE), according to Auto Body News. The new EV Technician/Shop Personnel Electrical Safety Standards were created in partnership with manufacturers, the aftermarket industry, and experts in the electric field. The new standards establish a proper procedure for working on and around electrified vehicles (xEV). According to ASE President Tim Zilke, “Technicians and service personnel must be properly trained to perform EV service and repairs. With the increasing popularity of electric vehicles, ASE has taken a proactive approach to support shops as they encounter more hybrid and EV repair opportunities.” The new certification consists of two levels. The first certification level is the “xEV Electrical Safety Awareness Certification;” those who pass the test will demonstrate an understanding of high-voltage safety awareness and can perform maintenance and repairs not related to the high-voltage systems or their components. The second level is titled the “xEV Technician Electrical Safety Certification” and is intended for those in the service and repair industry; those certified will demonstrate an understanding and capability of working with high-voltage systems. Skills performed by those with the second certification may include evaluating and classifying the condition of the high-voltage battery and high-voltage electrical system, securing the high-voltage system against being activated, re-starting the high-voltage system, performing general work on de-energized high-voltage systems and components, and assessing the risk of high-voltage vehicles that were involved in an accident.
                                • Motor vehicle repair costs grew by 23% in February 2023 year over year, a rate nearly four times higher than overall price increases, according to government data reported by ABC News. Contributing to the higher costs were a labor shortage, a lack of car parts, and expensive high-tech car repair costs. Auto body shops increased pay to attract and keep workers in a tight labor market. In addition, repair shops have grappled with part scarcity that began during the pandemic and invested in new equipment to be able to fix high-tech cars. In response to the higher costs, some consumers are choosing to make only basic repairs rather than more comprehensive ones. A study from Aftermarket Matters shows fewer car repair shops exist in the US. About 225 cars and trucks were on the road for every active service bay in 2016, compared to 246 vehicles per bay in 2021.
                                • Consumer confidence levels increased slightly in March 2023 after falling for two consecutive months, according to data from The Conference Board. The Conference Board’s consumer confidence index rose to 104.2 in March 2023 from 103.4 in February 2023. According to Ataman Ozyildirim, a senior director of economics at The Conference Board, “Driven by an uptick in expectations, consumer confidence improved somewhat in March but remains below the average level seen in 2022 (104.5). The gain reflects an improved outlook for consumers under 55 years of age and for households earning $50,000 and over.” Plans to purchase appliances have cooled, while intentions for automobile purchases slightly improved in March 2023, per Ozyildirim.
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