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 $1.4 million annually.

    • The auto body shop industry consists of about 31,800 firms that employ about 248,700 workers and generate $54 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 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

                                Apr 10, 2024 - Growth Ahead for Industry
                                • The US auto body shops industry is projected to grow at a CAGR of 4% between 2024 and 2028, according to a forecast from Inforum and the Interindustry Economic Research Fund, Inc. The anticipated industry growth rate is comparable to the overall economy's expected growth. The report noted that consumer confidence levels have improved, which bodes well for auto body shops and other service industries. Additionally, consumer sentiment has seen a degree of improvement following sustained lower levels. Many consumers have delayed replacing their vehicles in recent years due to high vehicle prices, high interest rates, and limited inventory levels. According to the forecast, these factors continue to drive demand in the auto repair industry, as cautious consumers choose to maintain and repair their cars instead of replacing them.
                                • A new Crash Course Report from CCC Intelligent Solutions found a 60% increase in the time it takes for vehicles to enter repair shops after estimate completion when compared to pre-pandemic times, according to Autobody News. The Q1 2024 report, which used data from 300 million claims-related transactions, shows that advanced technology is leading to costlier repairs, higher claims costs, and longer cycle times. Other factors contributing to delays are labor shortages, higher labor costs, and scheduling backlogs. According to Kyle Krumlauf, director of industry analytics at CCC, “Much of what the industry is experiencing is reflective of a new normal where complexity, beginning with the vehicle itself, is reshaping the market landscape.” Key findings in the report include auto tech transformation (higher costs associated with fixing advanced driver assistance systems and other technology), electric vehicle repairs (higher labor costs due to detailed repair procedures and capacity constraints), replacement of parts versus repair (cost of repairing newer model year vehicles compared to older models is up 35%), and volatile weather patterns contributing to increases in property losses.
                                • Consumer confidence levels were essentially unchanged in March 2024, after a dip in February 2024 following three consecutive months of growth, according to data from The Conference Board. The Conference Board’s consumer confidence index was 104.7 in March 2024 from 104.8 in February 2024. According to Dana Peterson, Chief Economist at The Conference Board, “Consumers’ assessment of the present situation improved in March, but they also became more pessimistic about the future.” Peterson added that confidence rose among householders 55 and over but fell for those under 55. Plans to purchase homes, autos, and large appliances decreased slightly on a six-month basis.
                                • Higher loss thresholds, higher repair costs, and decreasing parts repairability were identified as key issues facing repair shops and insurers, according to an Enlyte report in Repairer Driven News. The total loss threshold for insurers has increased due to higher used and new vehicle prices, resulting in more repairs of collision-damaged vehicles. The average cost of a repairable claim in the US was up 8% in the first six months of 2023 over 2022, compared to the typical annualized growth of between 3% and 5%. The report projects the average repairable claim will exceed $5,500 in 2024 compared to an estimated $5,000 in 2023. The report noted that vehicle material choices by manufacturers have led to a decrease in the repairability of parts. More parts are being used per repair, with the number of parts used in each repair growing by about 1% a year. Replacement part costs have also increased, $275 per part in 2023 compared to $200 in 2020.
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