Auto Repair Shops NAICS 811111

May 19, 2026 - Auto Industry Demand Getting Hit From All Sides

• Rising inflation, tariffs, and the ongoing Middle East war are expected to further weaken US auto demand in 2026, pressuring vehicle and parts imports while boosting demand for aftermarket repair components, according to S&P Global. Containerized US imports of automobiles and auto parts fell 9.4% in 2025 as higher borrowing costs, steel tariffs and elevated vehicle prices weighed on consumers, with prolonged conflict expected to push prices even higher and suppress container volumes further. At the same time, aftermarket suppliers such as Advance Auto Parts are benefiting as consumers delay new vehicle purchases and keep older cars on the road longer. Auto parts importers are also accelerating sourcing diversification away from China toward Southeast Asia, South Korea and Japan, though industry experts warn supply chain shifts could take up to two years amid continued tariff uncertainty and volatile trade policies.
• The automotive right-to-repair debate has become a defining issue for the US aftermarket industry as vehicles grow more software-driven and connected. Independent repair shops, parts distributors, and aftermarket manufacturers argue that automakers are increasingly restricting access to diagnostics, telematics data, and calibration systems needed to service modern vehicles. Industry leaders warn that limited access could shift more repair business to dealerships, reduce competition, and weaken demand for aftermarket parts. At the center of the fight is control over vehicle data, which OEMs say is necessary to protect cybersecurity and safety, while aftermarket advocates argue consumers should have the freedom to choose where their vehicles are repaired. As EV adoption and advanced driver-assistance systems expand, the outcome of the right-to-repair battle could fundamentally reshape the future of the automotive aftermarket.

• Parts inventories are swelling in the auto repair shop industry, but it’s less about weak demand and more about shops adjusting to a new, less predictable environment. After years of parts shortages, many repair businesses and their suppliers began stocking more aggressively to avoid delays, only to see demand cool as higher interest rates slowed driving and new vehicle purchases, and post-pandemic repair surges leveled off. At the same time, the uneven rollout of electric vehicles has complicated ordering, with shops still heavily reliant on traditional parts even as future demand shifts. As supply chains improved, backlogged parts orders from tariffs also arrived in waves, leaving shelves fuller than expected. The broader backdrop remains strong - the global aftermarket is projected to exceed $500 billion in 2026, according to Motor Intelligence.
• Auto repair prices in the US climbed 7.3% year over year in February, per the US Bureau of Labor Statistics’s Producer Price Index (PPI), amid a mix of higher input costs and increasing vehicle complexity. A major driver is the increased cost of parts and operations, fueled by elevated energy prices from the Iran war and ongoing tariff-related supply chain pressures that continue to push up wholesale costs. At the same time, the industry faces a shortage of skilled technicians, leading to higher wages in a labor-intensive sector and contributing to inflated repair costs. To protect profit margins repair shops are passing through these higher costs by marking up parts and service fees. On top of that, modern vehicles - especially those with advanced electronics and EV components - are more complex and expensive to fix, a longer-term upward trend that is unlikely to ease off anytime soon.