Auto Repair Shops
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 82,500 automobile repair shops in the US fix cars with mechanical problems or restore a vehicle after a collision. The automobile repair industry is highly fragmented. Most out-of-warranty vehicles are repaired at independent shops. A vast majority of independent service shops are family-owned.
Competition from Dealers
Faced with declining new car sales, car dealerships are increasing their efforts to service and repair vehicles of all types.
Declining Collision Sector
Once a highly-profitable segment, the collision and body repair sector is in what some industry experts have termed “irrevocable decline.
Industry size & Structure
The average auto repair shop has about 4-5 employees and generates $709,000 in annual revenue.
- The automobile repair industry includes 78,600 firms that operate 82,500 shops, employ 345,600 workers and generate $55 billion in annual sales.
- The auto repair industry is separate from dealerships that provide repair services as well as the aftermarket industry, which manufactures and supplies components for vehicle repair.
- The automobile repair industry is highly fragmented. A vast majority of independent service shops are family-owned.
- The average car is 12.1 years old. A shift toward older vehicles tends to benefit the auto repair industry, as it indicates customers are more likely to take them to a mechanic for service.
- Many independent mechanics are closed on the weekends, hindering competition with car dealerships that operate on Saturdays. Mechanics work an average of 40 hours a week.
- The largest auto repair companies in the US are Belron US, Meineke/Maaco, Midas, Monro, and Precision Tune Auto Care.
Industry Forecast
Auto Repair Shops Industry Growth
Coronavirus Update
May 6, 2022 - Federal Right to Repair Legislation Pending
- Federal legislation pending in Congress would “end manufacturers’ monopoly on vehicle repair and maintenance and allow Americans the freedom to choose where to repair their vehicles," according to its author US Representative Bobby L. Rush (D-Ill.). H.R. 6570, known as the REPAIR Act, is meant to ensure that vehicle owners and independent auto repair shops will have equal access to necessary vehicle repair and maintenance tools and data as automakers’ dealerships and would level the playing field between independent auto repair and body shops and dealerships and spur competition, Reuters reports. The bill would require all tools and equipment, wireless transmission of repair and diagnostic data and access to on-board diagnostic systems needed for repairs be made available to the independent repair industry.
- Auto repair shops are seeing their inventories depleted due to distribution issues all along the supply chain, according to Wawanesa Insurance. Shipping times for car parts and other goods have increased due to a lack of container and cargo ships. Parts also face unloading delays due to a labor shortage, which also means there are fewer delivery drivers to transport parts to repair facilities. Exacerbating delays along the supply chain is a shortage of skilled mechanics to put the parts into the vehicles. CarParts CEO, Lev Peker, predicts that auto-part prices will rise an additional 5% by the end of 2022, with the entire supply-chain process taking two months longer than before the pandemic.
- Repair shops are expanding their supplier networks in efforts to allocate parts that are hard to find due to global supply chain bottlenecks. According to a survey of heavy duty repair shops by Fullbay, TMC, and MOTOR, 84% of shops are experiencing longer delays in parts deliveries, which 37% report as “severe”. Online suppliers are an option, but shops should be clear about whether substitute brands are acceptable and opt to use reliable online retailers that can provide parts tracking and solid delivery dates.
- More old cars on the road translates to greater repair opportunities. An estimated 76 million vehicles on the road or 16 years or older, and the number that is 12 years or older is expected to increase by nearly 25% in 2022. People are keeping their vehicles longer, as the average length of ownership increased 60% in the past decade. Older vehicles typically have higher mileage and need an ever-widening variety of replacement parts to remain in operation.
- The automotive repair industry’s worker shortage worsened during the pandemic and continues today. The number of positions in demand rose from 136,503 in 2020 to 258,000 in 2021, according to the TechForce Foundation’s Transportation Technician Supply & Demand Report. In 2020, demand for auto technicians outpaced supply by nearly three to one. In 2021, the imbalance escalated to about five to one. The shortage of technicians was made worse during the pandemic partly due to lower enrollment in post-secondary technical education programs. In a typical year, about 39,000 auto service technicians graduate from technical colleges and training programs, according to the National Automobile Dealers Association. However, the industry needs 76,000 new technicians each year to replace those who retire or leave the industry.
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