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 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 77,600 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.

Declining Collision Sector

Once a highly-profitable segment, the collision and body repair sector is in what some industry experts have termed “irrevocable decline.

Competition from Dealers

Car dealerships are increasing their efforts to service and repair vehicles of all types.

Industry size & Structure

The average auto repair shop has about 4-5 employees and generates $750,000 in annual revenue.

    • The automobile repair industry includes 77,600 firms that operate 81,600 shops, employ 375,700 workers, and generate $62 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 12.5 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 Meineke/Maaco, Midas, Monro, and Precision Tune Auto Care.
                            Industry Forecast
                            Auto Repair Shops Industry Growth
                            Source: Vertical IQ and Inforum

                            Recent Developments

                            Apr 10, 2024 - Higher Growth Forecast
                            • The US auto repair industry is projected to grow at a CAGR of slightly over 4% between 2024 and 2028, according to a forecast from Inforum and the Interindustry Economic Research Fund, Inc. The expected growth rate of 4.1% is comparable to the overall economy's anticipated growth. The report noted that consumer confidence levels have improved, which bodes well for auto repair 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 examined 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.
                            • The Repairer Driven News has reported that shipping disruptions in two significant canals are expected to impact parts delivery and costs in the auto repair industry. The US Department of Defense has warned that the Houthi group, backed by Iran, has been attacking US cargo ships in the Red Sea since mid-November. The attacks have disrupted commerce and shipping through the Suez Canal, a major shipping route from Asia to the East Coast. At the same time, the Panama Canal Authority has also reduced the amount of traffic due to drought in the canal’s watershed. According to the authority, it is the first time that transits in the canal have been restricted. As a result, vessel transits were expected to drop to 18 daily in February from a typical level of 36-38 transits daily, causing ships to wait up to two weeks to get through the canal. Experts predict that auto body shops with limited inventory could begin running out of parts and raising prices. Aftermarket products could be most affected by delays in the Red Sea, according to the report.
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