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 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
                            Source: Vertical IQ and Inforum

                            Recent Developments

                            Nov 10, 2022 - EV Repair Risks
                            • As electric and hybrid vehicles go mainstream and constitute a larger part of a repair shop’s business, the dangers – including fire and electrocution – posed to technicians by EV high voltage systems are increasing. Auto techs working on EVs are at risk if they don’t follow safety procedures diligently and thoroughly, warns Dirk Fuchs, director of technical programs and services for the Inter-Industry Conference on Auto Collision Repair (I-CAR), who’s been touring the country warning repairers of the dangers associated with EV repair. “Every procedure and every recommendation from I-CAR and the original equipment manufacturer (OEM) must be followed exactly every time to avoid either the loss of life and/or the loss of your entire shop and your customers’ property from a thermal event,” Fuchs cautions. However, with proper training repair shops can grow by picking up business from shops that turn it down.
                            • Automakers are developing new voice control capabilities for vehicles and adding voice commands that go deeper into the car’s controls, including verbal cues for turning on windshield wipers, adjusting mirrors, or raising the tailgate, The Wall Street Journal reported in November. In an effort to keep drivers’ eyes on the road – and not on dashboard screens – carmakers are expanding voice capabilities and using artificial intelligence to transform cars “into a travel companion of sorts,” WSJ wrote. More drivers are embracing voice controls as the technology has improved. Some 40% of owners said they used their in-vehicle voice systems at least once a week, up from 30% in 2019, according to a US survey conducted last year by research firm Strategy Analytics, according to WSJ.
                            • Auto repair shops are poised to benefit from record high new car prices and soaring interest rates on car loans that are making repairs an economical alternative to replacing an aging vehicle. The average price of a new car topped $48,000 in September 2022, according to data from Kelley Blue Book (KBB). That figure represents more than 80% of median income in 15 US states, reports YAA Car Search. Moreover, industry insights from KBB and TrueCar indicate that new car prices have yet to peak. Adding to buyers’ pain, interest rates on auto loans have soared, with the average annual percentage rate on financed new vehicles in the third quarter at 5.7%, up from 4.3% at the same time last year, and up from last quarter's 5%, according to Edmunds.
                            • In a move designed to greatly accelerate the transition to electric vehicles, the California Air Resources Board in August 2022 approved regulations that banned the sale of new gasoline-powered cars by 2035. By then, all new passenger vehicles sold in the state would then have to run on electricity or hydrogen. While the rule doesn’t force California’s car shoppers to buy these vehicles, it creates fines for automakers who fail to comply with the targets. The penalties are stiff enough that experts believe automakers will comply with the new mandates. The Clean Air Act grants California – the nation’s largest auto market – the ability to impose emissions standards on new vehicles that are stricter than those at the national level and which other states can then follow. Several other states have announced similar plans including Virginia, Washington, Oregon, Massachusetts, and New York.
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