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An establishment where cars or other motorized vehicles are repaired by auto mechanics and technicians is known as an automotive repair shop/store.In regional dialect, such stores are called a garage or workshop. Companies in the automotive repair industry typically provide repair and maintenance services for passenger vehicles and light trucks.
The market of American automotive service is diversified based on VEHICLE TYPE that includes commercial vehicles, passenger cars, including a SERVICE TYPE of mechanical, exterior, structural, electrical, and electronics. Lastly, there is a segmentation called EQUIPMENT TYPE that includes tires, seats, batteries, and other equipment varieties.
Most repair shops have a broad categorization of their automotive service, covering both mechanical and bodywork repair of damaged vehicles (by collisions) and paintwork repairs provided to scuffs, scratches, and dents of a car.
In addition, you can also find automotive repair shops specializing in AUTO GLASS repair to shattered glass, cracks, chips of car windows, windshields, and a quarter glass of automobiles.
Although the COVID-19 outbreak paralyzed the business growth of virtually all American industries, the automotive repair industry, by contrast, experienced mild impacts of the pandemic, as the industry adapted to a service-based model of the market.
The auto repair industry is leaving no stone unturned in maximizing AI-based automated vehicle inspection technology for automatable inspection as a failsafe measure to provide a better service experience to the customers and expand the customer base.
The U.S. automobile manufacturers and service stations alike have long argued the value of maintenance and repair of automobiles when taking possession and operating an automobile.
In early times, a vehicle owner was financially responsible for the routine maintenance and repair of his vehicle. This was the status-quo when the automotive repair industry was in its rudimentary stage of development.
Since the responsibility of maintaining a vehicle’s good operating condition was the sole responsibility of the owners, they were left with no option but to maintain routine service visits to a nearby repair shop.
Before the advent of computers and new advancements in technology, most of the automotive repair stores/shops had to recruit skilled employees who knew how to service and repair cars using proper equipment.
An example of how the American automotive repair industry is adopting cutting-edge technology for vehicle inspection is Scope technology, a tech company based in the U.S.
The company has developed a vehicle inspection technology automated by artificial intelligence in collaboration with Microsoft’s Azure cloud computation.
The technology’s visual inspection process is said to finish a vehicle inspection in less than five minutes, reducing vehicle diagnosis cost by 50%, as reported.
Motivated by the advancements in new technology, the American automotive service market is expected to drive growth in the fast lane, considering technological advancements are reportedly increasing the average lifespan of automobiles, and a great number of drivers are becoming aware of road safety.
Lastly, there has been a surge in the sales of used cars by vehicle owners, indicating a great opportunity for growth for the key industry players across the U.S.
Combining single-location companies and units of multi-location companies, there are about 162,000 automotive repair services industries across the U.S.
These establishments collectively generated annual revenue of nearly $115 billion. Based on revenue measures, the market size of the automotive repair industry in the US is around $65.3bn, as of 2021.
Besides, the auto industry has employed over 1.7 million people. The industry dominates 4.5 percent of all the country’s jobs.
The auto repair industry in the United States has long faced low barriers to entry. A key challenge is the requirement of a high amount of capital needed to purchase new equipment and cover the payroll of staff.
Another barrier to entry for the automotive repair industry was the immense lack of skilled mechanics with knowledge of how to service cars with sophisticated models.
The shops which had sufficient working capital and a skilled workforce overcame the entry barriers. Currently, the industry is reeling under the after-effects of the COVID-19 pandemic that ravaged the business of virtually every industry in the United States.
As reported, the auto repair shops face a terrible shortage of car parts as the manufacturers don’t have enough manpower to maintain the cycle of distribution of automobile parts to automotive repair stores and dealers.
Moreover, new cars on the American roads are in short supply since the pandemic which means the crash parts that are vital for repairs are not being made by the companies.
As reported, due to COVID-19 and Hurricane Michael, the area of automobile parts shortage has gone downhill and will take some time to bounce back to a stronger market.
One of the potential opportunities for growth in the industry is the total number of vehicle miles expected to rise in 2021.
Another opportunity for growth in the industry is the rising number of passenger cars and the growing demand for electric vehicles in the United States.
The advancement in cutting-edge technologies like AI-automated vehicle inspection technology and augmented reality apps have prompted companies to invest in research and development activities to launch sophisticated automotive diagnostic tools to inspect vehicular damage faster.
These technologies will help auto repair shops to understand the complex vehicle parts and service them better.
Most automotive repair shops in the United States have their individual authorized dealerships of various automobile manufacturing brands and provide vehicle owners of these brands with repair and maintenance services.
Some of them have franchise stores located at different places where they offer overall servicing of vehicles. Take a look at the digital footprint of most automotive repair and maintenance stores in the United States.
They are expanding their digital presence by offering the most competitively-priced car repair and maintenance to car owners across the country.
Moreover, adapting to digital platforms has helped these auto repair stores gain new customers by running discount offers on their websites, attracting customers to book repair services.
There are certain regions in the country where online retailing of auto parts is catching up fast as the customers are able to purchase required car parts from the website. One of the values that digitization has created for the industry is increasing the price transparency of the auto parts for auto repair stores while giving customers an easy way to purchase necessary car parts from the comfort zone of their homes.
In the early 1900s, when most American automobile manufacturers were just toying with the concept of automobile manufacturing, it was Ford Company that first made a breakthrough in the automobile industry by creating the first Model T from the first conveyor belt-based assembly line in 1913.
The assembly line manufacturing was a groundbreaking development due to significantly reducing the production costs and consequently paving the path for manufacturing affordable cars for consumers.
For example, the price of the first Ford models was $850 which later dropped to $290 in 1924. The Model T was sold by expectations, benefiting Ford to become the largest automobile manufacturer in the United States.
By the time Model T cars were retired in 1927, they made over 15 million sales. Later, the company launched another new Model A in 1927 and continued its production through 1931. .
Though the Model A of Ford was successful in the market, challenges from emerging automakers like General Motors and Fiat Chrysler slowed down the pace of Ford, as the rival automakers produced contemporary upscale cars equipped with newer styling.
The uniqueness of traditional American cars was that they were not as complex as their European counterparts and were more affordable for end-consumers.
As a result, car ownership became a more common trend in American society, leading to the growing importance of auto repair mechanics in the country.
American auto manufacturing brands, over time, launched vehicles with upscale models having more intricate parts and systems which required skilled mechanics who could understand the complex parts of the new cars and repair them efficiently.
Fixing auto parts of the traditional models without complex parts was easier than new-age cars with more complicated parts.
Consequently, the demand for specialized professional mechanics increased, causing traditional auto repair shops to become a part of the automotive industry in the U.S.
Early auto dealers started their business using auto repair shops, a makeshift of their existing garages. Later, business owners of early dealerships thought of a market that they could use to sell cars and repair them as well.
When the sales of cars hit rock bottom in 1932, the use of used cars became a trend among the automotive community. Meanwhile, the Great Depression led many consumers not to partake with their old vehicles, which then gave rise to the importance of lubrication to extend the lifespan of the old vehicles.
According to a famous author and automotive historian, Robert Genat, the Great Depression of the early 1930s devastated marginally financed auto markets. However, it couldn’t deter the survival of auto dealerships for the top-selling cars that served customers with service departments dedicated to the maintenance and repair of consumer automobiles.
The owners of cars between 1900 to 1932 had no time to learn how to use technical tools. They didn’t have special training to understand the complex details of automotive technicalities. In the early days of the automotive industry, there were both good and poor auto repair shops. The good ones hired a skilled mechanic providing efficient servicing to many automobiles for a reasonable price.
Mobile mechanics are seen as the latest addition to the automotive repair industry.
Though they are not different from traditional mechanics, the only difference is the portability of servicing automobile consumers, as they bring the shop to the car owners.
The mobile mechanics specialize in servicing consumer cars and fleet-oriented services.
Conclusively, the auto repair industry in today’s times has gone past the point when repairing cars used to be difficult due to the limitation of choices before the automobile owners. Now there is no dearth of auto repair services industry more accessible and efficient for vehicle owners across the U.S.
In contrast to what devastating effects the COVID-19 has rendered to different industry sectors in the United States, the automotive repair industry experienced a mild impact of the pandemic.
It seems that the industry quickly understood the implication of the viral disease and so improvised its tactic by adapting to new technologies and other means to fuel its growth in troubled times.
The automotive repair industry in the United State was not keeping itself abreast with the times relative to digital transformation until the onset of the Covid-19 pandemic.
For many auto shop owners, the pandemic came wearing a sign of a “now or never” moment and prompted them to digitize their shops and enforce contactless services.
Now, most auto repair shops have a scalable cloud-based system. These shops are digitized with specialized software to diagnose any issue in a vehicle with surgical precision. Today's digitally-equipped auto repair stores provide repair and maintenance services more efficiently by using real-time data and automated diagnostic procedures.
The onset of pandemic and lockdown measures has affected the production of new cars in the market causing a major shortage of car parts in the U.S.
Due to the shortage of new cars in the market, consumers have shifted their focus to used cars as an alternative to a new car.
The surge in the sale of used cars has also increased the demand for local mechanics for brake repair and smaller fix-ups.
There has been a noticeable shift in the auto car since the pandemic, particularly it has given rise to the idea of mobile mechanics as customers prefer to stay indoors during the pandemic.
Recently, LYFT has launched a new service model through its app that allows car owners in Houston to order from a menu of car maintenance services and have the work done at their residence.
The COVID-19 pandemic has affected the business of cash-strapped local auto repair shop owners, forcing most of them to lay off or furlough staff. They are in constant fear of suspending their business for good (under unavoidable circumstances).
The good news is, nearly 69,000 job openings are estimated for automotive service technicians and mechanics every year, on average, over the decade. A large portion of those job openings come as a replacement for workers who have been transferred to different occasions or have retired.
If locally owned auto repair shop owners go out of business, the fallout will be a monopoly of big auto repair shop owners coordinating with vehicle manufacturing brands. If this happens, customers will have to incur expensive auto repair and maintenance services for their vehicles.
The surge in the demand for electric vehicles Year-Over-Year (YOY) is an indicator for transforming the growth of the automotive industry in the United States.
For instance, the yearly sales of plug-in electric cars crossed over the 400 thousand mark in 2019. Statistically, the figure represents more than 1% of the total vehicle sales share in the United States.
Even though the adoption of electric cars is not widespread, its long-term projection for rapid growth across the world is unquestionable. The report by the International Energy Agency (IEA) International Energy Agency (IEA) forecasts that the electric vehicles (EVs) are projected to grow around 125 million in numbers by 2030 from 3.1 million, in 2017.
It goes without saying that the surge in the demand for electric cars will be hailed as a growth engine for original equipment manufacturers and some of the other sectors, including tire manufacturing brands, aftermarkets, and the supply chain industry.
The future of electric vehicles seems promising because of the involvement of big names like Tesla, which has launched 25 new service centers and introduced 100 new service vehicles to its current fleet in 2019. And not to mention the additional auto service centers launched by Tesla that include London's posh Westfield shopping center and an upgraded showroom in Santa Monica
The Covid-19 pandemic has delivered a death blow to the sales of passenger vehicles across the United States which still don’t seem to pick up pace since 2018.
Commercial vehicles, on the contrary, have been on record-breaking sales Year-over-year (YOY) in the aftermath of the post-recession phase. The reason why commercial vehicles are catching up in the U.S. relates to the shifting preference of the consumers. They prefer trucks that can accommodate both cargo and passengers.
Commercial vehicles, like medium and heavy-duty trucks, are designed to haul goods and passengers for more miles on average compared to passenger cars.
As a result, commercial vehicles require routine servicing and replacement of their parts and components, as they cover high distances in a relatively short time.
There has been a noticeable surge in the numbers of vehicle lease companies between 2009 to 2016, totaling more than one million to almost 4.5 million, in the United States.
This means the shifting consumer preference is no longer an intangible concept. It has become a reality in which consumers prefer leasing cars to buy them, and this trend of shifting preference is not yet to fade away soon.
The trend also indicates that automotive repair shop owners have to join hands with companies that lease cars if they want to survive in the business, like getting vehicles from customers for repair and maintenance.
With nearly 90,000 repair locations, some experts argue that the future of the automotive repair industry may show some decline. One reason to support this argument is that most stand-alone repair shops across the country will lose their business to software automation and leading-edge technologies that are being used today by large auto repair shops to provide costly and more efficient servicing and maintenance to new-age vehicles.
It also indicates that the future of the automotive repair industry in the U.S. is bright for mechanics with technical skills and expertise to fix new-age electric cars with marked accuracy.
Otherwise, any auto repair shops lacking skilled mechanics will soon lose their business to their counterparts who recruit skilled workforce or train them to meet the demand for the rapidly evolving automotive repair industry today.
New technology is the biggest influencer in the automotive repair industry in the United States. And this has been proven by the pandemic in which those auto repair shops that closed their business were not able to adapt to digital transformation.
Besides, in troubled times like pandemics, locally-owned auto repair stores that require the surrounding community for their survival are often at the receiving end of going out of business.
Either they go insolvent because of no footfalls or succumb to intense competition from larger auto repair shops with futuristic technology in providing better repair and maintenance services to customers.
In 2019, the United States had nearly 276 million registered vehicles.
More than 286 million light-duty vehicles (e.g. passenger cars, minivans, SUVs, etc.) operating in the country require routine servicing and maintenance, not to mention that most of them are not brand new, yet they are running on the road, risking transportation safety in the country.
To provide better servicing to these vehicles is where the companies that form the automotive franchise industry come into the picture.
Automotive franchises refer to a segment of the automotive aftermarket industry that involves products and services purchased after the first sale of a car.
The areas of automotive franchises include auto parts retailing, car rental, gas stations, fleet management, auto maintenance repair shops, and auto restoration services.
Covid-19 has affected many franchise industries, including auto franchising, though it managed to suffer the mild impact of the pandemic. As the quarantine lockdown measures post the onset of pandemic gradually lessen, the people in the United States are turning to road trips.
A report by OnePoll on behalf of Cooper Tires revealed that 44 percent of the drivers in America took more road trips in summer 2020. Meanwhile, 58 percent of American drivers are determined to carry on taking more road trips even after the pandemic ends.
If the travelers indulge in more road trips, that would trigger the growth of automotive repair franchises in 2021. A reason to support this argument lies in the statistic claiming that the automotive repair market is likely to grow from $691.7 billion in 2020 to $828.6 billion [globally] in 2023, at a CAGR of 7%, starting in 2021.
With new vehicle models catching up fast across the United States, along with 25% of the cars which are at least 60 years old present to us an understanding of why the business of auto repair and maintenance services is going to thrive, irrespective of the shifts in the country’s economy.
Meanwhile, the advent of sophisticated vehicles with complicated parts has increased the importance of a skilled workforce to provide great repairing and maintenance services to these modern vehicles.
This explains why franchises spend nearly 28.2% of their revenue on wages of the workforce whose technical expertise and experience are the lifeblood to the growth of their business.
Before you make up your mind to invest, don’t forget to conduct solid research as well as carefully review the franchisor’s Franchise Disclosure Document (FDD) that will supply you with some useful details regarding procedures, and costs related to the franchise.
Some costs not covered in the FDD are default in business ownership, like utility costs, and employee wages. Make sure you are aware of them. Remember, what qualifies a good franchise is one’s ability to understand the business environment and the competitive market.
Moreover, you need to know the value of working with key people in achieving your franchise business goals.
To own and operate an auto repair business in the U.S. involves its fair share of hurdles. However, the challenge often wears the guise of an opportunity.
This explains why so many business owners consider the viability of opening an auto repair shop, and a large number of them are already investing their time, energy, and money into the automotive repair business.
The auto repair businesses in the U.S. are more than a quarter of a million. They dominate the employment of more than half a million people in the country.
As a result, the sector managed to generate impressive revenue of $69 billion in 2019, which also projects the future growth in revenue earning of the industry at an estimated rate of 2.5% per annum.
The automotive repair service industry in the U.S. is a multi-million dollar business consisting of service, repair, and maintenance of automobiles, trucks, vans, and various types of vehicles, both commercial and private.
Mechanical repair is the major part of automotive repair and maintenance services with 50 percent of industry revenue earnings. The independent auto repair shops maintain, service, and repair 70% of out-of-warranty automobiles.
Pieces of equipment that include engine hoists, vehicle lifts, or air compressors are key essentials of your auto repair shop.
If you observe how contemporary automotive repair businesses work, you get an idea that it’s not enough to handle some essential equipment.
With new-age vehicles continuing to dominate the market, it is no longer a subject of much consideration as auto repair businesses have to embrace the cutting-edge technology to fix diagnosing issues in vehicles and render efficient servicing to customers.
The pieces of equipment you require for your auto repair shop come in varying costs, but what remains a fact is you have to bankroll the cost of buying equipment if your current available funding is not good enough to afford the equipment costs.
The cost related to insurance premiums is liability coverage for your auto repair business. Besides, the degree of those costs can affect the bottom line expense of a business. Therefore, auto repair financing is considered a great help to support the management of these expenses.
One of the ways to succeed in your auto repair business is establishing it in a high-traffic area in a good location. Research shows the choice of location is one of the most important factors for business success. Having the optimum location allows for more parking spaces, storage and working space. A downside of this business approach to the perfect location can be higher expense in rent and taxes.
The Automotive Service Association came into being on May 31, 1951. It is a non-profit trade association based in the Dallas/Fort Worth, Texas area.
The association’s mission statement is to advance professionalism and excellence in the automotive repair industry by providing high-quality service at reasonable prices in conformity with proven merchandise of top-notch quality distributed by reputable firms.
The association is bound to a code of ethics, including employing skilled technicians, promoting the goodwill between the motorists and the members of the association, as well as recommending corrective and maintenance services to customers.
The Alliance of Automotive Service Providers which came into being in 1999 is a national association representing the automotive service industry in the U.S.
AASP was formed through a coalition of state and regional organizations representing the automotive service industry. More than 8000 automotive aftermarket businesses are being represented by the AASP affiliates in America’s 14 states.
The association’s code of ethics includes rendering superior service at the most competitive price, encouraging continuous training, providing a quality work environment, and upholding the highest standards of the automotive service industry.
The Coalition for Collision Repair Excellence (CCRE) was founded by independent repair facility owners as a unique structure to empower its post-repair service inspectors and technicians and sponsor shops to oppose the mandated use of inferior parts and don’t undertake improper repairs and illicit practices for job steering.
It is bound to the mission, like challenging any unwanted influence of outside entities meaning to impose the use of inferior parts, materials, or techniques, and ensure that customer awareness is increased to help vehicle owners from getting swindled by any third party efforts to compromise their rights as a vehicle owner.
The collision industry foundation was founded as a charitable arm of the collision repair industry providing emergency assistance to collision repair professionals who have experienced serious losses because of natural disasters or any other disastrous events.
The foundation was incorporated on April 26, 2001, as a not-for-profit organization with a mission to provide emergency relief by securing and distributing donations to collision repair professionals (e.g. technicians that fix the damaged parts and bodies of vehicles because of accidents, weather, or other incidents).
The Society of Collision Repair Specialists (SCRS) was founded in Riverside, Missouri in 1982, and since its inception, the foundation has been the largest national trade association for being the voice of collision repair facilities across North America.
The foundation is based on the principle of working together to bring forth a positive advancement in the industry. The maxim of SCRS is providing a collective voice and powerful representation on behalf of the collision repairers, on burning issues that matter for the livelihood of the industry.
The Automotive Service Association (ASA) Of Florida is a leading association and resource representing the Florida automotive service industry.
The association’s mission is to empower independent automotive service providers through education, networking, resources, and industry relationships to improve the standard of professionalism and make the industry successful.
Automotive Service Council of California provides assistance to auto repair shops doing business in California by improving their repair shop operations.
With its wealth of information and experience, the council is a large network for advice and insights dedicated to improving the skill set and business of auto repair shop owners.
In the automotive repair industry, there are different types of businesses that come under the ambit of automotive repair and maintenance services.
Auto repair financing is a great option for covering various types of costs related to buying shoplifts and air compressors, inventory, and meeting the requirements associated with automotive repair shop licensing and regulatory norms.
We have cherry-picked some of the best financing options for auto repair shop owners while making sure you stay informed about the eligibility criteria of each of these loan options for your automotive repair businesses.
SBA loan programs, like SBA 7(a) program, and SBA 504 program, or the Microloan program, can get you funding for your auto repair business.
For example, with SBA 7(a) programs, you can purchase new land, expand an existing business, repair existing capital, refinance existing debt, or purchase machinery supplies, or diagnostics and repair tools. SBA 504 loans allow you to purchase long-term machinery and equipment.
You can also use the fund to renovate or convert the existing facilities of your business.
This type of auto repair industry financing is ideal for the business owner in the early stages of their venture and wants a loan to survive the initial phase of business development.
This type of auto repair business loan is suitable for business owners who don’t want to risk their personal assets as collateral to qualify for the loan. An unsecured business loan can help you get the necessary funding for your auto repair business, but it comes with high-cost interest rates with the effect of costly repayment of the loan you borrow. Major players offering unsecured business loans include Fundbox, BlueVine, Rapid Finance, TD Bank, and Biz2Credit.
Use the loan to pay for the training costs of new hires across diverse tools and technology used in new-age cars.
Get necessary working capital for your auto repair business and cover monthly rent of your repair bays, or pay for tax/payroll costs.
Availing an auto repair business loan turns up a sour experience for most potential borrowers, especially those with poor credit scores and unhealthy businesses.
While some private lenders give a red-carpet welcome to borrowers with impressive credit standing and a healthy business financial condition, they usually don’t sound welcoming to the borrowers whose credit scores are not good and appear in violation of their eligibility criteria.
Under such circumstances, private lenders usually impose a certain degree of restrictions, like higher interest rates on your loan, lowest funding, and annoyingly prolonged approval time for your loan application.
Because of problems associated with loan acquisition for auto repair businesses from the lenders with strict eligibility criteria, most borrowers turn to alternative lenders, someone with relatively more flexible funding criteria. Since 2010, Funderial has successfully assisted both small to midsize businesses with flexible lending /repayment options specific to their needs.
For grocery store chains to run successfully, timely financial assistance is one of the most important things. It helps them manage cash flow and cover sundry expenses, such as buying a new set of equipment, upgrading older equipment, expanding the business, funding marketing costs, and refinancing existing debts, among other things.
This is where loan companies like Funderial come into the picture, extending a broad variety of loan options for small and medium-sized businesses, at attractive terms through our in-house financing model, as well as through our trusted lending partners across the United States.
To help you operate your grocery store and maintain its sustainable growth, we have a host of unique financing options at affordable rates and easy terms, with instant approval timespan, and quick funding.
We are fully aware of the dire financial need a grocery store owner experiences. And in critical times like pandemic-ravaged economy forcing businesses to shut down their operations due to lack of funding, our well-timed funding assistance can help your business survive and thrive without risking crisis-induced cessation of your venture.
