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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.
