Automotive Services, Except Repair and Carwashes

SIC 7549

Industry report:

This category covers establishments primarily engaged in furnishing automotive services, except repair and carwashes. Establishments primarily providing automobile driving instructions are classified in SIC 8299: Schools and Educational Services, Not Elsewhere Classified.

Examples of miscellaneous automotive service providers include emissions testing centers, inspection services, do-it-yourself garages, diagnostic centers, lubricating and oil change shops, emergency road services, rust proofers, window tinting shops, and towing services. According to the U.S. Census Bureau, there were 8,280 oil change and lubrication shops in the United States in 2010. Together these firms employed 62,507 people and generated $2.3 billion in sales. Despite the large presence of several oil change chains, the industry was highly fragmented and dominated by small, family-run businesses. More than 70 percent of firms had fewer than five employees, and 97 percent of firms had fewer than 25 employees. The largest segment of the industry was towing services, and as of 2010, 8,263 establishments operated in that category. Employment in towing services totaled 52,293, with annual revenues reaching $4.5 billion in 2010.

The industry is served by the Automotive Oil Change Association (AOCA), a nonprofit trade organization with more than 1,200 members representing over 3,500 auto maintenance centers throughout the United States, Mexico, and Canada. The towing sector is served by the Towing and Recovery Association of America, Inc., which was founded in Kansas City in 1979.

The automotive services industry grew out of America's love affair with the automobile. From just 2.2 million in 1920, annual automobile production rocketed to more than 8 million by 1950. As auto output fluctuated around 8 million annually in the mid-1900s, the automotive services industry ballooned. Significantly, federal safety and emissions regulations that were developed in the mid-1960s helped bolster demand. By the end of the first decade of the 2000s, there were more than 250 million cars registered in the United States. The median age of vehicles in use increased from 6.5 years in 1990 to 9.4 years in 2008. By 2011 it had reached a record high of 10.8 years. Americans routinely drove automobiles over 1 trillion miles annually at the end of the first decade of the 2000s and early 2010s, and periodic maintenance, such as oil changes, were increasingly recommended at more frequent intervals.

Several trends affected this industry at the end of the first decade of the 2000s. A deep recession that began in early 2008 led to a very depressed new car market as consumers held on to their existing cars to save money. With more older cars on the road, more consumers were in need of basic maintenance and repair to keep their vehicles running. However, this trend was balanced by the fact that while consumers were willing to spend money on necessary repairs, they were more likely to avoid or put off maintenance services to save money. In addition, the recession meant that Americans had less disposable income and, as a result, drove less. The number of miles driven in the United States dropped in both 2007 and 2008--the first declines since 1980. Fewer miles translated to fewer oil changes and less maintenance needed.

By 2012 the automotive services industry, like many others in the United States, had started a slow recovery from the economic recession. Revenues in the oil change service segment had dropped 2.7 percent between 2006 and 2011. However, according to IBISWorld in December 2011, "demand for the [oil change] industry will return in line with growth in disposable incomes and the number of cars on the road." The towing industry had fared somewhat better, recording an almost 3 percent annual growth rate during the same time. In the 2010s, according to IBISWorld, "individuals will drive more in response to a better employment rate, strengthening demand for towing services."

Industry leaders in the early 2010s included Jiffy Lube International, Inc., of Houston, Texas, a subsidiary of the Shell Oil Company. Jiffy Lube operated more than 2,000 service centers in the United States and Canada and served approximately 24 million customers a year. Valvoline Instant Oil Change was the second-largest quick-lube company in the United States. A division of the Valvoline Company, the firm operated more than 800 oil change centers in 39 states. The Pep Boys-Manny, Moe, & Jack, based in Philadelphia, operated 700 stores in 35 states. The locations had added do-it-for-me services to their core do-it-yourself parts and accessories inventory. By 2011 sales for The Pep Boys had reached almost $2 billion, and in 2012 the firm agreed to be purchased by The Gores Group. Work in this industry was also performed by 45,000 gas stations, over 22,000 car dealerships, and branches of chain stores and warehouse clubs with automobile service centers.

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