General Automotive Repair Shops

SIC 7538

Companies in this industry

Industry report:

This category covers establishments primarily engaged in general automotive repair, including those specifically engaged in repairing engines. Establishments primarily engaged in industrial truck repair are covered in SIC 7699: Repair Shops and Related Services, Not Elsewhere Classified.

Industry Snapshot

The general automotive repair industry, once dominated by small, independent service stations offering personal attention, evolved toward heated competition between manufacturers, dealer networks, and large, chain service centers. The rapidly increasing complexity of vehicles has led to greater specialization among automotive mechanics. In some cases, however, the abundance of electronic engine components facilitated the diagnosis of problems. In 2009, there were 129,616 established engaged in general auto repair. These firms employed 422,526 and generated $29.15 billion in revenues.

Organization and Structure

Four types of businesses in the United States offer general automotive repair services: full-service gasoline stations, independent garages, automotive dealerships, and chain automotive centers. Some owners of independent service stations complained that auto manufacturers reduced the repair options available to consumers by limiting availability of factory manuals and instruction to their own dealer networks. Other concerns about dealer repair centers focused on the expense of parts and repairs, as well as the conflict of interest involved when the same companies that sold new vehicles also provided most repairs. On the positive side, dealerships did offer a greater number of specialists with up-to-date training than most independent repair shops.

Because of their size, chain automotive centers garnered high levels of general automotive repair business and typically charged lower rates than dealerships. In the absence of any comprehensive regulatory standards, they also appealed to consumers because of their name recognition. Disturbingly, however, there were numerous cases in which such centers were found guilty of undertaking unnecessary repairs, and even of punishing employees who failed to maintain a set sales target for parts and service. In his book, Mr. Badwrench, Arthur P. Glickman quoted a study conducted at the University of Alabama at Huntsville in 1972 that found five major chains guilty of unnecessary repairs ranging from 22 percent to 47 percent of the total number performed. Similarly, in 1993 both Sears and K-Mart faced charges of making unnecessary repairs in their automotive service centers. Problems of this nature continued to arise with other companies through the late-1990s.

In an independent study conducted by Wiese Research Associates, Inc., independent neighborhood automotive repair shops scored higher than all other automotive service centers in five out of seven categories. They rated highest in the categories of honesty/integrity, pricing fairness, responsiveness, answer questions, and friendliness. The categories receiving lower ratings than the other shops were cleanliness/appearance and management.

By the late 1990s, automotive dealers and service stations had made strides to address customer service issues. In a survey conducted by Medical Economics, independent service facilities ranked seventh in customer satisfaction--behind Lexis and Infiniti, Saturn Corp., Shell Oil Co., Audi, Acura, Mobil, and Buick.

This consumer viewpoint continued through the 2000s as demonstrated by a 2008 survey completed by Consumer Reports National Research Center. In it, independent repair shops scored a 71 percent satisfaction rate while new-car dealerships only rated 53 percent. The primary difference was indicated as the personal service that an independent shop delivers.

Common performance problems addressed by engine repair mechanics were no-start, hard starting, stalling, misfiring, vacuum leak, hesitation, surging, backfiring, run-on, pinging, vapor lock, gas line freeze, poor fuel economy, and lack of engine power. In many cases, these problems were easy to identify but hard to diagnose, given the wide range of causes that led to them.

Engine analyzers typically combined methods of checking the battery, charging, and starting systems, ignition systems, engine condition, fuel systems, and emission control systems into one unit. Alternatively, engine repair mechanics tested facets of engine performance with dozens of specialized instruments, including tach-dwell meters, exhaust gas analyzers, and volt-ohm-milliammeters.

The performance of tune-ups was necessary in the case of gasoline engines to limit exhaust pollution and to maintain engine power and acceleration, economical fuel consumption, smoothness of engine operation, ease of starting, and engine service life. Diesel engines did not require the same level of tune-ups because they did not contain spark plugs or an ignition system.

Common mechanical problems addressed in engine repairs included leaking gaskets, worn piston rings, burned and leaking valves, loose or worn engine bearings, worn timing chains, and cracked, broken, or scored engine parts. Stethoscopes aided in the detection of abnormal noises. Color of exhaust smoke was often useful in diagnosis as well. But mechanics above all had to refer to service manual troubleshooting charts covering specific makes and models of engines.

Background and Development

The earliest automobiles were driven by wealthy enthusiasts who could either perform their own repairs or afford to employ a personal mechanic. The advent of the affordable, mass-production, assembly-line automobile created many more drivers but was based on a simple design and required easy repairs. As the number of drivers and roads in the United States grew, and as vehicles became more varied and complex, gasoline stations offering not only fuel but also routine maintenance and repair services proliferated. These full-service gasoline stations were augmented by independent garages capable of working on more difficult mechanical problems.

At this stage, the United States enjoyed what many analysts of the automotive repair industry described as a golden age. Full-service gasoline stations offered an ideal mode of apprenticeship for would-be mechanics who learned on the job as they went from pumping fuel to routine maintenance and repairs. However, oil companies began replacing full-service, independent gasoline stations with their own self-service stations offering no repairs. Consumers welcomed the cheaper fuel prices, even if they did not fully appreciate what they lost in terms of personal service.

In the late 1980s, smaller operations were also threatened by environmental legislation dictating insurance coverage for possible leaks in underground gasoline storage tanks and replacement of old units. The industry also anticipated further, expensive renovations to accompany the increasing emphasis on alternative fuels causing less damage to the environment. However, some small service stations planned to retain their repair facilities even if they were forced to discontinue selling fuel.

In the mid-1990s, full-service gasoline stations and independent garages began to experience an ongoing decline due to the trend toward specialization in automotive mechanics and the competition offered by automotive dealerships and chain automotive centers. Results of a study conducted by Lang Marketing Resources, Inc., a consulting and analysis firm, showed a decrease in the service station and garage population from 227,000 to 155,000 between 1980 and 1996. Many of those stations were light vehicle repair locations. The Lang study showed that in 1980, service stations and garages installed nearly half of the aftermarket products in the United States, but by 1996, they installed only 35 percent of the product volume. According to U.S. Census Bureau figures, the number of automotive repair services had risen to 192,000 by the late 1990s.

According to the National Automobile Dealers Association (NADA), the service and parts department in the average franchised car dealership reported $2.7 million in revenue during 1996, a 10 percent increase in dollar sales over 1995. Profit margins increased to 5.9 percent, from 5.3 percent the previous year. In a survey conducted by AutoInc. Magazine, "37 percent of responding Automotive Service Association (ASA) mechanical repair shops listed total annual revenue in 1996 as between $250,000 and $500,000; 17 percent indicated between $500,000 and $750,000; 15 percent were from $100,000 to $250,000; and 14 percent listed between $750,000 and $1 million. Eleven percent showed revenues greater than $1 million."

U.S. Census Bureau figures reveal that in 2001 establishments engaged in automotive mechanical and electrical repair and maintenance achieved sales of $47.1 billion. This was an increase of 5.5 percent over 2000, when sales totaled $44.6 billion. In 2001, NADA figures show that the average franchised car dealership generated $3.7 million in service and repair revenues, a near 9 percent increase from 2000 levels. Industry-wide, this resulted in more than $80 billion for dealerships.

One of the reasons consumers found it more affordable to drive used vehicles were reasonable repair rates. As Motor Age reported in its February 2003 issue, in recent years automotive repair charges have increased at a slower rate than some U.S. industries. The publication explained that, based on figures from the Car Care Council, automotive maintenance and repair costs had increased 44.5 percent since the early 1990s, while financial services had increased 90 percent and hospital services had increased upwards of 100 percent.

Despite special incentives like cash rebates, value pricing, and subvented rates financing and leases, which made new car purchases more attractive and drove down the value of used vehicles, the demand for automotive repair remained strong in the late 2000s. According to some analysts, weak economic conditions during throughout the 2000s caused many consumers to keep existing vehicles or purchase used ones, boding well for automotive repair shops. Even after factoring in costs for repair, maintenance, and other fees, this approach resulted in significant savings for vehicle owners. Citing figures from Runzheimer International, Motor Age reported that after paying off their vehicles, consumers could save almost $2,500 a year by trading them in every eight years, as opposed to doing so every four years.

According to the U.S. Census Bureau's Statistics of U.S. Businesses, 78,523 establishments operated in the general automotive repair shops industry for part or all of 2005. Per Dun & Bradstreet, retail sales in the industry during 2007 were led by California (12.6 percent), Texas (8.2 percent), and Florida (6.4 percent).

In 2007 NADA reported franchised dealership total service and parts sales rose to $84 billion from $80.5 billion during the previous year. Also, dealerships employed about 257,200 technicians and 366,157 service stalls. Service labor sales accounted for $37.6 billion in 2007, an increase of 3.2 percent from the prior year.

Current Conditions

In 2008 the United States experienced an economic crisis that pushed the economy into a recession. As the housing market collapsed and the unemployment rate rose above 10 percent, consumer confidence plummeted. U.S. new car sales fell significantly, which may have been good news for the auto repair industry as older vehicles on the road should translate into more needed repairs. However, as consumers looked to cut corners and conserve funds, they tended to put off regular maintenance and minor repairs. According to the NADA, franchised dealership parts and service sales were $76 billion in 2009, down from $82 billion in 2008 (which was down from $84 billion in 2007).

Several trends were observable during the late 2000s in the franchised service and parts departments. First, fewer dealerships were offering auto body services as consumers put off body work during the recession. According to the NADA, revenue from auto body work performed by dealership declined from $7.2 billion in 2008 to $6.6 billion in 2009. Second, in an effort to cut costs, dealerships decreased their service departments' hours of operations. Although the number of service departments that offered weekend hours was up 2 percent between 2008 and 2009, the total hours of operation declined over the same period from an average of 57 hours to 54 hours.

On the legislative front, various industry advocates were battling for or against legislation that would require the U.S. auto industry to distribute documentation and information to independent repair shops necessary to repair today's automobiles. In late 2010, the Auto Service Association and the State Affairs for the Alliance (SAA) were battling an effort to pass such "right-to-repair" legislation in New York. Matthew Godlewski, vice president of SAA said, "We know that more than 75 percent of post-warranty vehicle repairs are performed by independent repair shops, and it's in our industry's best interest that consumers bringing our products to those repair shops have good experiences."

Industry Leaders

The most successful automotive repair shops during the late 2000s were dealerships and franchises. Among the leaders at this time was Jiffy Lube International Inc. with some 2,000 service centers in operation in the late 2000s. Most are franchised, although some locations are company owned and operated. Jiffy Lube is a subsidiary of Shell Oil Company. Other industry leaders included AAMCO Transmissions, Inc.; Midas, Inc.; Group 1 Automotive; and Penske Automotive Group Inc.

Workforce

Automotive service technicians and mechanics employed roughly 763,700 workers in 2008, per the U.S. Department of Labor's Bureau of Labor Statistics. This number was expected to increase by 5 percent from 2008 to 2018 as demand for workers rises due to more vehicles in the general population particularly with multi-car families. This growth could also be attributed in part to the increasing average age of automobiles. With the aging of the vehicle comes the need for service and repairs though advances in automobile quality may temper this. The industry's median hourly wage was $16.88.

Mechanics engaged in general automotive repairs had to wield a variety of tools and work methodically through a checklist of important parts to isolate a problem area or to guarantee that all areas of an automobile were being adequately maintained. Working conditions varied from business to business, but in general much of the work performed was necessarily dirty, greasy, and uncomfortable, with strenuous lifting of heavy equipment often required and minor injuries common.

Whereas automotive electronics and electrical systems had once been the province of specialists, by the late 2000s they had become so much a feature of automotive design that mechanics in general had to become increasingly familiar with them. As a result, employment opportunities favored those mechanics who had completed some training in the area of electronics. The overall trend toward heightened technological complexity also stressed the need for greater levels of training and made specialization an increasingly probable step for mechanics.

Research and Technology

With fuel economy and environmental concerns of paramount importance to the automotive industry, engine repair specialists expected changes in engine design, with a particular emphasis on new technologies taking advantage of alternative fuels. The overall increasing sophistication of all areas of automotive design had mixed consequences for automotive mechanics. New technologies made available a variety of electronic and computer systems for increasingly swift and accurate measurement of aspects of automotive performance, which facilitated the diagnosis of problems. On the other hand, the growing importance of electronic and computer systems in the actual running of most parts of a vehicle ensured that mechanics would need to become ever more highly skilled and specialized.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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