What You Need to Know About Auto Repair Service Market Analysis
It’s important to know as much about an industry as possible before you invest in it. Invest by, say, buying a franchise. So, if you’re thinking about purchasing an auto repair franchise, which, since you’re reading this, you probably are, just what do you know about the auto repair service market? What do you need to know about the auto repair service market? Here are some key points of auto repair service market analysis.
The Automotive Aftermarket
On the news and in the business sections of newspapers, we see, hear, and read a lot about the “auto sector”. When publications use this phrase, they’re usually referring to automobile manufacturers; the big companies who make vehicles, their corporate officers, and the men and women who work in the plants making the vehicles. But there’s another portion of the automotive market that is not referenced as often. The automotive aftermarket.
The automotive aftermarket encompasses all the business transactions that occur after a brand-new car is purchased or leased. This includes reselling, repairs, and maintenance. If you are looking to buy to an auto repair service franchise, you’re looking to get into the automotive aftermarket. And it is important to distinguish the two markets. For example, during the Great Recession of 2008-2010, the American automobile industry fared so poorly that some analysts predicted its demise. However, the American automotive aftermarket performed extremely well during this period (and continues to do so). So clearly, there are key differences.
What does the market analysis tell us about the demand for auto repair? Well, while sales of new automobiles have increased since its nadir of 2008-2010, it’s still diminished. Part of the reason for this, or a side effect of it (it’s kind of a “chicken and egg” conundrum) is that Americans are, on average, holding on to their vehicles for longer. And, as you would expect, the average age of vehicles in the United States is high and rising. Indeed, the average vehicle age has been climbing steadily for the past several years.
The older a vehicle is, the more repair and maintenance it is likely to need. Of course, newer vehicles need regular service and the occasional repair, too. But still, older vehicles need the services of auto repair shops more often. So, this trend is good for the auto repair service market. It’s worth bearing in mind just how many vehicles are out there to begin with. More than one car for every American aged 16 or older. So, demand is strong.
Some Key Figures
According to the Auto Care Association, the U.S. automotive aftermarket was worth an estimated $273.4 billion in 2017. This is an increase of nearly $35 billion in just four years. For some perspective, these figures put the automotive aftermarket between 1.5% and 2% of the total US Gross Domestic Product.
The analysis goes on to show that value of the auto repair service market for vehicles that are four years old or fewer is approximately $20.7 billion. When you increase that age to look at vehicles eight or more years old, that number grows to an impressive $77.3 billion.
To learn more auto repair service market analysis, please contact Tuffy Tire & Auto Service today.Back