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If you enjoy repairing your vehicle and have some training or experience in working on cars, opening a car repair shop might be the career move for you. With a car repair shop, you’ll get to work on vehicles daily, and you’re sure to see a variety of challenging repair jobs. You’ll also have the satisfaction of helping car owners to get their much-needed vehicles back on the road. With time, you can grow that shop into a profitable business, and with a base of returning customers, you can enjoy stable work that puts your talents to use.

Business Overview

Car repair shops offer a variety of vehicle repair services to the public. Some of these repair shops specialize in particular services, like muffler repair, brake work, or tire service. Others become more generalized and may offer brake work, engine repair, inspections, AC/heating services, and more. Some shops also specialize in working on certain types of vehicles, like sports cars or luxury vehicles. It’s common for a shop to not only work on cars and trucks but also on trailers and small engines like lawn mowers and golf carts. 

There’s a great deal of variety in the car repair shops in business today. Small, one-person shops offer a personalized experience, while larger shops provide efficiency and a capacity that allows them to repair dozens of vehicles each day. 

Industry summary

According to IBIS World, the auto mechanic industry has undergone steady 1.4 percent annual growth from 2014 to 2019 and is expected to bring in $69 billion in revenue in 2019. During that time, the number of businesses increased to 271,068, and the industry now employs 577,172 people. 

That growth is largely due to an increase in disposable income and corporate profit, which allows consumers to choose professional repair services over do-it-yourself repair options. As businesses enjoy increased profits, they also expand their operations, which further contributes to the number of vehicles on the road – and the number of vehicles that need to be repaired.  

Industry trends

The car repair industry is benefitting from the fact that people are increasingly keeping their used cars longer, states Christian Brothers Automotive. Given the high cost of purchasing a new vehicle, consumers are increasingly buying used vehicles, instead. Brands known for their reliability, such as Toyota and Honda, have become more popular, and with drivers requiring that their used vehicles last, there’s an increased need for repair shops to keep these vehicles running well. 

Electric cars also continue to grow in popularity. Tax credits, electric car improvements, and a reduction in the cost of electric vehicles means there are more of them on the road now. Auto repair shops that can learn and work on this new technology can increase their customer base and potentially increase their profits, too.

Who is the target market for your car repair shop?

Most car repair shops target vehicle owners, though some shops specialize and market toward more niche audiences. A shop might specialize in a particular service, like muffler repair, and market solely toward vehicle owners who are looking for this particular service. Other shops might work on certain types of vehicles, like luxury or foreign vehicles, and would market only toward the owners of those types of vehicles. 

Skills, experience, and education useful in running a car repair shop

While starting a car repair shop doesn’t require a business degree, certain skills and experiences are valuable when going into the auto repair business. 

Automotive knowledge. A detailed knowledge of cars is a must for any car repair shop owner. The better you know cars, the more trust customers will have in you – and the more they’ll keep coming back. 

Vehicle repair experience. No formal vehicle repair education is required to become a mechanic, but when opening a car repair shop, however you should have plenty of vehicle repair experience. Earning a degree in an automotive-related field can leave you well-prepared for the challenges of working as a mechanic, but it isn’t required. 

Interpersonal skills. Car repair shop owners will need to work with customers daily, and customers can be stressed or upset when their vehicles are broken. Strong interpersonal skills are valuable when running a repair shop. 

Management experience. If a repair shop employs staff, then management experience is a valuable trait to have. From interviewing and hiring staff to maintaining schedules and training staff, management is an ongoing task when owning a repair shop. 

Organization skills. With multiple vehicles on the schedule, each needing different repairs and different parts, organization becomes important to keeping a shop running smoothly. Organizing the shop itself, is also vital so that mechanics can quickly find the tools and supplies that they need in order to maximize their productivity. 

Marketing skills. Most repair shops have to do at least some marketing. When a shop’s owner can handle part of the marketing, themselves, they can save money over hiring an agency. 

Physical stamina. Repairing cars is a physically demanding job, and mechanics spend most of the day on their feet. Physical stamina is important when working in this industry full-time. 

Financial Overview

The cost to open a car repair shop will largely depend on the shop’s size and the amount of money that you invest into specialty supplies and equipment. A one-bay shop with one vehicle lift stocked with basic equipment will cost about $50,000 to start. Larger shops with more extensive equipment and multiple lifts can cost as much as $75,000 or more to open. 

Common startup costs for a car repair shop include: 

  • Shop renovations and modifications
  • Vehicle lift
  • Diagnostic equipment
  • Tools and supplies
  • Inventory, including vehicle parts
  • Signage

Working capital

A car repair shop will rely on working capital to cover its month-to-month operating expenses, like rent, electrical bills, and supply purchases. If that working capital gets tied up in supplies that aren’t needed or used, and the shop doesn’t generate enough business to replenish that working capital, it will be difficult to keep the shop operating. 

Insurance

A car repair shop will need multiple policies to be fully covered: 

  • Commercial liability insurance protects the shop if a customer is ever injured while at the shop and can pay for expenses like legal fees.
  • Commercial property insurance covers the cost of lost or damaged equipment, or if the building itself, is damaged by a fire or other event. 
  • Workers comp insurance covers expenses like lost wages or medical bills if an employee is ever injured while on the job. 
  • Garage keepers insurance protects a car repair shop in case of accidental damage to a customer’s car during a repair. 

The costs of insurance policies vary based on a repair shop’s location, property value, and the value of the equipment within the shop. To get an accurate idea of what insurance will cost, request quotes from multiple providers. Compare those quotes while considering factors like premiums, deductibles, and coverage limits and exclusions.

Common operational expenses

In addition to budgeting for the above startup expenses, a car repair shop will need to be able to cover the following operational expenses. 

Rent

Rental costs for a shop will vary according to its location and size. A shop in a more rural setting will usually have a lower rent. Prime commercial space in a high-traffic area will cost more, but can also generate business awareness and walk-in traffic. 

Employees

Depending on the size of a car repair shop, it may be necessary to hire one or more employees. According to Glassdoor, auto mechanics make an average salary of $51,410 per year. It’s important to budget not only for employee salaries but also for the additional expenses that come with having employees, such as workers comp insurance, health insurance contributions, unemployment insurance expenses, and paid time off. 

Marketing

While many repair shop customers will become recurring customers, shops need to market to establish that initial customer base. Marketing options vary, but some common options for repair shops include print advertising, radio advertising, and even sponsoring local events and networking within the community. Costs of these activities will vary depending on the type and volume of marketing. 

Licenses & Permits

While you’re not required to hold an Automotive Service Excellence (ASE) Certification, the Advanced Technology Institute states that it may be difficult to find financing and liability insurance for your shop without that certification. To earn the ASE Certification, you’ll need to have at least two years of work and educational experience before you can take the certification test.

Certain permits and licenses are required to run a business, and these will vary from state to state and from town to town. 

How much can you potentially make owning a car repair shop?

Many factors affect the potential earnings of a car repair shop, including the shop’s size, the number of employees, the types of services it offers, and even its location – shops in urban areas will probably bring in more business than shops in more rural areas. A shop’s profit margins also affect its income. 

 

Hard data on the average income of repair shops isn’t available, but we can assume that shop owners make more than the average automotive service technician salary. The Bureau of Labor Statistics reports that the top 10 percent of automotive service technicians make an average of $66,950, which can give us a rough idea of the earning potential for a car repair shop owner.

Things to consider before starting a car repair shop

Opening a car repair shop requires a significant financial investment, especially if you don’t have much of the equipment that you need. Diagnostic equipment alone can cost many thousands of dollars, and if you have to modify the shop that you’re renting, you’ll be looking at even larger expenses. 

To keep expenses minimal, consider starting out by specializing in a field like brake work or tire alignments, adjustments, and installation. These fields don’t require extensive diagnostic equipment, and the inventory is more minimal when compared with that you’d need to start a more generalized repair business. 

You can also make the transition into owning your own shop easier if you have an existing base of customers. Doing some work out of your home’s garage (with the proper insurance) can help to gradually build up some customers while also getting a feel for what running a shop full-time would be like. This experience can leave you better prepared for when you ultimately decide to start up your own car repair shop. 

Resources: 

Auto Care Association
Automotive Maintenance & Repair Association
Automotive Service Association



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