The year is coming to a close, and 2016 is almost upon us, so it’s a good time to think about what trends the auto repair shop industry may experience in the upcoming year and into the future.
According to an IBISWorld research report on the auto mechanics market, the annual growth in the industry from 2010 to 2015 was 1.3 percent, and the Automotive Aftermarket Industry Association forecasts 3.4 percent growth between now and 2017. During the Great Recession, many auto repair shops suffered declines in customers because unemployment was high, people were traveling and using their cars less, and some were choosing to do maintenance on their vehicles themselves rather than take them to professionals to be fixed.
However, it is now almost 2016. The economy has rebounded somewhat, and new car and truck sales have come back much stronger than expected, increasing the number of registered light vehicles in the United States to 257.9 million, but the average age of a car on the road has hit a record age of 11.5 years old. Part of the reason for this is that cars are more reliable than they’ve ever been before due to improvements in technology which allow owners to hang on to them longer.
Reliable or not, auto shop mechanics know that even in the best of cars, there are parts that need to be fixed or replaced periodically. A higher average age of car is a positive indicator for business. Another contributing factor is the increasing complexity of cars being manufactured. Where once many people would have opted to fix routine or even complex car problems, the computerized nature of today’s vehicle makes that much harder to do because it’s more difficult to both diagnose and fix the problem without specialized equipment.
Changes in demographics and experience will also affect auto repair demand. Many Baby Boomers grew up changing the oil on their cars and tinkering or even rebuilding them in their spare time. As cars have become more computerized and less user friendly and Boomers’ incomes have risen with age, many of those tinkerers have opted to have their cars fixed by professionals. In plainer language: they don’t understand their cars anymore.
Ironically, younger people have more experience with computers but are less likely to look under the hoods of their cars because they lack mechanical skills. Millennials are not replacing their Boomer parents under the car in the garage on the weekend.
To sum up: the economy is doing better, there are more cars on the road, both new and old, cars are designed to be more complicated than ever, and Boomers are aging out of doing their own mechanical work and not being replaced by their children. All of this means that auto shops are likely to enjoy regular business in the foreseeable future. And with those glad tidings, the Automotive Management Network would like to wish you Merry Christmas and all the best in 2016. Happy New Year!