Auto Body Repair Industry

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Auto Body Repair Industry

The market size of the US auto body repair industry is currently $50 billion and is forecast to grow by less than 2% from 2020 to 2025. The market grew by less than 3% from 2015 to 2020. This slow growth was caused by factors like the decrease in the number of car sales, as more Americans are leasing vehicles instead.

US AUTO BODY REPAIR INDUSTRY

Market Size & Growth

  • The US auto body repair industry is reportedly worth $50 billion and is expected to grow by 1.5% from 2020 to 2025. Between 2015 to 2020, the market grew by 2.7%.
  • Factors such as the number of vehicle accidents and the number of vehicles owned drive the growth of the US auto body repair industry.
  • The industry is expected to see a relatively slower growth because the number of vehicles being purchased in the US is reducing and consumers who lease vehicles tend to opt for new vehicles, rather than fixing older ones.

OPPORTUNITIES

Consumer Expectations

  • Today's auto body repair shop consumers have different expectations in terms of how they want to be marketed to.
  • Although word of mouth marketing is still as important as ever, auto body repair shops need to see the opportunities that can be leveraged through web marketing.
  • Having a strong online presence offers the chance for customers to leave social media and online reviews, which are hugely important to prospective customers.
  • In today's competitive auto body repair market, operators need to have a marketing plan that includes social media, Google Click-to-Message, YouTube video ads, and search engine optimization.
  • These body shops have to accommodate all the different ways a customer may want to contact them. This is why omnichannel marketing and customer service is important.
  • As the COVID-19 pandemic intensifies, auto body repair shops need to use this opportunity to build a strong online and social media presence.

Increasing Sales of Hybrid Vehicles

  • Within the past few years, sales of electric and hybrid vehicles have increased, which has led to promising growth opportunities for the spare parts sector, since these automobiles need specialized spare parts.
  • This introduces an opportunity for auto body repair shops to amp up their services for electric vehicles or get the adequate training on repairing these vehicles.
  • Based on data provided by Mitchell International, by 2022, "owning an electric vehicle will be as cheap as owning one that runs on fossil fuels, and sales will grow much more quickly."

CURRENT TRENDS IN THE AUTO BODY REPAIR INDUSTRY

Reduced Demand For Replacement Auto Parts

  • The decrease in the demand for replacement auto parts is one trend that is negatively affecting the US auto body repair industry,
  • As better automotive advancements are being made, vehicle owners are facing more challenges when it comes to fixing and maintain their vehicles themselves.
  • This trend has resulted in shares in leading auto parts stores such as O'Reilly Automotive, dropping by over 20%.
  • In addition, vehicles with better advancements typically have higher quality components which last longer and require less auto repairs.
  • In general, this trend is slowing down the growth of the US auto body shop repair industry.

Vehicle Diagnostics

  • More auto body repair shops in the US have embraced and incorporated compulsory pre and post repair scanning in their daily operations within the past year.
  • These operators are becoming more aware of the importance of diagnostics and calibrations needed to efficiently fix today's vehicle. They are also seeing a favorable return on investment as a result of this strategy.
  • Even shops that were sure "they would be unable to get local bill-payers to step up and pay for scanning are finding success as they become more knowledgeable and skilled at presenting manufacturers’ documentation to support their scanning invoices. "
  • By facing emerging technologies like this, despite the costs associated with training and learning these technologies, auto body repair shops are setting their operations apart and differentiating themselves from the competition.

Shortage of Technicians

  • Another trend in the auto body repair industry is the shortage of shop technicians. Most of these technicians are retiring and there are not a lot of properly trained technicians to replace them.
  • In addition, the industry turnout is reducing the number of skilled technicians available.
  • While around 35% of auto body repair technicians have spent two to five years with their current employers, over 15% have spent a year or less with their current employers.
  • Organizations like the Auto Care Association are proactively addressing the industry shortage of technicians by creating job boards and working with institutions to teach STEM courses to students interested in becoming automotive technicians.

Shared Mobility

  • The growth of the shared mobility sector is positively affecting the US auto body repair industry.
  • E-hailing and car sharing services are rapidly growing in cities and suburbs across the US.
  • This higher utilization of "shared vehicles will create more wear and tear and a greater need for the services of well-positioned automobile repair service chains. "

FUTURE TRENDS IN THE AUTO BODY REPAIR INDUSTRY

Artificial Intelligence

  • Artificial intelligence (AI) is increasingly being used in the US automotive industry and is revolutionizing the industry.
  • This technology is being used by car manufacturers to better connect drivers and passengers by incorporating systems that allow people to use WiFi and send and receive emails. The technology is also being used by insurance companies to track unsafe driving habits and driver alertness.
  • While auto body shop operators do not exactly need to have an in depth knowledge of how AI works, the technology presents "opportunities to improve shop floor efficiency, through elements like quick photo estimates."
  • Repair information and expertise on "driver-assist technology have become commonplace in most repair shops, and, as AI technology continues to evolve at an accelerated rate, technicians will need to be able to diagnose and repair increasingly-sophisticated computer systems."
  • The methods used to inspect cars in this industry are dramatically changing and within the next few years, auto body shop operators will need to be more efficient in the use of these new systems in order to remain competitive.
  • Auto body repair shops in the US will soon recognize AI-based tools that they can use for not only cost savings streams, but to also increase their return on investments beyond historical models.
  • One study surveyed more than 700 auto body repair customers and found that these individuals find artificial intelligence virtual service operators useful, with 68% wanting to book an appointment, 18% wanting to get a service estimate, and 14% interested in asking basic questions through these operators.

Car Accident VR Training

  • Auto body repair shops in the US are required to stay updated on new vehicle designs, repair techniques, and innovations in order to better serve customers.
  • A few operators are beginning to do some training for new techniques and innovations through virtual reality. These programs are more cost effective than conventional training programs, some of which require overnight travel.
  • They can also be done remotely. With the COVID-19 pandemic fueling the use of more virtual tools, doing training programs remotely will be helpful.
  • One of the limitations associated with using virtual reality programs is the cost. In the past, getting the tools - such as hardware packages - for these programs cost thousands of dollars. This price has dropped dramatically and will continue to reduce, thus making it easier for auto body repair shops to start using them.
  • Virtual reality is also a helpful recruiting tool that these auto body repair shops can use to attract young, tech savvy talents.

Electric Vehicles

  • Another technological advancement in the automotive industry that will impact the auto body repair sector is electric cars.
  • Electric vehicles solely use electricity as their source of energy, making them more efficient than normal vehicles. While some speculate that these vehicles are the "beginning of the end for auto mechanics," experts say different.
  • Electric vehicles are introducing a new generation of auto mechanics, one where less dirty work is required. Maintenance on these vehicles will reportedly be more software driven.
  • As a result, having knowledge of the code and software that these vehicles have will soon be an essential skill set in the auto body repair industry.
  • While there will still be a lot of tasks that these body shops will need to do with their hands, they will have more tasks related to large amounts of code and will be expected to be fluent in this language.

EFFECT OF COVID-19 ON THE AUTO BODY REPAIR INDUSTRY

Reduced Sales

  • As of April 2020, auto body repair shops in the US were still open for business as the US government classified them as essential businesses.
  • Based on a survey of several auto body repair operators, almost 80% of respondents mentioned seeing a decline in sales since the COVID-19 outbreak.
  • These operators started seeing a slump in their sales when the US government first introduced travel restrictions.
  • Auto body repair shops in states that implemented travel restriction and social distancing orders early - including Pennsylvania and New York - have been seeing the most decline in sales.

Less Repair Jobs & Downsizing

  • Auto body repair shops in the US have reported that the number of repair jobs associated with insurance claims has reduced dramatically, as a result of stay at home orders leading to fewer car accidents.
  • As of April 2020, almost 20% of auto body repair shops in a survey had laid-off workers as a result of declining business.

Supply Chain Disruptions

  • These shops mainly rely on automotive parts manufacturers to supply them with after-market and original equipment manufacturer (OEM) parts.
  • Almost 50% of auto body repair shops are experiencing supply shortages due to COVID-19. They are particularly finding it difficult to get OEM parts, a challenge that has made some of them temporarily shut down.
  • More than 15% of these body shops are having issues obtaining paint supplies and relevant materials needed.

Difficulty Accessing PPE

  • Auto body repair shops which are open are implementing safety measures like face masks, gloves, and other personal protective equipment.
  • As a result of the emergency reallocation of personal protective equipment to healthcare workers, some of these body shops are finding it difficult to get the needed personal protective equipment.

Safety Measures

  • Due to the pandemic, these businesses are ensuring that they follow other safety measures including sterilizing, workplace cleaning, and disinfecting.
  • While working on vehicles, auto body shop workers are minimizing interactions with customers and limiting direct contact with the interior of these vehicles.
  • These shops are also offering hands-free payments like digital payments for their repair services.
  • Auto body repair shops across the US are also offering contact-free auto drop off and pick up services.

PPP Loans

  • As an attempt to keep their businesses open and their workers employed, several auto body repair shops are seeking loans from the US government.
  • Based on data published on July 7, since the pandemic, roughly 19,700 auto body repair businesses have received up to $2.06 billion in Paycheck Protection Program (PPP) loans.
  • With the help of the loans, these businesses have protected over 133,000 jobs in the auto body repair industry.
  • At over 2,000 loans, California "saw the most auto body Paycheck Protection Program loans," while Honolulu, Hawaii "had the largest concentration of PPP loans within a single ZIP Code."

Increased Adoption of Digital Marketing

  • The COVID-19 pandemic has caused a shift in how auto body repair shops are promoting their services.
  • These businesses are increasingly using digital marketing tactics like geofencing, email marketing, social media marketing, and Google PPC (pay-per-click) advertising.
  • They are also offering more coupons and discounts to reach customers.

Future Outlook

  • A study published in April 2020 by Car Wise examined what auto body repair shop operators think their business will look like in a few months.
  • About 80% of these operators mentioned feeling confident that they could "weather the financial storm even if [COVID-19] lasts for a while."
  • Almost 10% of these operators stated that they would be forced to completely shut down their businesses if the situation does not change.
  • Most of the business operators surveyed were confident that "businesses would return to normal during the second half of 2020."
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