Is Owning an Auto Repair Shop Profitable? Six Keys to Success

The automotive industry, like most industries, has had an interesting two years. New cars are not coming off the assembly line as quickly as they once were due to supply chain issues and production slow-downs. This means the automotive repair industry is staying busy as more Americans are hanging on to their cars longer.  Those aging cars need to stay in prime working order, which means customers are needing prevention, maintenance, and repair services more than ever. According to recent stats,  the repair industry is valued at about $68 billion in 2022. So, if you have been contemplating an investment and asking yourself, is owning an auto repair shop profitable? Take a look at what it takes to build a successful auto repair business.

Six Keys to Success in Auto Repair

  1. First on the list is capital. You will either need to have enough seed money to get off the ground, or good credit to qualify for a business loan. It can be difficult to estimate your total costs with so many variables. For instance, where will your shop be located? How much is the real estate in that area? After all, you want to be set up in a high-traffic area where you don’t have too much other competition. You will need to estimate your construction costs, permits, licenses, payroll, etc. Staffing will be another big job to tackle.
  2. Auto repair is a skilled trade and is considered an essential service. But there are all types of cars on the road right now, which means your technicians need to be qualified to work on a full spectrum of vehicles from a 12-year- old car to a new electric hybrid. Improperly trained service personnel will be a detriment to your business.
  3. You need to provide a detailed menu of after-market repair services to have a large customer volume to keep you in business. This means when you are hiring techs, make sure they are qualified to handle all the services you will offer. Will you do maintenance, repairs, inspections as well as specialized services? These are all decisions that need to be made.
  4. Once you determine the services you provide, you must have a building equipped with the proper equipment, tools, and supplies. You need to supply quality parts to your customers along with quality labor. This is a necessary component of your success. Labor and parts are how you make money, with profit margins on parts sales typically averaging between 20 and 28 percent. You will need to crunch the numbers so they are fair and competitive to attract and keep customers while still giving you healthy profit margins.
  5. There is a great deal of competition in the auto repair industry, so you need to ascertain how you will stand out among the competition. Developing a strong business plan with great marketing ideas is a necessity. Promoting yourself to potential customers in a target audience and letting them know you are available to provide auto repair services in their community is a great start. After your business gets going, having positive customer ratings can increase your customer volume and possibly boost profits.
  6. Your main goal is to provide exceptional service with highly trained techs and quality parts. This will grow your reputation as an auto repair service shop and build clientele. When a customer has a good experience that builds repeat business.

Franchising with AAMCO

No doubt there are many details to opening a service-related business, like auto repair. It’s very competitive and will take time to build a clientele and make money. Going it alone as an independent shop can be challenging. So, if you’re still asking yourself, is owning an auto repair shop profitable? The answer is, yes. You can enjoy the dream of business ownership in a lucrative industry like auto repair, with a strong, iconic brand name behind you that’s provided trusted service that customers have come to rely on for 50 years when you franchise with AAMCO.

Our franchisee testimonials say it all. Our franchise owners are driven to succeed. Our job is to do whatever it takes to help them grow their business. We’ve done that through a significant investment we’ve made in training and technology.  AAMCO University is a state-of-the-art training facility we created to be a leader in the complex car repair industry. We offer classes for franchise owners and their technicians. The campus features a high-tech garage where technicians obtain the skills to repair electric, hybrid, and other modern vehicles, and you, the franchise owner learn the day-to-day operations with expert instructions from franchise industry leaders.

And your costs? Unlike the variables associated with starting a business from scratch, we have your financial investment clearly spelled out. Opening an AAMCO Center includes a total franchise investment ranging from $240,325 to $346,700 with a franchise fee of $39,500. We require you to have $65,000 in liquid capital and a net worth of $250,000.

Still, want to know if owning an auto repair shop is profitable? Your potential income and individual earnings will, of course, vary depending on your market, the mix of services you offer, and other factors. However, AAMCO franchise owners have been known to take in $713,092 annualized average gross sales per center.

Ready to get started? Request information to learn more about opening your own AAMCO franchise.

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