The automotive maintenance industry encompasses businesses that offer maintenance and repair services for a wide range of automotive vehicles. These services include but are not limited to motor oil changes, transmission repairs, and engine replacements. However, this industry is external to businesses that supply appearance oriented services for automotive vehicles, such as car washes. It is currently a $9 billion industry and a highly fragmented market. Nonetheless, there are some key players in the industry including Driven Brands Inc. and Jiffy Lube International Inc. Unlike its sister sub-industry of car washes, auto maintenance businesses rely on necessary rather than discretionary spending of vehicle owners, especially owners that rely on their automotive vehicle for transportation or their work.
The primary factors affecting the automotive industry are the rise of electric vehicles such as Tesla and the volatility of fuel prices due to the pandemic. Rising environmental concerns over the negative effects of carbon emissions has accelerated demand for low carbon emitting vehicles, propelling the advent of electric vehicles into the industry. More recently, the COVID-19 pandemic has stagnated the automotive industry as more Americans are confined to their homes and therefore traveling less. The enormous drop in oil and gas prices because of a lack of demand has also deeply affected the automotive industry, a reflection of the debilitating impact of the pandemic.
The growth of disposable income and an improving economy will likely augment industry revenue in the future. Due to the necessity of auto maintenance services for vehicle owners, revenue has remained stable for the past five years, with a projected increase of a 1.7% annualized rate to $8.8 billion. Although most owners of automotive vehicles would consider auto maintenance to be necessary spending, increases in disposable income will boost the industry regardless because less owners will put off repairs/maintenance for their vehicles due to a tight budget. Although projections for the next five years indicate that growth in the industry will be at a slower rate, revenue is expected to increase regardless especially with the expansion of the economy.
Average Automotive Franchise Percentage Fees
Standard Automotive Franchise Investment
This metric is the standard industry investment amount for a single unit franchise investment in this industry. Our research and analytics team analyzed over 55 franchise concept investment breakdowns in order to calculate this figure.
The Paid-in-Full Rate is when the SBA loan is fully paid off by the franchisee including interest, indicating financial strength.
The Charged Off Rate is the SBA loan default rate where loans have no confidence in being paid off by the franchisee.
For every 4 SBA franchise loans fully paid including interest, 1 SBA loan was unable to be paid back, or defaulted.
-SBA Franchise Loan Data from 2010-2019
-Franchise Businesses taken into account: 2,083
Learn more about the Automotive Services Industry
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