Has anyone had experience or looked into acquiring auto repair shops?

July 30, 2024

by a searcher from Yale University - School of Management in New York, NY, USA

I have seen several auto repair shops pop up on broker listing sites and albeit they are quite small in size (<$500K EBITDA), it appears they are quite common.

Would love to learn more about your thoughts on pros and considerations when it comes to acquiring within this space? It seems like the two main concerns within this space is the growth of EV and increase complexity when it comes to servicing newer models with more bells and whistles. Wonder if there are any others, especially when it comes to the operations.

Also if there any resources that you have beyond IBISWorld, would really appreciate it!

Reply by a searcher
from Biola University in North Tustin, CA, USA

Thanks for the tag ^redacted‌. Some of the main drawbacks from my perspective include challenges scaling a shop because once bays are maximized, only option to grow is to acquire another shop; (reliable) techs can be hard to find and keep; lenders seem a bit hesitant to lend unless the property is included (almost impossible in Cali because property values are so high). Also heard that the vast majority of smaller independent shops seem to have set defacto pricing for many services, meaning if your expenses increase it would be difficult to increase pricing to offset and margins get squeezed.

”Other than that Mrs. Lincoln, how was the play?” 😀

Reply by a searcher
from Columbia University in New York, NY, USA

^redacted‌ I regularly talk to the GM at my auto shop because my son is in an automotive technology program at a trade school in Texas. I definitely agree with the talent pipeline being a huge issue. That said, very few shops are being proactive about taking on recent grads and also offering relocation as necessary. In other words, I think this is a fairly localized industry that has tended not to think about recruiting in a very sophisticated way. That is where you may find an opportunity to do something a bit different.

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