Revenue is on the rise. That’s the prediction of the latest report on the auto repair and maintenance businesses in Australia.

Motor Vehicle Engine and Parts Repair and Maintenance in Australia trends (2018-2023) forecasts revenue will increase slightly over the next five years. This is great news after a tough few years coming out of Covid, which saw the biggest decline in the marketplace for decades.

So there is more income in the sector, however low margins will continue to affect profitability.

In addition, there are immediate cost of living pressures to consider.

There are also more independent businesses now trading because this is a sector with low barriers to entry. So competition, and import prices – driven by supply chain issues – have an impact on industry repair shops’ profits.

There is no short-term relief in sight, suggests report author Andrew Ledovskikh.

Franchises have buying power

However, the advantage of a franchise is the extra buying power that comes with a volume business and smart franchisors will use their bargaining power to good effect.

We can expect to see mechanics and repair businesses adapting to the demands of electric vehicles. State and federal governments have set ambitious EV targets for their passenger fleets.

By 2026 the Queensland government wants all its eligible government passenger vehicles to be ‘zero emission’. Add to that the goal of 50 per cent of all vehicle sales to be zero emission by 2030.

Industry statistics

The $12 billion auto repair industry comprises 37,316 businesses, employing 79,799 people.

This sector includes the following services:

• Motor vehicle servicing accounts for 54.1% of the market
• Engine repairs equate to 24.7%
• Muffler, brake and exhaust repairs are 15.2% of the market
• Transmission and other repairs account for just 6%

So what is driving business?

• An average older vehicle age in Australia means more repairs while more vehicles on the roads will also lift demand.
• The Motor Vehicle Service and Repair Information Sharing Scheme introduced mid-2022 is boosting competition. This ensures all repairers have fair access to the information needed to service and repair vehicles.
• Advanced technology: today’s vehicles require specialised equipment and of course staff training.