SOURCE: Freedonia Group, Inc.

March 16, 2007 10:02 ET

Automotive Repair & Maintenance Service Revenue to Reach $105 Billion by 2010

CLEVELAND, OH -- (MARKET WIRE) -- March 16, 2007 --Repair and maintenance service revenue for light vehicles in the U.S. is projected to increase at an annual rate of 4.0 percent, reaching $105 billion by 2010. The industry's current moderate revenue growth results from improvements in new vehicle quality, reliability and durability. Overall new vehicle quality and resulting durability began to improve significantly during the 1980s, as new technologies and improved electronic systems were gradually introduced into the vehicle platform. These improvements have offset other factors such as the expanding light vehicle park, average miles traveled per year, increased labor rates, and increasingly complex vehicle designs. These and other trends are presented in "Automotive Repair & Maintenance Services," a new study from The Freedonia Group, Inc., a Cleveland-based industry research firm.

New light vehicle dealers held the largest share of the automotive service market in 2005, due to their typically large size, and industry-high labor rates. Dealers consider parts and service work highly valuable due to its outsized impact on their bottom line results -- while making up on average about twelve percent of a dealer's total revenues in 2005, parts and service generated nearly 60 percent of total operating profits. Additional reasons for the expected growth of the new light vehicle dealer's share of the service market include the extended vehicle and powertrain warranties offered on many newer vehicles. General repair garages and service stations are expected to experience below average growth as an increasing number of these providers install convenience stores in the place of service bays. Independent garages are also hampered by the inability to access OEM diagnostic and service data at cost-effective rates, and often have difficulty attracting and retaining skilled technicians.

Body shops will continue to perform the majority of vehicle body repair work, although dealers are attempting to capture more of this business. Specialists will experience moderate growth as a group, as exhaust system specialists continue to see declines caused by the improved quality of stainless steel exhaust systems, which often last the life of the vehicle. Transmission and drivetrain specialists will be increasingly affected by OEM extended powertrain warranties. Tire stores and repair chains will experience strong growth as they extend their value propositions into more service categories.

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