Toronto, Ontario -- Last year, independent auto repair facilities in the U.S. saw profits rise as sales fell, a new report has found.
Average sales at American independent auto repair shops dropped in 2024, but gross profit margins and owner compensation climbed, Paar Melis & Associates concluded in the 2025 Auto Repair Industry Benchmark Report.
"There’s no denying that 2024 was a challenging year for auto repair shops and the numbers tell the story," the authors wrote in the introduction.
There’s no denying that 2024 was a challenging year for auto repair shops, and the numbers tell the story. One of the key trends we noticed this year was a slight dip in the average monthly sales across the industry. Given the broader economic environment in 2024 with many Americans tightening their belts and focusing on saving, this result isn’t surprising.
But here’s the upside. Even with revenue down, gross profit margins improved, and our core metric -- owner pay + profits -- continued to rise."
The annual report, based on more than 1,000 auto repair shops across the U.S., found that top-performing businesses are improving margins through smarter staffing strategies, better cost controls and increased investment in training. It also found shop owners consistently rank customer service and experience as their biggest strengths. They ranked efficiency and productivity as their top weaknesses.
Paar Melis identified common traits among high-performing shops, including the use of performance-based pay structures with retirement benefits to attract and retain talent. Stronger oversight and increased productivity also contributed to higher average repair orders and margins.
Shops with weaker performance struggled with high overhead costs, inconsistent execution and poor financial controls. Yet even among those shops, average gross profit margins increased.
The report also points to broad market forces shaping the sector. Repair and maintenance costs have risen nearly seven percent industry-wide -- and many top-performing shops are preparing for future volatility by maintaining cash reserves and improving communication with customers.
High interest rates have limited major investments and inventory expansion, but aging vehicle fleets continue to drive demand. The number of vehicles aged six to fourteen years is expected to rise by 12 percent between 2020 and 2028.
Nearly half of shop owners surveyed said they plan to begin servicing electric vehicles within five years. Many have already begun acquiring tools and training to support the shift. The report notes that while EVs and hybrids still account for a minority of total vehicles serviced, the category is growing quickly.
Parts availability has improved overall, though shops continue to report long delays for certain European and electronic components. Some owners are pre-ordering parts or working with multiple suppliers to avoid slowdowns. Recently announced import tariffs may also create new pricing and availability pressures.
Dealership service departments remain the largest competitor to independent shops, particularly for newer or more complex vehicles. However, the report found dealers face longer wait times — often up to five days — and higher prices. Independent shops, by contrast, benefit from faster service and closer customer relationships.
One third of mass-market vehicle owners choose independent shops for faster turnaround, while another third cite cost as the main reason. Customer satisfaction has risen year over year, especially in areas such as advisor courtesy and speed of service.
The report concludes that leading repair shops are achieving success through intentional management, strategic investment and sharper focus.
"While the economic climate is unknown for 2025, we’re expecting similar results this year for the industry. We don’t expect explosive growth, but we also don’t see the industry sliding backward. Success will come from managing costs, improving efficiency, meeting client expectations and building the right team."
