Car Repair Shops Are Thriving During Chip Shortage

Key Points:

• According to a Statista report, global sales of automobiles are projected to fall under 70 million units in 2021.
• The chip shortage has increased the value of used cars, which has led to an increase in vehicle repairs as car owners invest in their automotive asset.
• Even if production were to increase or the shortage were to be resolved, it will take at least one “cycle” to normalize, which still benefits car repair shops.

Commentary:

The chip shortage is a supply chain challenge that continues to rock the automotive industry, with no clear end in sight. Car dealerships across the country are struggling to fill their lots due to lack of inventory. This, in turn, has caused the value of used cars to boom. For Joe Hyde, Director of Automotive Technology at Christian Brothers Automotive, a vehicle repair company, that increase in value has made their services even more important. MarketScale spoke with Hyde on the impact of a thriving market for vehicle repair shops, and how the used car market will continue to shape their industry’s trajectory.

Abridged Thoughts:

How does that affect us on the repair side? Well used vehicles, of course, are more likely to go to an independent repair facility for repair rather than back to a selling dealer, because typically there’s no warranty unless they purchase an aftermarket warranty, which in those cases and aftermarket warranty can be serviced anywhere the consumer decides.

And so what we’re seeing is we are seeing an increase in vehicle repairs at all of our locations. And I think from a market standpoint, because people can’t go out and choose the vehicle that they want, they are choosing to take care of the vehicle that they currently own a little better. They’re doing more maintenance, they’re holding on to it longer. And so that is actually provided our industry with a significant increase in repairability. Throughout this whole shortage, we have only heard the negative effects for those in the automotive industry.

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