That the auto repair industry is thriving in tough economic conditions is old news. But, there is a related trend worth monitoring, alluded to in this USA Today article: which companies are capturing the additional repair volume?
Equity valuations of auto parts chains (AutoZone, Pep Boys) are reaching 52-week highs. Pep Boys has also announced plans to increase its store count by 5%. The success of these aftermarket parts retailers is not good news for dealers and independent shops. Consumers who buy parts at these chains are generally considered “do-it-yourself” (DIY) customers, who aim to conduct simple repairs without help from repair shops. Buying fluids or parts at a retail chain is a strong proxy for this DIY activity.
An increase in the DIY segment is particularly concerning for repair service providers because experts have predicted a reduction in DIY activity for nearly a decade. These experts have noted that vehicles are becoming more sophisticated and electronic, making it difficult for car enthusiasts to perform even basic repairs without formal training.
All that said, dealer service centers and independent shops have still seen an uptick in revenue these past two years (even if they’re not capturing their fair share of the incremental repair volume). Plus, improving economic conditions and continued advances in vehicle technology should eventually cool down the recent DIY trend.