Fewer collisions will translate into reduced industry demand for repair services
Los Angeles, CA (PRWEB) May 12, 2013
The Car Body Shops industry has been driving a bumpy road over the past five years. According to IBISWorld Industry analyst Radia Amari, “the recession has had lingering effects on the industry, with consumers holding off on essential repairs and pulling back on discretionary services like paint jobs”. Additionally, persistently high unemployment numbers have diminished the number of cars on the road. Fewer vehicles on the road decreased the pool of cars that would require industry services. As a result of these adverse conditions, industry revenue is expected to drop at an average annual rate of 1.7% to $35.6 billion in the five years to 2013. Neglected repairs offered a bright spot for the industry during the immediate years following the official end to the recession, but revenue will begin declining again in 2013, dropping an estimated 2.8%. The increasing demand for new cars will support revenue decline during 2013. A rise in new car purchases limits demand for repairing damaged cars.
Over the next five years, the industry is anticipated to continue traveling along the same bumpy road. As the US economy gains stronger footing, consumers will experience increases in disposable income and purchase new cars at accelerating rates. These new cars will come equipped with more technologies that increase safety and help drivers avoid accidents and mishaps. “Fewer collisions will translate into reduced industry demand for repair services”, adds Amari. Despite the pent-up demand for repairs created during the recession, expected increases in new car sales will more than offset the demand increase from consumers that held off visiting industry firms for service. New car sales will limit growth prospects for the industry, causing revenue to decrease in the five years to 2018.
The Car Body Shops industry is characterized by a high number of nonemployer firms, which tend to be sole operators and small family businesses. IBISWorld estimates that the market share concentration level has fallen over the past five years as franchisees exited the industry due to slow growth in consumer disposable income and, thus, reduced sales volume for small operators. The top four players derive a significant portion of their revenue from franchise agreements, but with franchisees going under, market share concentration has dropped.
For more information, visit IBISWorld’s Car Body Shops in the US industry report page.
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IBISWorld industry Report Key Topics
This industry provides repair and customization work to the interior and body of passenger cars, trucks, vans and trailers. Some industry firms specialize in certain auto repairs; for example, paint shops specialize in post-collision paint jobs, while automotive glass shops replace, repair and tint windows. Restoration shops, which typically represent a niche market, restore classic and antique cars.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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