Growing worldwide concerns about the economy and the cost of living have become a significant driver of consumer behavior. By prioritizing essentials, consumers are shifting their dollars away from things they don't need for their daily lives. In turn, businesses across every industry have had to take note of these trends and adapt, and auto repair shops are no different.
Rising fuel costs are among the most significant drivers of consumer spending habits. With gasoline reaching a national average of over $4 per gallon, consumers are facing the dilemma of keeping their vehicles fueled. Transportation remains a necessity for daily life for around 90 percent of Americans, and because of that dependency, automotive-related costs become a priority for consumers looking to cut their spending.
Keeping their vehicle on the road and running well is a requirement for most Americans, and they will need to find an auto repair shop that can service their vehicle at a price that they find fair. For auto repair shop owners, this is just one reason that worries about the economy can be alleviated. Many more help to paint the picture that the industry will stand strong and work to support consumers during hard economic times.
Due to the volatility of fuel prices, it's difficult to predict how widespread any cutbacks to vehicle usage or vacation travel will be. But historically, vehicle miles traveled in the US have increased year over year, even as average monthly gas prices have risen. Given that 2026 is likely to follow this trend, it's clear that the need for auto repair shops' services remains. Vehicles will continue to need repairs and upkeep, while customers will continue to seek out your shop to get their cars ready for the season.
One potential effect of rising oil prices could be a renewed push towards electric vehicle adoption. Despite recent factors, such as the removal of the federal EV tax credit, that have disincentivized consumers from purchasing electric vehicles, the significant savings on fuel costs might entice some to make the switch.
With current speculation that oil prices will return to expected levels a little over a year from now, consumers looking for a new or used vehicle might be incentivized to switch to an EV and cut fuel costs by 60-70 percent. Early signs since March indicate that used EV inventory has decreased, while the prices of remaining inventory have increased.
If this trend of adoption continues as gas prices remain at record highs, auto repair shops shouldn't worry about it detracting from service opportunities. Instead, it should be seen as a signifier that EVs are a worthwhile service category and that this new wave of EV ownership is a great opportunity to adopt and enhance EV repair services as volume shifts towards the EV repair category.
The restrictions placed on consumers in 2020 were the main factor influencing the amount of travel that year. Even with the economic shifts at the time, the problem wasn't that consumers were choosing to limit their vehicle use; it was that they were explicitly told not to. This consumer resilience in driving can be seen in the rapid return of vehicle travel to expected levels the following year, and further cements the idea that it is very difficult to keep consumers away from their vehicles.
Another takeaway from this time period can be seen with the fluctuation in the prices of both new and used vehicles. The behavior of consumers looking to purchase a vehicle in 2020 and the years immediately following indicated a shift in how they allocated their finances with their vehicles. However, that shift was largely beneficial for auto repair shop owners.
When the cost of replacing vehicles became prohibitively expensive, more consumers chose to keep their current ones. And by keeping a vehicle for longer, drivers become more motivated to repair and maintain their vehicles and to seek out an auto repair shop that delivers exceptional service at a fair cost.
While we currently haven't seen effects on the new and used auto market as during the pandemic, the principle of consumers allocating less to non-essential purchases could also lead to shops seeing more customers returning to keep their current vehicle up and running, rather than looking to upgrade.
Given how car-dependent and auto-addicted the average American is, when the time comes to make financial sacrifices, their vehicle is unlikely to be one of the cuts. The average consumer needs to keep their vehicle on the road to get to work and provide for their families, making subscription services or expensive restaurant visits more likely to be cut.
And it's been clear in the 2020s, amid an unpredictable economy, that consumers have increased their vehicle usage year over year, regardless of economic conditions. This only creates more client opportunities for auto repair shop owners and affords the auto repair industry a sense of security in troublesome financial times.
As long as Americans need to drive their cars, auto repair shop owners will have the opportunity to fix them.