Frost & Sullivan Says Convenience and Price Drive U.S. Consumers to Seek Light Vehicle Repair Service

MOUNTAIN VIEW, Calif., January 22, 2009: The economic concerns in the U.S. has had widespread effects on consumer behavior. It has not only lowered citizens' disposable income, but has also changed consumer spending patterns. Consumers have altered their attitudes to personal transportation and fuel consumption, which, in turn, is starting to affect the vehicle maintenance and repair industry.

New analysis from Frost & Sullivan, Overview of the United States Light Vehicle Repair Service Industry, finds that there were over 244.1 million light vehicles in use in 2007 and this forecast will increase at a compound annual growth rate (CAGR) of 1.7 percent until 2014. There are vehicle opportunities but the way consumers and the repair industry respond to an economic downturn will have a major impact on the repair industry.

If you are interested in a virtual brochure, which provides manufacturers, end users, and other industry participants with an overview of the U.S. light vehicle repair service industry, then send an e-mail to David Escalante, Corporate Communications, at david.escalante@frost.com, with your full name, company name, title, telephone number, company e-mail address, company website, city, state and country. Upon receipt of the above information, an overview will be sent to you by e-mail.

"Although the rise in the number and age of vehicles is good news for the light vehicle repair service industry, they are likely to be offset by vehicle owners' extending the intervals between service as a means of saving money. The economic uncertainty has consumers deferring expenses for as long as possible," says Frost & Sullivan Senior Consultant Mary-Beth Kellenberger.

Consumers hope to curb fuel expenditures by driving less, sharing vehicles within the household, purchasing smaller and more fuel-efficient vehicles, and changing their driving behavior. They are also gradually shifting from the dealer channel to aftermarket repair locations to curb expenses and are experimenting with alternative and lower-grade fuels.

When done en mass, these behavioral changes can have a dramatic impact on the maintenance and repair industry; but vehicle owners are testing out many different strategies and the effects on the repair industry will be apparent only in another six to nine months. Currently, repair service participants actively monitor job counts and vehicle owner service requests, so they can adapt product offerings, services, prices, and product inventories to position themselves appropriately.

The industry serves two distinct consumer groups - that which wants premier service and that which prefers convenience/value. To serve these discrete segments, the industry provides a broad spectrum of service providers ranging from drive-through lube shops to prestige service dealerships.

"If price is a strong driver, the independent repair channel may actually experience higher traffic as consumers shift from higher-priced dealer service to lower-cost independent repair service," notes Kellenberger. "However, the industry is challenged by consumers' indecisiveness about how to respond."

Most repair service companies expect a drop in the number of service jobs and an increase in the importance of price as a location decision factor. This puts lower-cost providers in a comfortable position, although it will be interesting to watch which company is suitably positioned to capitalize on the market opportunities presented.