Navigating the Automotive Aftermarket: Drivers Face Rising Costs Amid Inflation and Economic Shifts

As the Canadian economy grapples with persistent inflation and rising interest rates, vehicle owners are feeling the pinch in their wallets when it comes to maintaining and repairing their cars. A recent study by J.D. Power has shed light on the challenges facing the automotive aftermarket, revealing a significant increase in the average cost of dealership and independent shop visits.

Inflation Fuels Automotive Repair Costs, Prompting Owners to Rethink Vehicle Purchases

Dealership Visits Surge in Cost, Independent Shops See Moderate Increase

The J.D. Power 2024 Canada Customer Service Index—Long-Term (CSI-LT) Study found that the average cost of a dealership visit has climbed to $465, up from $432 a year ago, a 7.6 per cent jump. Similarly, visits to independent shops have increased, but at a lower rate to $273 from $262, up 4.2 per cent. This trend suggests that the automotive aftermarket is feeling the effects of broader economic conditions, with inflation and higher interest rates driving up the cost of maintenance and repairs.

Owners Opt to Repair Aging Vehicles Rather Than Purchase New

The study also observed that macro-economic conditions and higher interest rates are not only driving up costs but also prompting owners to keep their aging vehicles longer. According to the study, 40 per cent of visits to dealerships and 24 per cent of visits to aftermarket shops were for repairs, compared to 31 per cent and 21 per cent, respectively, in 2021. This shift indicates that more owners are choosing to invest in repairs rather than purchasing new vehicles, as the financial burden of larger-ticket items like mortgages and new-car purchases becomes more challenging.

Automotive Repair Shops Poised to Capitalize on Changing Consumer Behavior

"With inflation pushing auto repair costs upward and interest rates making larger-ticket items like mortgage payments and new-vehicle purchases more expensive, owners are being hit with a 'double whammy' and have to make different decisions in order to balance their budgets," said J.D. Ney, automotive practice lead at J.D. Power Canada. "As more owners opt to fix their vehicle instead of buying a new one, auto repair shops have an opportunity to attract more lucrative business in this $13 billion market by excelling in the service factors that drive customer satisfaction, mainly saving time and convenience."

Convenience and Timeliness Emerge as Key Factors for Customer Satisfaction

The study also noted that saving time and convenience are key factors affecting customer satisfaction. Completing service within 90 minutes and a speedy send-off, including paperwork and key pick-up, are the two performance indicators that have seen the most significant increase in importance year over year. As owners seek to minimize the disruption to their daily routines, automotive repair shops that can offer efficient and convenient service are poised to gain a competitive edge.

Dealerships Maintain Dominant Market Share, but Independents and Quick Lubes Capture Significant Portion

Dealerships continue to dominate the auto service and repair market, holding nearly half (48 per cent) of the market share. Independent shops and quick lube locations capture 27 per cent and 11 per cent, respectively. These market shares have remained almost unchanged from 2023, the report noted. Average annual visits also remain steady, with 1.6 visits per year in the dealership segment and 1.3 in the aftermarket segment, up from 1.2 in 2023.

Dealerships Account for Majority of Automotive Service Market Revenue

With an average cost of $465 per visit, dealerships account for 61 per cent of the auto service market's total revenue, while the aftermarket segment captures the remaining 39 per cent. These proportions have remained consistent since 2023. Among aftermarket service facilities, Great Canadian Oil Change (838) ranked highest on a 1,000-point scale, followed by Jiffy Lube (834) and Midas (813).