Auto Repair & Service Business Valuation Benchmarks

Auto service and repair shop owners, prospective buyers, and industry investors rely on a diverse set of financial benchmarks to assess the value of a business. We have compiled data from current BizBuySell listings and sold businesses to provide insight into the business for sale market and important benchmarks for pricing and evaluating auto repair and service businesses relative to industry standards.

See also: Car Dealership Business Valuation

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Highlights of Auto Service and Repair Shops Sold on BizBuySell

Auto repair and service shops listed and sold on BizBuySell are comprised primarily of small, locally owned businesses engaging in general automotive service, maintenance, repair, and mechanic services. A small number of these businesses are franchise units, though not enough to materially affect average financial values. Additionally, specialized service shops such as tire shops, auto body shops, window tinting, glass replacement, muffler shops, and similar specialized auto service businesses are included.

Auto Repair & Service Business Transaction Trends

The median value for auto service and repair shops has shown a steady increase, with 31% growth in sales price from 2020 to 2024 and 39% growth in asking price over the last five years.

It can take anywhere from six months to a year to sell a small business privately. In 2024, there were 192 auto repair businesses sold on BizBuySell, spending a median of 208 days on the market.

Of note is the closing gap between asking and sales prices, despite increasing values and interest rates. This trend implies increasing demand for businesses in the auto repair industry.

Auto Repair & Service Business Valuation Multiples

Valuation, or pricing, multiples are financial tools that allow for comparisons between businesses that have different levels of revenue and earnings. They represent the sales price of a business relative to its revenue or earnings, and given enough individual business sales data, they represent what the market is willing to pay for a business given its revenue and earnings.

Valuation Trends

Business values and associated multiples fluctuate over time, influenced by a variety of macroeconomic factors such as interest rates, inflation, consumer spending, and overall economic growth. For auto repair and service shop businesses reported sold on BizBuySell, earnings and revenue multiples have been fairly consistent after the post-pandemic increase, with only a moderate dip in 2023 as interest rates made business acquisition loans more expensive.

Earnings Multiples

Earnings multiples represent the value of a business relative to its owner’s discretionary earnings or "cash flow". Arguably the most important valuation metric - as seller's discretionary earnings will often dictate how much a buyer is able to borrow to finance the business acquisition - most valuations will hinge on a reasonable earnings multiple.

Revenue Multiples

Revenue multiples represent the value of a business relative to its overall sales or revenue. In conjunction with an earnings analysis, revenue multiples are commonly used to value a business based on its top line revenue potential.

How to Interpret These Multiples

Recent Listings vs. Sold Businesses

We calculate and provide valuation multiples from two sources: Current and recent listings of auto repair businesses for sale, and our database of "comparable" businesses sold on BizBuySell. Multiples based on listing data are always higher due to owners setting asking prices above what their businesses might typically sell for. This occurs either intentionally as a negotiation strategy, or incidentally due to business owners’ common tendency to overvalue their own businesses.

Multiples based on comparable businesses - "comps" in business broker parlance - are much more useful as they represent the prices at which businesses ultimately get sold. Business brokers and valuation professionals will always turn to local comps when pricing businesses for sale or evaluating businesses for acquisition. We provide both sets of data at the national level to offer general context. Local business sale comps by sales class suitable for pricing and negotiations are available in BizBuySell's Business Valuation Report.

Quartiles, Median, and Average

No two businesses are identical, and as such, valuation multiples exist in a range. We have carved out four common values within this range: Lower quartile represents the value under which the lowest 25% of valuation multiples fell. Upper quartile represents the value above which the highest 25% of multiples fell. Median is the middle of the range, and average is the mean of the set. Mean is almost always higher than the median, driven by a minority of high revenue, high value businesses sold at multiples above the upper quartile.

Businesses with consistent financial performance, above average revenue and earnings, demonstrable growth potential, low owner involvement, unique competitive advantages, and a seller willing to finance will command a multiple at or above the upper quartile. Businesses with lower revenue and thin profit margins, full-time owner involvement, and many direct competitors will trade at or below the lower quartile. Most businesses will fall somewhere in the middle.

Based on this data, half of auto repair and service businesses are worth between 1.67 and 3.26 times their annual seller discretionary earnings, with 25% of exceptional, large businesses trading above this range, and 25% of smaller, less desirable businesses trading below.

Financial Benchmarks

To determine how a business compares in terms of sales volume and financial performance relative to industry peers, it’s necessary to have some insight into industry standards. "Benchmarking" describes the practice of comparing a business’s financial performance to typical industry standards to determine where a business falls relative to other businesses in the same industry. These benchmarks can help guide owners and investors towards appropriate valuation multiples from the range above.

To that end, we have aggregated auto repair and service industry financial ranges useful for comparing an auto repair and service business to the broader industry.

Auto Repair & Service Business Revenue and Earnings Trends

The median discretionary earnings and revenue for sold auto service and repair shops have increased over the last several years. Between 2020 and 2024, median earnings for these businesses sold on BizBuySell rose 23% while median revenue increased 29%.

Earnings Ranges

Discretionary earnings (used interchangeably with the terms "cash flow" and seller's discretionary earnings or SDE) is often the crux of business valuations, so it is important to benchmark it relative to other auto repair businesses traded on the business for sale market. Below you will find discretionary earnings ranges for businesses sold over the past five years, as well as recent auto repair listings.

Revenue Ranges

Revenue volume plays a large role in business valuation, as it measures the size of the potential income opportunity for new ownership. It's not uncommon for buyers to select an earnings multiple range based on overall revenue. The table below includes revenue ranges of businesses sold over the past five years and recent auto repair businesses listed for sale.

How Revenue and Earnings Level Affects Business Values

Clearly higher levels of earnings lead to higher valuations, even given the same multiple. However, valuation multiples also tend to rise with business sales volume. Auto repair businesses that generate higher sales (and maintain reasonable profit margins) tend to sell for earnings multiples on the higher end. So, an auto repair business generating $1 million or more will generally sell for an earnings multiple of 3 or better, where a smaller volume auto repair shop with sales below $500k may trade closer to 1.7 times earnings or less.

This tendency for higher revenues to fetch higher valuation multiples is largely driven by the economics of business acquisition financing. Businesses with greater revenue and earnings give buyers more cushion to cover debt service obligations and still have enough left over to pay the new owner a reasonable income.

Automotive Sector Comparisons

For a more complete understanding of the market and valuation standards, consider comparisons within the broader automotive sector when benchmarking auto service and repair shops. The chart and table below include key metrics from sales of automotive businesses on BizBuySell between 2020 and 2024.

Relative to others in the automotive sector, auto repair businesses tend to get lower valuations relative to revenue and earnings. The two primary factors driving down values are the lower average revenues, and the high level of labor and associated wages/people management expense. While car washes operate at similar earnings levels, they require very little labor and operational management as they are mostly self-service business models.

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