Auto service industry trends: How shops and agents can stay ahead of change

The auto service industry is in the middle of its biggest transformation in decades. As vehicles become more connected and complex, small businesses such as independent repair shops, body shops and similar businesses are under pressure to keep pace with new technologies, higher costs and shifting customer expectations. 

At the same time, these changes create opportunities for forward-thinking shop owners and the independent insurance agents who support them. By understanding what’s driving change and helping clients prepare, agents can strengthen relationships and position themselves as trusted risk advisers in a rapidly evolving market. 

What’s driving change in auto service?

Challenges for the auto service industry are emerging through both internal and external forces, as well as from familiar and unfamiliar factors.

1. Rising costs and supply chain strains

Inflation and parts shortages continue to squeeze shop margins. Nationwide’s research shows many owners now cite rising operational costs as their top business risk, followed closely by supply chain instability. Parts that once arrived in days can now take weeks as manufacturers and distributors continue to face supply chain disruptions and raw material shortages, while pricing remains unpredictable. 

To stay competitive, shops are rethinking how they source and manage inventory. Strategies include forming direct partnerships with manufacturers, buying in bulk and tracking demand data more closely. Agents can help clients protect these investments by ensuring business interruption and equipment breakdown coverage reflects real-world repair delays and inflationary pressures. 

2. Labor shortages and workforce pressures 

A shortage of qualified technicians is reshaping the labor market. According to the U.S. Bureau of Labor Statistics, employment for automotive service technicians and mechanics is projected to see about 70,000 openings each year through 2034, largely due to retirements and ongoing demand for skilled workers.¹ 

Many business owners are responding with training and upskilling programs, better benefits, higher wages and safer work environments. That’s where agents can add real value: by reviewing workers’ compensation, EPLI and safety programs to ensure they align with how today’s shops attract and protect their people. Conversations about workplace safety, including chemical handling, ergonomics, and shop layout, can help reduce injuries and demonstrate a commitment to employee well-being.  

3. Electrification and new service demands 

According to projections, electric vehicles (EVs) could account for around 45% to 50% of new U.S. light-duty vehicle sales by 2030. For example, the Edison Electric Institute forecasts about 7.7 million EVs will be sold in 2030, equating to nearly 46% of the light-vehicle market.² While EVs require less frequent maintenance, they introduce new exposures such as high-voltage battery systems, specialized diagnostic tools and fire suppression needs. 

Shops looking to stay relevant are investing in training and certified EV equipment, but this shift carries both cost and risk. Agents can help business owners navigate these changes by evaluating property coverage for high-value tools, liability limits tied to EV battery work and endorsements that account for the evolving nature of service operations. 

4. Technology and cyber exposure 

Repair diagnostics have gone digital. Many shops now use cloud-based systems, AI-driven scanners, and customer management tools to improve speed and accuracy. These platforms streamline operations but also create cybersecurity risks, especially for shops storing customer payment and vehicle data. 

A cyber incident could shut down operations or erode hard-earned trust. Agents can help clients understand the value of cyber liability coverage that addresses both data protection and business interruption, as well as equipment breakdown coverage that includes connected devices.

5. Regulation and compliance

From OSHA standards to environmental disposal requirements and advanced driver-assistance system (ADAS) calibration protocols, the regulatory environment for auto service businesses continues to expand. Each new system or process, especially those tied to EVs or automation, can bring fresh compliance challenges. 

Regular reviews of umbrella coverage and professional liability policies can help shop owners ensure they have appropriate protection for these evolving risks. Agents can also encourage clients to document safety procedures and maintain training records, which can be critical in demonstrating compliance during audits or inspections. 

How shop owners are responding

Across the industry, small business owners are already adapting to stay resilient: 

• Bulk purchasing and supplier partnerships to manage parts costs 

• Marketing and CRM tools to build customer loyalty and stand out from competitors 

• Automation to improve efficiency and consistency 

• Training and upskilling programs to retain staff and address emerging technologies 

• Enhanced employee benefits to attract workers and reduce turnover 

Each of these strategies affects risk exposure, from inventory storage to employee data management. Agents who understand these operational changes are better equipped to align coverage with the realities of modern auto service work. 

How agents can add value 

Independent agents play a vital role in helping auto service businesses manage risk while staying competitive. Here are a few focus areas where proactive guidance can make a measurable difference: 

• Covering evolving technology risks: Recommend clients consider cyber liability coverage for connected diagnostic systems, along with equipment breakdown protection for specialized repair tools. 

• Supporting workforce and safety goals: Reinforce the importance of workers’ compensation and EPLI coverage, and point clients toward safety training resources that can help reduce claims and turnover. 

• Preparing for new compliance requirements: Discuss umbrella policies that provide an extra layer of protection as regulations expand, especially for shops adding EV or ADAS services. 

• Conducting a review: Guide clients through an evaluation of the business’s needs, to help ensure it is properly covered for specific exposures and risks. 

By connecting coverage options to real operational challenges, agents move from policy providers to problem solvers, helping clients not only survive industry change but thrive in it. 

Be the differentiator

Auto service shops are operating in a high-tech, high-cost environment where every decision can impact their bottom line. Independent agents who understand these pressures can deliver more than insurance. They can provide insight. 

By helping clients plan for inflation, protect their data and build safer, more resilient workplaces, agents strengthen trust and long-term relationships. 

Connect with Nationwide to learn how our tailored solutions can help you support your auto service clients, protecting their people, property and profitability.