How Much Does It Cost to Start an Auto Repair Shop?
- Nate Jones, CPCU, ARM, CLCS, AU
- 3 days ago
- 3 min read
Starting an auto repair shop can be a rewarding business venture, but it requires careful planning and a realistic budget. Whether you’re looking to open a small neighborhood shop or a full-service repair center, understanding the costs involved is crucial.
In this guide, we’ll break down the main expenses, highlight essential insurance requirements, and provide tips to help you start your business on solid financial ground.
Startup Costs for an Auto Repair Shop
The cost of starting an auto repair shop can vary widely based on location, size, and services offered. On average, new auto repair shop owners can expect to spend anywhere from $50,000 to $200,000 or more to get up and running. Here are the main categories to consider:
1. Lease or Purchase of a Facility
Leasing a small garage can cost $2,000–$5,000 per month, depending on location.
Buying property requires upfront capital but can be a long-term investment.
2. Equipment and Tools
Essential tools include lifts, diagnostic machines, hand tools, spray booths, and welding equipment.
Estimated cost: $20,000–$75,000 for a fully equipped shop.
Business licenses, environmental permits, and local regulations vary by state and municipality.
Typical costs: $500–$2,000.
SBA Guide to Starting a Business
4. Staffing Costs
Hiring experienced mechanics, body technicians, and administrative staff is a major expense.
Average salaries range from $35,000–$60,000 per employee annually, depending on experience.
5. Marketing and Branding
Website development, signage, and advertising campaigns: $1,000–$10,000.
Struggling to market your business? Visit Contractor Back Office for website SEO and marketing support.
Essential Insurance for Your Auto Repair Shop
While equipment, staff, and facility costs are substantial, one expense you cannot overlook is insurance. Auto repair shops face risks such as property damage, accidents, and customer liability. Some key coverages include:
General Liability Insurance: $500–$1,500 per year
Commercial Property Insurance: $1,000–$3,000 per year
Garage Liability Insurance: $600–$1,500 per year
Equipment Insurance: $300–$1,000 per year
Workers’ Compensation Insurance: $2,000–$6,000 per year (varies by state and payroll)
Commercial Auto Insurance: $1,200–$3,000 per year
Tips to Reduce Startup Costs
Lease equipment initially instead of buying all new tools.
Start with a smaller location and expand as your business grows.
Hire a mix of experienced and entry-level staff to balance payroll costs.
Take advantage of small business loans or grants offered through the SBA.
Shop for bundled insurance policies to reduce overall premiums.
Planning Your Budget and Financial Forecast
Before opening your doors, create a detailed financial plan that includes startup costs, monthly overhead, expected revenue, and a safety buffer for unexpected expenses. Proper planning ensures your shop remains profitable and sustainable.
Final Thoughts
Starting an auto repair shop requires significant investment, careful planning, and the right protections. From leasing a facility to purchasing equipment, hiring staff, and securing insurance, understanding the true cost will set you up for long-term success.
Protecting your business with the right insurance is just as important as investing in tools and staff. At Wexford Insurance, we specialize in helping auto repair shop owners nationwide find coverage tailored to their needs.
Contact us today. and make sure your business is covered from day one.
