The rising cost-of-living is showing no sign of slowing down, with higher costs being the biggest challenge facing the vehicle repair sector, according to the industry watchdog.
The Motor Ombudsman, which raises standards in the motor industry through codes of practice and provides dispute resolution, has published its annual poll of issues facing the trade.
Tough times
AM Online reports that more than 90% of workshops are expecting to pay higher taxes, bills and overheads this year, including motor trade insurance, the poll found.
It said: “The annual survey of independent garages and franchise dealer workshops found 92% of repairers expect rising operational costs to be their biggest obstacle in 2026, up two percentage points on last year’s outlook.
“The Motor Ombudsman said workshops are likely to be hit by a combination of pressures including higher minimum wages, business rates revaluation and higher standing charges for energy use, alongside the recent rise in employer National Insurance contributions.”
Another issue for garages is customers being able to afford rising repair bills, with 69% of respondents believing that fewer customers will be able to afford routine maintenance such as servicing, with 68% expecting motorists to delay essential repairs to cover rising household bills.
Costs ceiling
While households try to juggle their finances, the poll also found that many garages have no choice but to pass on rising cost of parts, with 68% of businesses expecting to see an increase in 2026.
And in some cases, it expects customers to take extreme action if they are unable to pay for repairs.
AM Online said: “More than half of respondents (55%) said it would be difficult to absorb higher costs without passing them on to customers, with businesses mindful of the impact on retaining existing customers and attracting new ones.
“The survey suggests the financial strain on motorists could have knock-on effects for workshops, with 38% of repairers expecting customers to abandon vehicles on site if repair costs become too high. That compares with 28% who forecast this risk for 2025.
“The poll also found that recruitment remains an issue, with 45% of workshops expecting difficulties in hiring qualified and experienced technicians to continue, while raising salary expectations to meet the higher cost of living is also an issue.”
Light at the end of the tunnel
While the majority of workshops are finding it difficult to balance the books, the poll found that 29% plan to upgrade premises to improve the customer experience. And 21% said they plan to invest in EV learning and training to upskill staff and raise operational standards.
The ombudsman also suggested that the squeeze on customers could see garages diversifying into complementary areas.
AM Online reported that the changes could see workshops diversify income streams and drive efficiencies, including the use of artificial intelligence.
It also noted that investment in newer capabilities such as Advanced Driver Assistance Systems and electric vehicle maintenance could help them stand out from the competition.
Bill Fennell, chief ombudsman and managing director of The Motor Ombudsman, told AM Online: “It is clear from the findings of our latest poll that garages and workshops across the UK are facing an unprecedented convergence of challenges, with rising costs at the very forefront of these.”
Final thoughts
Workshops and customers are all feeling the pinch with the ongoing cost-of-living squeeze, and businesses can no longer just pass on any hikes. The key to not only survival, but also for growth, can be to diversify and introduce new services that meet changes in demand. Familiarity and convenience are huge draws for customers, especially if they are moving into new territory, such as EVs, and many would prefer to remain with someone they know and trust.
Reducing motor trade insurance costs
While some business costs can’t be controlled, you may be able to take steps to reduce the price of your motor trade insurance. To find out more, check out our guide: Tips for reducing motor trade insurance premiums.
