Right to Repair Laws Could Shift Pricing Power Back to Independent Auto Shops
If Michigan passes right-to-repair legislation, independent auto shops may finally compete on price with dealerships. Here is what that means for your margins.
The John Deere settlement reached in January 2023 with the American Farm Bureau Federation gave farmers the legal right to repair their own equipment using manufacturer diagnostic tools. That agreement was about tractors, but its ripple effects are now reaching auto repair shops in Michigan and elsewhere. For independent shop owners, the more immediate question is not philosophical — it is financial.
Right now, many independent auto repair shops pay third-party vendors for diagnostic software that is either incomplete or significantly delayed compared to what dealerships receive directly from manufacturers. That gap costs time, and time in a shop is billed by the hour. When a technician cannot run a full diagnostic because the tool is locked or outdated, the job either goes back to a dealership or gets underpriced to compensate for guesswork. For more on the topic discussed above, see Small Biz Press USA.
The Pricing Gap Is Real and Measurable
The National Federation of Independent Business, which has chapters in Michigan and 49 other states, has been pushing state legislators to advance right-to-repair bills that would require automakers to give independent shops equal access to the same diagnostic and repair information dealerships receive. NFIB's Michigan chapter has cited this as a priority issue in its 2024 state legislative agenda.
According to the U.S. Bureau of Labor Statistics, the average hourly rate for automotive service technicians was $23.44 as of May 2023. Independent shops that cannot run complete diagnostics often spend more unbillable labor hours per job than dealerships do, which compresses the margin on what is already a labor-heavy business. If a shop loses one billable hour per diagnostic job and runs 15 diagnostic jobs a week, that is roughly $350 in weekly revenue that simply does not exist on the invoice.
The legal landscape is moving, slowly. Massachusetts passed a right-to-repair law for automobiles in 2020, though automakers and the Alliance for Automotive Innovation filed suit almost immediately, and implementation has been tied up in federal court since. Michigan has not yet passed comparable legislation, but NFIB's position is that the John Deere settlement establishes a useful precedent — one that shows manufacturers can agree to open access without the industry collapsing.
Dealerships argue that open access creates cybersecurity risks because modern vehicles are networked systems. That argument has kept some legislators cautious. But independent shops counter that cybersecurity protocols can be built into licensing agreements, as they already are in some third-party diagnostic software contracts.
For shop owners tracking this issue, the practical move right now is to document what you are paying for diagnostic access and what jobs you are declining or referring out because of tool limitations. That data becomes useful in two ways: it helps you make a concrete case to your state representative, and it tells you exactly how much a favorable legislative change would be worth to your bottom line. Put a dollar figure on it. Advocacy works better with specifics than with principles.