Automotive Sector Report Shows Nearly Half Of All Customers Making Price Sensitive Demands

The Capricorn State of the Nation report released today by Capricorn – New Zealand’s largest automotive member group - shows the combination of cost of living pressures, financial concerns and the critical skills shortage are making it hard for small business owners in automotive to have a work life balance and take a break.

Nearly 6000 automotive businesses from across New Zealand are Members of Capricorn, employing over 30,000 people including nearly 4000 apprentices, with an average turnover of $1.2 mil. The State of the Nation Report is the largest automotive industry report in the country and is an indication of wider small business pressures and concerns across the economy.

The report highlights key challenges and opportunities for the sector and shows that despite ongoing concerns, New Zealand businesses are adapting to emerging vehicle technologies and continuing to grow. Electric and hybrid vehicles now account for 18 per cent of vehicles coming in for service in workshops, a figure predicted to grow to over 30 per cent for hybrid vehicles over the next decade.

Over half of all businesses surveyed are actively staying up to date with the latest automotive technologies and a growing number of business owners plan to increase their focus on electric and hybrid vehicles over the next two years. Businesses are not just feeling positive about new technologies but the industry as a whole with four out of five planning to grow in some way in the next 12 months, a figure that has increased significantly in the last year.

Brad Gannon, Group Chief Executive Officer of Capricorn says this is positive news for the industry in New Zealand, but more needs to be done to support small business owners.

“it’s great to see the automotive industry in New Zealand continuing to evolve, adapt and grow, but we need to draw attention to the stress that this growth is putting on small business owners,” Brad says.

“Workshops have fought through COVID, supply chain challenges, the energy transition and are managing cost of living pressures from customers. Nearly half of our small business Members tell us they are facing pressure from customers about rising costs, which leads to mental health challenges, for both them and their staff.

“While we see the skills shortage is beginning to ease, finding good staff remains a top concern for business owners in the country. We believe this is a key contributor to the number one challenge of the industry which is having a good work-life balance.

Gannon is calling on policymakers to continue to work with industry to showcase the automotive sector as an attractive career path for young New Zealanders to boost the apprentice numbers.

“We welcome the Luxon Government’s focus on reforming skills and training to increase the participation of industry and business owners in hiring and retaining apprentices.

“Thousands of New Zealanders depend on their local automotive workshop. Business owners do not want to let their local community down by taking longer than absolutely necessary to service and repair cars.

“Many of our business owners were once apprentices themselves who now run their own business. That pathway from apprentice to business owners is one of opportunity, of new technology, of innovation and business ownership, and we want to see that showcased as an example of the Government’s focus on the skills sector.”

Minister for Commerce and Consumer Affairs Scott Simpson welcomed the report, which shows 80 per cent of small businesses in the automotive sector plan to expand in the next 12 months.

"A growing industry means demand for training and opportunities. Good news - the Government is investing in apprenticeships and on-site training.

“From 2026, we’re introducing an industry-led model that gives apprentices, trainees, and employers more choice and flexibility.

"The automotive industry is an exciting career path, one which is always innovating,” Mr Simpson says.

While the skills shortage is not as severe as in previous years, it still places significant pressure on businesses owners and the workload of other staff. Nearly a quarter of business owners report that understaffing is increasing workloads for their teams, and 11 per cent say it’s leading to lower employee morale due to stress and fatigue.

In positive news for skills and training across the industry, over a quarter of automotive workshops employ a female mechanic or apprentice. Female qualified mechanics have more than doubled, increasing from eight per cent in 2024 to 17 per cent in 2025, and female spray painters in collision repair and panel and paint have increased five per cent, up to 28 per cent, year on year.

Each year Capricorn also releases the Capricorn Confidence Index as part of their national report. Now in its fourth year, the Capricorn Confidence Index offers a barometer for the health of the automotive aftermarket industry. It’s based on responses to three key questions around confidence in the automotive industry, confidence in their own business’s future and plans to grow or improve profitability over the next 12 months.

These responses are combined into a single score out of 100 points, with the 2025 Capricorn Confidence Index rising to its highest level at 71.2, up from 68.0 in 2024 - indicating a modest but encouraging lift in overall business sentiment across New Zealand’s automotive industry.

The 2025 Capricorn State of the Nation report draws on two key sources: Capricorn’s own State of the Nation research, and the EV & Lithium-Ion Battery Safety Research – 2025 conducted by Painted Dog Research. With analysis provided by independent research partner Klein, the report delivers rich insights into the current state and future direction of the industry.

The full Capricorn 2025 State of the Nation report can be accessed here: https://issuu.com/capricornsociety/docs/capricorn_state_of_the_nation_2025_new_zealand?fr=sMWQ1Mjg4Mjk0NDA

STATE OF THE NATION 2025 KEY STATISTICS

Business Growth Strategies and Focus Areas

Automotive businesses are prioritising growth through efficiency and profitability improvements.

• 80% of workshop owners plan to grow or improve profitability over the next 12 months.
• Key focus areas include improving business efficiency (69%), increasing profit margins (50%), reducing operational costs (50%).and upskilling themselves and staff (50%).
• Average turnover for 2025 is reported at $1.2m, an 11% increase on 2024.

Persistent Challenges Facing the Industry

• 52% of members report maintaining a healthy work-life balance, with this the key concern of members.
• Cost-of-living pressures and price sensitive customers are the lead concern for 48% of businesses.
• Cash flow and profitability was a key concern for 42%.
• Finding good staff including apprentices was a concern for 41%

Skills Shortage and Its Impact

•  36% of businesses reported being affected by skills shortages, down from 38% in 2024 and a significant drop from 59% in 2023. These figures suggest that while the issue persists, the pressure is gradually easing.
• Of the 36% of business owners that reported facing staffing issues, 9% had unfilled positions, while 27% said they were actively struggling to find qualified workers.
•  22% of business owners report that understaffing is increasing workloads for their teams, and 11% say it’s leading to lower employee morale due to stress and fatigue.
• The perception of the automotive sector as less attractive than other industries contributes to recruitment challenges.

Apprenticeships: Key to Workforce Development

Apprenticeships are essential for addressing the skills shortage in the automotive industry and fostering future talent.

•  43% of business owners reported employing an apprentice.
• The percentage of female qualified mechanics has more than doubled, increasing from 8% in 2024 to 17% in 2025.
•  Similarly, female representation among spray painters has grown from 23% to 28% over the same period.
• 28% of businesses employ a female mechanic or apprentice .

Emerging Vehicle Technologies Impact

The automotive industry is adapting to the rise of electric and hybrid vehicles, reshaping service demands.

• 77% of workshop owners currently service EVs, with expectations for hybrids to account for 31% of total workload in the next decade.
•  59% of businesses are actively keeping pace with new technologies, many still feel underprepared.
•  Only 18% feel ready for a surge in EVs, and 28% for hybrids—highlighting the need for targeted training, safety awareness, and investment in equipment.
•  44% of businesses plan to increase their focus on BEVs and 55% on hybrids in the next two years but need the right support and training, presenting both a challenge and opportunity.

Confidence Index and Business Outlook

•  The Capricorn Confidence Index indicates a steady outlook for the automotive industry.
•  The index rose to 71.2, up from 68.0 in 2024 - indicating a modest but encouraging lift in overall business sentiment.

ABOUT CAPRICORN

Capricorn is one of New Zealand and Australia’s largest and most dynamic Member-owned organisations. Since 1997 we’ve provided New Zealand Members with financial and business solutions to make running a business easier.

Our flagship Trade Account offers instant credit with over 1600 Preferred Suppliers across our business, simplified monthly expenses, and a generous rewards program.

We have a strong foundation in the automotive and machinery aftermarkets. Our vibrant community includes over 31,000 Members across Australia and New Zealand, from national franchises to your local family workshop. Last year, Capricorn facilitated nearly $4bn in sales with our Preferred Suppliers.

At Capricorn, we're about more than just products and services. We work hard to ensure that our Members, Suppliers and People feel like they're part of something bigger - a community which is connected and supported to make a difference, while having some fun along the way!

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