Total Addressable Market (TAM) gives auto repair shop owners a broad estimate of all potential customers within a geographic area. However, TAM alone doesn’t provide a realistic picture of the number of actual customers your shop can expect. Many vehicles within TAM will never come to your shop due to dealership loyalty, fleet service contracts, and other barriers.
This is where Serviceable Available Market (SAM) becomes essential. SAM narrows TAM down to the real opportunities—vehicles that are not just in your market but also available for service at your shop.
Failing to calculate SAM correctly can lead to overestimating customer potential, investing in the wrong marketing strategies, or opening a shop in an unsustainable market. A well-defined SAM helps you avoid these mistakes and focus your efforts where they will have the greatest impact.
To estimate SAM, you must remove vehicles and customers that are not realistically available to your business. This includes those who exclusively use dealerships, fleet accounts with service contracts, loyal customers of competing shops, and DIY repairers.
TAM is determined by:
If your market area includes 80,000 vehicles, then the TAM is approximately 120,000 service visits per year.
Dealership-Loyal Customers (20-40%)
Many car owners take their vehicles to dealerships exclusively, particularly those with newer vehicles under warranty. In areas with higher incomes or a high volume of new car sales, this percentage will be higher.
Fleet Vehicles with Exclusive Contracts (10-25%)
Large businesses, municipal fleets, and rideshare companies often sign contracts with a specific service provider. Unless your shop actively services fleets, these vehicles should be removed from SAM calculations.
Competitor-Loyal Customers (20-35%)
Some drivers are committed to an independent repair shop they’ve used for years. In areas with well-established competitors, this percentage will be higher.
DIY Vehicle Owners (5-15%)
Certain customers prefer to repair their own vehicles and will only visit a shop for major, unavoidable repairs. This percentage varies based on income levels, vehicle types, and local repair culture.
Example SAM Calculation:
Let’s assume a TAM of 120,000 service visits per year. After filtering:
Your estimated SAM: 48,195 service visits per year.
This number represents realistic customer potential—the customers who are likely to choose an independent shop like yours.
Most auto repair shops don’t service every type of vehicle. Specialization further reduces SAM but can make your business more profitable by increasing the average repair order (ARO) and customer retention.
Smaller SAM doesn’t mean lower profitability. In many cases, a niche shop could command higher pricing, attract loyal customers, and face less direct competition than a general repair shop.
SAM isn’t a fixed number—customer movement, economic trends, and vehicle technology constantly reshape who is available to your business.
Some customers don’t have a dedicated repair shop and are actively searching for a better service provider. Additionally, new residents moving into the area represent untapped potential, as they often need to establish a relationship with a new repair shop.
Shops that invest in local marketing, such as Google My Business, referral programs, and direct mail to new residents, can take advantage of floating customers who are still deciding where to go.
SAM can also decrease due to economic downturns, population decline, and changes in vehicle repair behavior.
Regularly re-evaluating your SAM allows you to stay ahead of changes and adjust your business model as needed.
Even if your SAM appears large, it doesn’t mean those customers will choose your shop. Competitor strength and differentiation affect how much of SAM you can realistically capture.
Evaluating your competitor landscape helps determine how difficult it will be to grow within your market.
While TAM provides a broad view of the market, SAM tells you who is actually available to your shop.
Understanding SAM isn’t a one-time exercise—it should be reevaluated annually to ensure your marketing, pricing, and service offerings align with actual customer opportunities.
Even with a clear SAM, not all available customers will choose your shop. The next step is to calculate Serviceable Obtainable Market (SOM), which determines how much of SAM your business can realistically capture based on brand reputation, marketing strength, and competitive positioning.
Understanding your real customer base is the key to sustainable business growth. Analyzing SAM gives shop owners a clearer picture of their market reality, leading to better marketing strategies, more effective customer retention efforts, and ultimately, long-term success.
