As new-car sales stall, repair shops prosper.

As a fourth-generation car dealer, Fred Emich IV doesn't have to go far to hear comparisons of the current economic crisis with other dire times in U.S. history.

Emich's great-grandfather started a Chevrolet dealership in Chicago after serving in World War I. His grandfather opened a Ford dealership in Joliet, Ill. His father grew a single Oldsmobile franchise in Lakewood into nine dealerships before selling to AutoNation in 1997.

"My grandfather's still alive, and he went through the Great Depression," says Emich, who owns Chevrolet and Volkswagen dealerships in Denver with his father and a third partner. "My father and my grandfather both worked through the '80s when interest rates were 21 percent. They battled some very high interest rates and inflation. And they said that this is much worse."

The outlook is especially bleak for domestic dealerships burdened by the uncertain future of the Big Three, slightly less so for foreign-car dealers. According to Emich, Volkswagen, for example, has a bond rating second only to Toyota and thus can still finance anyone with a credit score more than 600, "probably 75 percent of the population," whereas he says General Motors Acceptance Corp. can't finance anyone with a credit score below 700.

Still, Emich said a few days before Thanksgiving, "All facets of our business are down quite a bit."

He's not alone. U.S. new-car sales in November were the lowest in 26 years for that month.

But there is a silver lining to the sagging new-car sales: a surge in business for auto repair shops. Some of them.

Dana TePoel, owner of Lake Arbor Auto & Truck in Westminster, said business at his repair shop was up 18 percent for the first 11 months of 2008 compared with the same period a year earlier, and up a whopping 65 percent for the month of September compared to the same month in 2007.

Nationwide, the Automotive Service Association reported in November that business for auto repair shops was up 16 percent over 2007.

TePoel believes it's the fairly high-end demographic he serves that accounts for the increases in business. His shop, which one customer dubbed the "Garage Mahal," boasts a comfortable waiting area, a classroom for the shop's four technicians to receive periodic continuing education from visiting instructors, and even a spare office with a computer and two WiFi connections for customers to get work done while they wait on repairs.

TePoel says his customers--in better economic times--typically kept a car until it neared the 110,000-mile mark and then sold. Thus they tended to leave major recommended repairs like the timing belt, replacement of the water pump and bearings to the next owner, a group that TePoel says typically does its own repair work instead of going to a repair shop.

[ILLUSTRATION OMITTED]

But that's changed in recent months, to TePoel's benefit. High-end customers, the type not prone to fixing their own cars, are hanging on to their cars longer. "Basically as a car owner, you have to make a decision: 'Am I going to cross this major service point?'" TePeol says. "What we're seeing is, 'OK, let's do this major service and keep the car another three years or whatever."'

On the other end of town, Larry Blazer has operated Blazer Automotive on Broadway just south of Hampden Avenue since 1983. He doesn't report the same surge in business that ToPoel is experiencing, but he's not complaining. He's been through other downturns, though none like this.

"The recession we had in the '80s, I didn't even know they had it," Blazer says. "I read about it more than I felt it. We sailed right through there without feeling the crunch at all. This one is worse."

A Volkswagen repair specialist, Blazer says that while his business has slowed, it hasn't stalled, and it isn't likely to.

"We're kind of recession-proof," Blazer says. "People are putting off what they can, but when push comes to shove, we all have to have our cars. They'll drive around with bumpers dragging on the ground, broken windshields and doors that don't open, but if a car doesn't start, they're finding the money to fix it."

Mike Taylor is the managing editor of ColoradoBiz. He writes about small-business money issues and how startups are launched. Read this and Taylor's past columns on the Web at cobizmag.com and e-mail him at [e-mail].