Markup and margin
Markup is profit as a share of what the part cost you. Margin is profit as a share of what you sold it for. A part that costs $75 and sells for $100 makes $25: a 33% markup, but a 25% margin. Your accounts, and every benchmark, talk in margin, so price with it in mind:
| Markup on cost | Margin on price |
|---|---|
| 10% | 9.1% |
| 20% | 16.7% |
| 25% | 20% |
| 33.3% | 25% |
| 50% | 33.3% |
| 100% | 50% |
In practice, most parts on a collision estimate are billed at the automaker's list price, and the shop's margin is the discount it buys at. A part bought 25% below list makes a 25% margin. We found no survey of typical discounts, so measure your own: our job costing guide shows how.
The types of part
| Type | What it is |
|---|---|
| New OEM | A new part from the vehicle's manufacturer, bought through its dealers |
| OE surplus | New OEM parts sold at a discount, possibly with minor blemishes; some platforms separate new-in-box surplus from parts recovered off new cars |
| Recycled | An OEM part taken from another vehicle, also called LKQ (like kind and quality), graded with the Automotive Recyclers Association's damage codes |
| Reconditioned | A used OEM part brought back to like-new condition |
| Remanufactured or rebuilt | A part rebuilt mostly with new components. A core charge may apply, and collision damage often makes the old part ineligible for return |
| Aftermarket | A new part made by someone other than the vehicle's manufacturer, sometimes CAPA-certified |
From the Audatex Database Reference Manual (April 2025) and parts platforms' definitions presented to the Collision Industry Conference.
Check the automakers' position statements too: in March 2026, for example, GM said only new genuine GM parts should be used in its airbag and restraint systems.
CAPA certification
The Certified Automotive Parts Association (CAPA), a non-profit founded in 1987, certifies aftermarket parts. It says more than 202 million certified parts have been sold. Its process:
- The factory is audited before any of its parts can be certified.
- Sample parts are tested for materials, fit, finish, paint adhesion, coatings, welds, adhesives and corrosion.
- Each part is test-fitted against the automaker's own part on an undamaged car, and must fit as well or better.
- Parts are checked at random once on sale, and can be decertified.
- Certified parts carry a tamper-evident, numbered seal; estimates often mark them with a "C".
CAPA doesn't warrant parts; the seller does. It stopped publishing its monthly decertification lists at the end of 2025, so check a part on its online Part Search before you rely on its certification.
State rules on non-OEM parts
Many states regulate how non-OEM parts are disclosed, and when insurers can specify them:
| State | The rule |
|---|---|
| California | Estimates and invoices must label each crash part OEM or non-OEM aftermarket. Insurers can require non-OEM crash parts only if they equal OEM in kind, quality, safety, fit and performance; the insurer pays for any modifications and warrants the parts in writing |
| New York | Estimates and invoices say whether body parts are OEM, non-original or used. An insurer that specifies non-OEM parts must name the supplier, use no more than three suppliers without consent, and use certified parts where one exists |
| Florida | Any estimate, from the insurer or the shop, that uses non-OEM crash parts must identify each one and carry a printed disclosure |
| Washington | Estimates and invoices must flag aftermarket or non-OEM body parts |
| Massachusetts | The opposite approach: appraisers must use rebuilt, aftermarket or used parts of like kind and quality unless safety would suffer, none can be found, new OEM costs less overall, or the car has 20,000 miles or fewer |
| Texas | Insurers may not limit coverage by specifying the brand, type, age, vendor or condition of parts, except under the commissioner's rules |
From each state's statute or regulation. Check your own state's current rules.
How parts are priced
Estimating systems price parts at the manufacturer's suggested list price, which can vary by region and changes without notice. Shops buy below list and keep the difference, and a few things move it:
- Automakers' programs. Some sell parts below list against aftermarket competition, such as Mopar's Competitive Crash Parts Program and GM's Bump the Competition, which GM calls a conquest program rather than a price match.
- Insurers' parts platforms. Some direct repair programs require shops to buy through a platform such as PartsTrader, which Mitchell's parent Enlyte bought in 2026. On PartsTrader in spring 2026, OEM was 52% of parts bought, aftermarket 20%, price-matched OEM 18% and recycled 6%.
- Tariffs. A 25% tariff on imported car parts has applied since May 2025 under Section 232, with parts that qualify under the US-Mexico-Canada agreement treated separately. It survived the Supreme Court's February 2026 ruling against the emergency tariffs, and Taiwanese auto parts, a big source of aftermarket parts, were capped at 15% in June 2026.
Price per part
+6%
In 2025, and about 8% year over year in early 2026 (CCC).
OEM parts
+4.21%
In 2025; aftermarket parts +3.89% (Enlyte).
Bumper covers
+6.7%
In 2025, up from 3.2% in 2024 (Mitchell).
With prices moving monthly, re-price parts before you order on an older estimate, and check every invoice against the estimate and the repair order.
How paint and materials are billed
Paint and materials (P&M) aren't included in refinish labor times, so they're billed separately, one of two ways:
- A rate per refinish hour. In a 2025 survey, 37% of shops used only this method, and 84% of those charged $40 to $60 per refinish hour, averaging $50.
- The materials actually used, invoiced from the mixing scale or a materials calculator. 26% of shops in the same survey always used a calculator.
California's Bureau of Automotive Repair accepts either method. In New York, insurer estimates show paint waste disposal as its own line, priced per paint hour.
Paint prices keep rising
The five largest refinish brands raised prices by an average of 7.4% in the first quarter of 2025. Four of them raised prices again by 6.8% to 7.6% between January and May 2026, and in April 2026 PPG announced a global increase of up to 20%. By one trade publication's count, the top five brands' prices have risen 75.87% in all since 2020. Raise your materials rate when your paint maker raises prices, and track what materials cost you per refinish hour.
Sales tax on parts and labor
Whether repair labor is taxed depends on the state, so show parts and labor separately:
| State | Parts | Labor |
|---|---|---|
| California | Taxed when billed separately, or when they're more than 10% of a lump-sum charge | Not taxed |
| Texas | Taxed when billed separately. On a lump-sum price, the shop pays tax when it buys the materials and charges the customer none | Not taxed |
| New York | Taxed | Taxed: repair services are taxable |
| Washington | Taxed | Taxed: repair labor counts as a retail sale |
From California's Regulation 1546, Texas's Rule 3.290 and Publication 94-113, New York Tax Law § 1105 and Washington's RCW 82.04.050.
On a separately billed invoice in Texas, a shop can buy parts and itemized consumables such as body filler and sandpaper tax-free with a resale certificate. Ask your state's tax agency how it treats paint and materials and shop supplies, which vary even more.
Free toolAuto body invoice templateSales tax on the charges your state taxes, your payment details, and the deductible split on insurance jobs. PDF, Word or Excel.GuideAuto body shop profit marginsWhat shops make on parts, paint and labor, and where to look when margins slip.Parts and paint margins also decide how much of your overheads your labor rate has to carry; our labor rate guide shows the effect.
