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A chop shop is a slang phrase for a location or business where people disassemble stolen automobiles for the purpose of selling them as parts. It may also less frequently be used to refer to a location or business that is involved with the selling of stolen goods other than automobiles or a brokerage that sells non-existent equities. It can refer to a business involved in fraud rather than stolen goods. A third meaning might be a business whose product, service, or equipment is of questionable quality. With the increase of the popularity of motorcycles, especially choppers, some legitimate motorcycle garages have taken this name. Some butchers and barbers have also used this name for their shops.

For a car to be useful to the average person in the United States it must be properly registered and insured as eventually the police would notice missing plates or that the paperwork was not in order after they had stopped the car for some other reason. Thus stolen cars of lower value are often taken to Mexico and sold where it is difficult if not impossible to track them down. The lower value of the car would also make it inefficient as recovery might cost more than the price of the car.

While newer cars often have more anti-theft devices, for the car thief, the risks and effort involved in stealing a car are not that much greater on a more expensive car, when compared to the potential rewards. Newer and more expensive vehicles contain many anti-theft devices that are likely to be quite complicated. If not defeated, these devices make it very difficult, if not impossible, to resell the car. Many of these devices are kept secret by the manufacturers. There may be a radio tracking device, or kill switches and microchip keys unique to that particular vehicle, that cannot be easily obtained. There may be many hidden places on the car where the VIN (Vehicle Identification Number) is printed. The chop shop will likely be more familiar with these devices. Most importantly, sometimes the separate parts of a vehicle may be worth more than the whole. This may be more pronounced on luxury, rare, or foreign cars.

A chop shop must be able to take apart a car without damaging the parts and keep them organized. Time is of the essence: more cars processed equals higher profits. Too many cars waiting to be processed require larger buildings which are often located in higher traffic areas. Larger buildings are more expensive and are not as easily rented without giving out more personal information and large deposits. Huge rooms full of cars waiting to be "chopped", as seen in the movies, is not realistic. There is no advantage to a large inventory, as it can be done more efficiently in a "JIT" (Just In Time) manner by asking a thief only when cars are needed.

In the event of a raid, a large inventory would result in multiple counts and a larger sentence against the defendants, whereas a talented attorney might be able to find a technicality if the shop only had one car. The car might be disassembled to the point that it would be difficult for the owner to recognize or prove ownership. A larger enterprise attracts more attention, as does many luxury cars going into the same warehouse and not coming out.

A large operation requiring numerous employees would mean more loose tongues, and would increase the likelihood of word getting out about the shop. Workers that work hard, do good work, keep their mouths shut and are willing to be involved in a criminal enterprise are quite difficult to find.

Chop shops are usually located in small industrial-type buildings where it would be expected that cars and workers would come and go and loud mechanical noises would be common. Chop shops operating in the Southwest are likely to be located in Mexico as the police are more easily bribed and American authorities do not have jurisdiction.