Walsall Council planners are currently considering a proposal to demolish Morris Car and Commercial Vehicle Repairs in Rollingmill Street and build a three-storey flats complex in its place.
If agreed, the new block would contain a total of 17 one and two bedroom apartments.
Garage bosses said the pandemic, increasing electric car ownerships and lengthy warranty offers have contributed to a drop in trade.
They said the new apartments would help provide ideal housing for nurses and health professionals working at the nearby Manor Hospital.
Agents Orrdee Services said: “(The garage) has in the past two years experienced a decline in business with customers numbers declining which
has been attributed as an impact from most people opting for new cars following the clean air campaign and car dealerships part exchange programmes that come with 5-year all-expenses paid warranties resulting in much reduced business.
“This trend compounded by the pandemic has resulted in the premises staying closed for most of the time from 2019 to this year.
“The current business has struggled financially ever since starting operation and has been shut down for greater part of 2020 and witnessed very few customers when they did open for business.
“A decision has therefore been taken to wind up the car repairs business and use the site for a more useful community need rather than just shutting the business down.
“The proposed development site sits very much close to the Manor hospital and Walsall Town centre.
“The proposal would support Manor hospital staff with accommodation within walking distance to workplace, Walsall train station, town-centre, nearby primary and secondary schools, Walsall college and Wolverhampton University campus.
“The proposal fully supports Walsall land use planning policies and brings to life and to use a piece of land that could otherwise become derelict.
“It is hoped that Walsall will grant the requested planning permission as this will open up the area that is otherwise secluded due to lack of human presence after usual working hours and will also promote Caldmore residents wanting to visit the Walsall Manor to walk given the opening up of a new safer route.”
“This proposal when analysed closely and objectively, brings much greater economic advantages to the borough as compared to the current usage which has resulted in the place being shut down.”
A decision on whether to approve the scheme is expected to be made by Walsall Council planning officers in November.