Sorry I may have missed it, but how long does this contract with the mechanic go for?
It sounds like you need him right now, but there are problems, use this time to research and implement a plan B, so when the contract expires (or you terminate it) you can thank him for his time, and move to plan B.
It sounds like you own the lease for the actual shop space, when does this expire? Again, you could research alternatives.
I would design a plan of where you want to be in 6mths or a years time, then put out a tender/expression of interest to all, then ask you mechanic if he is interested in bidding. You don't have to accept his bid, but it lets him know you are moving forward and he needs to decide if he is with you or not.
I would separate the now (one issue) from the future (separate issue).