A "chop shop" is a garage where stolen cars are dismantled so that their parts can be sold separately.
When someone stole Shane Vendrell's Lincoln Navigator, Vic Mackey and the Strike Team got information that a man called Mark owned a "chop shop" and could give them some information. When they went in, they found him working on some stolen cars so he agreed to give them information if they didn't mess with his shop. He then led them to a man called Ricardo, who had asked about a Lincoln Navigator.
Detective Vic Mackey found about an illegal "chop shop" on Newman ran by Armenian Alex Eznik and his men. Vic gave the address to Captain David Aceveda and he sent police units to the place. They came back with several arrests.
Edixon owned a "chop shop" where the Strike Team went looking for a stolen Mercedes Benz. When they didn't found it, they told Edixon to tell everyone that he was looking to buy one. Eventually, Deena went to Edixon to sell him the stolen Mercedes and he was captured.