It is a garage with lots of tools and lots of vehicles (cars and trucks). Inside, T-Ray and his band of mechanics work in the Chop Shop for Mr. Bishop, where they remove fuel cells and old batteries from derelict cars and sell them for profit.
T-Ray and his band of mechanics are responsible for the theft of the Highwayman during the Recover your stolen car quest, and have taken the car to the Chop Shop to be upgraded and sold to Mr. Bishop. The player must locate the Chop Shop in order to retrieve the Highwayman.
Although the Chop Shop only shows up on the New Reno town map after the player has been there, the location can be reached (somewhat illegitimately) by pressing "5" on the town map screen.