Fixed Ops Journal - June 2018 - F4

FIXED OPS JOURNAL

EDITOR'S LETTER

BODY BUILDING

 Collision repair presents dealership opportunities and obstacles

ost of the 18,000-plus newvehicle dealerships in the
United States don't run body
shops. But hundreds more
dealerships have gotten into the collision
repair game in recent years - even as
others have dropped out - and that trend
appears likely to continue.
As industry analysts expect new-vehicle
sales in 2018 to drop for a second straight
year after seven brisk years of growth,
DAVID
dealerships are looking even more to their
fixed operations - including body shops -
KUSHMA
to make their profit numbers work. If you're
dkushma@crain.com
deciding whether to open or expand a
Fixed Ops Journal
shop, we hope our special report on
editor
collision repair in this issue of Fixed Ops
Journal will prove useful.
The share of franchised dealerships that operate on-site body shops
rose to 39.2 percent last year, up from a low this decade of 35.3 percent
in 2013, the National Automobile Dealers Association reports.
Dealership collision centers wrote more than 3.6 million repair orders
in 2017, an average of more than 500 orders per shop, NADA says.
But if you think running a dealership body shop amounts to an everexpanding license to print money, think again. In 2017, NADA notes,
total sales by dealership collision repair centers - about $6.73 billion
- were lower than in the three previous years. And sales per repair
order last year - roughly $725 a ticket - were down from 2016. That
suggests the competition dealerships face from repair chains and
independent shops isn't easing.
The decision whether to keep bodywork in-house or outsource it
remains a tough one for dealers and fixed ops managers. But the return
on investment is potentially lucrative: Collision repair remains a $40
billion-plus business in the U.S., according to industry estimates.

big on equipment, training
and automaker
certification and have
developed strong ties with
auto insurers that seek to
limit repair costs.
As more dealerships
open body shops, the role
of in-house collision
estimators becomes more
important and difficult,
even as artificial
intelligence increasingly
competes with human
estimators to appraise crashed vehicles and define needed repairs. We
spend time with a dealership estimator and talk to insurers about what
they look for in helping their customers decide which body shop -
dealership or aftermarket - is right for them.
At the same time, more automakers are operating their own collision
repair certification programs as a way of steering work to their
dealerships' body shops and ensuring that other shops meet their
repair standards. We look at the latest entry in the field, launched by
Subaru of America, and talk to an architect of General Motors'
expanding certified collision repair program.
The expense of operating a dealership body shop entails risk, but the
potential rewards also are great. If this issue's special report helps you
define those trade-offs better, we've done our job. 

Dealer advantages

If you're a fixed ops aficionado, the place to be in August will be Atlanta, site of this year's NACE Automechanika extravaganza. That event
combines the North American version of the world's largest auto service trade show with the biggest high-end training venue for U.S. collision and service repair professionals.
Fixed Ops Journal will be there, too. On Aug. 9, we'll hold a daylong
forum - our first such session - in association with NACE Automechanika.
We've recruited many of the best brains in fixed operations to share
ideas that will help you build the service department of your dreams, not
just in collision repair, but also in such areas as fixed ops management
and profit maximization, service technician recruitment and pay, and
the future of the service bay as new technology and innovations emerge.
If you're a dealer, general manager or fixed ops director, or you represent an automaker or supplier on the service side, there's a lot here for
you. Register at autonews.com/fixedopsforum.
See more on Page 22. And see you in ATL.

As the lead story of our body-shop coverage notes, dealerships seem
especially well-positioned to pick up collision repair work. The more
complex technology that gets built into a new car or truck, the more
comfort that owners of crash-damaged vehicles may find in taking
them to dealership shops with certified, experienced technicians and
factory parts and tools, throughout the vehicle's life.
But dealerships' aftermarket competitors won't cede the collision
repair field without a fight. The "big four" chains - ABRA, Caliber,
Gerber and ServiceKing - continue to gobble up independent shops,
although their ravenous pace of acquisition has slowed a bit in the last
few years. Our report suggests that the consolidators continue to spend

CORRECTION
A brief on Page 34 of the April issue gave the wrong price for the RPlate
Pro digital license plate. It is $699.99.

PAGE 4

JUNE 2018

Join us in Atlanta

http://www.autonews.com/fixedopsforum

Table of Contents for the Digital Edition of Fixed Ops Journal - June 2018