Fixed Ops Journal - October 2019 - F18

FIXED OPS JOURNAL

SPECIAL REPORT

Collision repair technician Tim
Beveridge works in the body shop
of Diehl Toyota in Butler, Pa. Diehl
Automotive Group is opening a
$2 million collision center near
Pittsburgh.

COLLISION IMPACT

Dealers battle from behind for body shop work
KEN WYSOCKY

weather the headwinds posed by the rising
foj@autonews.com
costs of doing collision work, such as service
technician certifications needed to meet auorina Diehl has seen the future of
tomakers' repair standards and the expense of
fixed operations for her nine-dealbody shop equipment. As a result, new-vehiership Diehl Automotive Group. It
cle dealerships capture only about one-fifth of
stands near Interstate 376 in the
the $36.2 billion annual U.S. collision repair
Pittsburgh suburb of Robinson Township, Pa.
market, according to industry consulting firm
It's a new, 26,000-square-foot, $2 million
Supplement Advisory in Costa Mesa, Calif.
collision center that Diehl says will position
But Diehl says she isn't intimidated. She althe group she owns, based in Butler, Pa., with
ready operates three small collision centers at
dealerships in western Pennsylvania and
dealerships. When the new center
northeast Ohio, for revenue growth
opens, scheduled for this month, Diehl
and enhanced customer service.
plans to convert the body shop at Diehl
"Collision repair is my priority in
of Robinson, a Chrysler-Dodge-Jeepterms of focusing on fixed ops," Diehl
Ram store, into nine service bays. The
told Fixed Ops Journal. "It only makes
two other collision centers will remain
sense for us to extend collision repair
open.
service to our customers. There always
The shop features 14 repair bays
will be a need for body repair work."
and eight refinishing bays. It will hanDealerships face tough competition
dle repairs of all makes and models.
from independent and chain stores Diehl: Crash
Based on how busy her existing
when they open or expand body work always in
shops are, Diehl says she is confident
shops. The well-capitalized big fish in demand
the center will thrive.
the collision repair space keep gob"There always is competition," she says. "But
bling up small independents. And some of the
we already schedule three to four weeks out at
big fish are joining forces: The merger this year
the existing shops. And with more technicians
of Caliber Collision and ABRA Auto Body Reand a new state-of-the-art facility, we'll be
pair created a chain of more than 1,000 stores
able to turn more hours, so I know this will
in 37 states and the District of Columbia.
work. Having the right people is always a key
Greater economies of scale and price unto success, and I have an amazing team."
dercutting among the largest body shop conStill, Diehl's venture is a bit of an outlier. From
solidators can make it hard for some dealerships to carve out a place in the market. The
well-financed conglomerates also can better
see COLLISION, next page

PAGE 18

OCTOBER 2019

Balancing test

Considerations for new-vehicle
dealerships operating body shops:

Pros

 Dealerships can ride on the

marketing coattails of automaker
brand recognition.
 Gross profit margins average
40-45%.
 Fixed shop costs are dispersed
across all dealership departments.
 Increased cash flow results from
faster payments by customers and
insurers.
 Repair parts are used right away,
limiting inventory carrying costs.

Cons

 Collision work is unpredictable,

unlike recurring vehicle
maintenance.
 Because crashes are relatively
infrequent and repairs differ, a
collision business model can be
hard to build.
 Collision repair requires scarce
specialty technicians.
 Automakers are toughening collision
repair standards, driving up costs for
tools and tech certification.
 Handling insurance payments and
parts ordering can require multiple
software platforms.
 Liability concerns are significant.

Fixed Ops Journal - October 2019

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