Fixed Ops Journal - June 2020 - F18

FIXED OPS JOURNAL

COLLISION SURVIVAL

How shops can position themselves for a rebound once roads are busy again

RICK POPELY

foj@autonews.com

f business is slow in the service lane because of COVID-19, it's bound to be even
worse in the body shop - at least for a while.
People are driving less, and there is
evidence that has led to a lot fewer accidents.
National statistics on the number of accidents
in recent months were not available, but a
University of California, Davis study said that
vehicle accidents fell by half in California in
the first three weeks after a stay-at-home order took effect March 20. In Texas, data from
the state Department of Transportation shows
that accidents fell by half during April.
"I've been in the business 50 years, and this
is the first time I've ever seen the number of
miles driven drop so precipitously. That's having a huge impact," Larry Edwards, chairman
of Edwards & Associates Consulting in
Purlear, N.C., told Fixed Ops Journal.
Now, dealerships are scrambling to cut costs
and have been forced to lay off workers in the
collision shop with no clear picture as to when
business will be back to normal. But experts
say some adjustments to body shop operations can help weather the downturn.

Keep quality up
Namely, they say it's important to retain
high quality standards, closely monitor productivity and preserve profitable direct-repair
relationships with insurance companies. Also,
dealers that supply body parts to other collision shops should check in with those customers to see whether they need better payment terms to keep their business.
Body shop business at Westside Lexus in
Houston remained strong through much of
April because the shop was working through
previously scheduled repairs, but Robert Par-

PAGE 18

JUNE 2020

The road less traveled

CCC Information Services said vehicle
miles traveled nationwide was down
19% in March and projects up to a
9.4% decrease in 2020. Here is CCC's
best- and worst-case scenarios for April
to August.
BEST CASE

April
May
June
July
August

-37%
-12%
-8.5%
-4.2%
-4.2%

WORST CASE

-41%
-27%
-12%
-8%
-4.2%

nell, Westside's parts and service director, estimated in late May that the 45,000-square-foot
shop was operating at half of normal capacity.
That forced him to make a "gut- wrenching" decision to lay off about 35 percent of his collision
center staff, which included 24 technicians plus
estimators and administrative staff. The decision was even tougher because many employees worked in the shop for 15 years or longer.
Parnell says Westside's service department
business rebounded to 70 to 75 percent of normal in May and could climb to 85 to 90 percent
in June. He's not confident that the collision center will bounce back as quickly or about when he
will be able to recall laid-off employees.
"We had hoped ... that we would bring all
those people back by June 30, but I don't think
that's going to happen," Parnell says. "We're in
uncharted waters, and it is so hard to predict
what will happen."
Edwards says dealers looking to trim costs in
the bump shop need to make sure quality
doesn't suffer.
"Don't cut muscle out of your organization,"
he says. "Don't reduce your performance

standards, and make sure that every dollar
you're spending back there is getting a return."
For example, one of Edwards' clients recently
noticed he was paying for three collision-repair
estimating systems but usually uses only one.
He suggests that managers keep close track of
productivity in the body shop to protect lucrative direct-repair relationships with insurance
companies, which will continue to demand
quick turnaround and high-quality repairs.
"It takes years to earn a good relationship
with an insurance company," he says. "One of
the things that can happen is, because it's
slow and I'm working with a reduced number
of technicians, my cycle time drops off, my
quality drops off."

Help others
Andy Church, COO of
Dealer Solutions Mergers
and Acquisitions of Toronto, says dealers that supply
body parts to other shops
should get on the phone
and find out how those Church: Reach
shops are doing financially out to customers.
and ask how they can help.
"Get close to your customers," he says. "You
can reach out, especially to your largest customers, to understand how their business is
doing. If you have the ability, maybe offer
them better terms and help them as well."
Church cautioned, though, not to be too
generous with payment terms or to offer deferrals to everyone. With smaller or infrequent
customers that could be struggling, he added,
it might be wise to require cash on delivery.
"Cash is king right now," he says. "You just have
to decide if you should move to possibly c.o.d.
terms so that you are well positioned and covered
so that you're not leaving yourself vulnerable." 

Fixed Ops Journal - June 2020

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