Fixed Ops Journal - October 2022 - F9

challenged dealership-owned body shops.
Collision repair complexity brought about
by the proliferation of electronics is growing.
Th e shortage of body shop technicians, estimators
and managers is increasing. Capital
investments in new equipment and extensive
training in the era of electric vehicles and advanced
driver-assist systems are rising. Th ese
and other factors have some dealers in the
collision repair business heading for the off -
ramp.
David Roberts, managing director at Focus
Advisors, a San Francisco merger and acquisition
fi rm specializing in the collision repair
business, predicts more dealers will follow
Baxter's path and partner with strong local
multiple-shop operators. He believes many of
those dealers can be more profi table by turning
over collision repair to companies whose
only business is fi xing wrecked vehicles.
Roberts' company is working with several
dealers who are selling their shops. He says
most dealers - unlike Baxter - have not retained
an interest in the shops they've sold.
In a white paper on the issues facing dealmore
than $3,700, according to CCC Intelligent
Solutions, a collision repair industry consulting
fi rm in Chicago. If a shop nets 15 percent,
that's $557 profi t per repair ticket - far
higher than what most repairs in the service
department generate.
Challenges cause numbers to drop
Despite the potential for making money, the
number of dealerships operating a body shop
continues to fall.
Last year, AutoNation, which ranks
No. 1 on the Automotive News list of the
top 150 dealership groups in the U.S.,
sold more than a dozen body shops to
Caliber Collision and now sells parts to
those shops as well as refers customers
there for accident repairs.
In 2022, according to the National
Automobile Dealers Association, 35.7
percent of franchised new-car dealers
are operating on-site body shops.
Th at's a drop from 39.2 percent just fi ve years
earlier.
It's easy to see why.
Worker shortages caused by the pandemic
and increasing insurance company bureaucracy
are exacerbating issues that have long
Roberts: Step
up or step back.
er-operated body shops, Roberts says dealers
who exit collision repair can see their fi xed
ops profi ts increase by:
 Converting body shop space to service
bays.
 Increasing parts sales to the multiple-shop
operators they partner with.
 Offl oading recruiting, training and certifying
body shop personnel to the partner.
 Charging rent to the partner if the body
shop remains housed in dealership facilities.
Roberts' message to dealers, especially
those with just one store, is to commit to operating
their collision repair businesses as effi -
ciently as the national chains and strong local
competitors or, like Baxter, fi nd a local partner
to operate the shop.
" Dealers have a choice, " Roberts
wrote. " Step up, invest and perform at
the level of competitive consolidators
and [multiple-shop operators], or
step back and realize improved operational
and fi nancial benefi ts by selling
their shops. "
Investments required
Susanna Gotsch, senior director, industry
analyst at CCC Intelligent
Solutions, a Chicago automotive repair
software fi rm, says the increasing complexity
of automobiles will require dealers
who want to remain in the collision repair
business to increase their investments in people,
equipment and facilities to repair
wrecked vehicles effi ciently and properly.
Gotsch: Dramatically more high-tech tools
and training for even the most basic vehicles
" About 85 percent of 2021 model year vehicles
are minimally equipped with front automatic
emergency braking, " Gotsch told Fixed
Ops Journal. " So, the tools and the training
needed to repair even the most basic vehicle
is dramatically more high-tech than what it
had been even just a few years ago.
" You are going to have vehicles that require
things like scanning and calibration, and
there are the checks of those repairs that require
signifi cant investments in real estate because
you have to have a lot of space around
the perimeter of the car. So, this is one of those
types of investments that requires an all-in. If
you are going to do it, you have to make the
proper investments, " she says.
Earlier this year at Bowman Chevrolet,
Rhonda Jensen, the store's general manager,
looked at options for the dealership's collision
repair business. " I could make a case for keeping
it and I could make a case for partnering
with somebody, " Jensen says.
In the end, it was the store's relationship
with its customers that convinced Bowman to
invest in its body shop.
" Because of our customers, wanting to keep
see REPAIR, Page 10
OCTOBER 2022 PAGE 9
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