Collision Has Recovered: It’s Time to Get Serious

I’m not going to lie: Collision has a bad rep ...

Just look at the statistics. Collision centers have declined 57% since the Eighties, and a whopping 27% of that drop has happened since 2007. Stricter environmental regulations have increased expenses, and direct repair programs have changed how clients are acquired. So, when business got tough during the 2009-2010 recession, many dealers saved costs by closing the doors on their collision center, and shifted focus to vehicles sales and service.

Collision centers are back ... for some

Happily, our industry has rebounded in recent years. So, I’m surprised that dealers are still unwilling to look at their collision center as a profit center. Meanwhile, our publicly-held competition is investing heavily in collision repair, and venture capitalists are actively involved in some of the largest multi-location collision companies, gobbling up locations and market share.

The surviving independents are making a killing. I think the independents’ success is part necessity. After all, if an independent collision shop can’t evolve fast enough, it will go out of business.

Dealerships, though, seem much more reluctant. This is partly because ownership often views the collision center as a loss-leader – to them, it’s a customer retention tool rather than a true profit center. Plus, I’ve seen many dealership collision centers continue to operate even when they are unprofitable. They struggle along while ownership focuses on vehicle sales, and hope the collision center doesn’t lose too much money! That’s not a philosophy that evokes much confidence.

Preparing for collision competition

So how do you – the individual dealer or small dealer group – compete against the mega-groups and the well-established independents? Like so many other dealership issues, I think the solution lies in three things: training, knowledge, and support.

Technical excellence ≠ management skill

A common theme I encounter while working with collision managers is that many were promoted with very little management experience. They start in the industry as a helper, moving their way up the ranks to become a body tech or painter, and then an estimator. Once the prior manager quits or is released, they find themselves as the manager.

Now that they’re expected to “make the department perform,” they have no clue how to make that happen. Most are remarkable technicians or estimators – that’s why they were promoted – but few are prepared for their new responsibilities, such as managing a team, forecasting, and expense control. These great workers are left hanging. They don’t know how the numbers work, how to get people to produce, or how to grow a business.

Sink or swim leads to drowning

All this adds up to a very frustrating experience. Lacking experience and knowledge, a motivated manager will work harder – very hard – but not necessarily smarter. They race faster and faster, trying to perform, and then – the next thing you know – that star employee is totally burned out.

And what does burn-out lead to? Quitting. I’m floored at the number of times dealers end up losing a quality long-term employee, often without gaining a thing along the way!

The craziest part is that much of this can be avoided! The sink or swim mentality accomplishes nothing. Stop putting people into positions with no training or support. Instead, equip your manager with the training and knowledge they need to lead a team and grow the business. Teach them how to obtain profitability and unlock the potential of their department.

Invest in people to increase ROI

With more vehicles on the road than ever before – and fewer shops to repair them – dealers now have an incredible opportunity. It’s time to get serious about your collision center and make the collision department become what it should be … a profit center and valued part of your dealership.

Ready to take the next step for your collision center? Join NCM Institute’s experts in our Collision Center Management course. It’s the most effective way to turn your best tech or estimator into your best manager.