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It’s Survival of the Fittest in the Collision Industry

Steve Hall
Written By: Steve Hall
Posted on February 06, 2020

I’ve been in the automotive business a long time, and throughout my career it seems that we have weathered many changes. Back in 1986, I remember the shakeup that occurred when the high mounted brake light was introduced, and the industry was concerned about the reduction in rear end collisions. This was especially concerning since every accident that was avoided would reduce the repairable car count by two vehicles. As the push for more safety features grew, we saw traction control, anti-lock brakes, adaptive cruise control, and many more items that would strike fear in the business. On the repair side, tri-stage paints, pearls, color shifting paints, and bonded panels would all cause the industry to adapt.

Move forward another 30+ years and we are seeing shifts once again. Collision mitigation systems, aluminum repair, electric vehicles, auto pilot features, and many more mainstream automotive technologies continue to disrupt the collision repair industry. Whether they are reducing the amount of collisions, or complicating the repair process, these advances are making a dramatic impact in the collision repair business.

Real Change in the Industry

The result of this evolution is evident everywhere. The days of small, undercapitalized, independent shops have come to an end. Even well capitalized auto dealers that are unwilling to invest serious money into their collision centers will bleed profits from this department. Now is the era of venture capital backed Multiple Store Owners (MSO) operators, and multi-dealership dealer groups feeding their centralized collision facilities. Scale is the dominate theme. These operations are well capitalized, and run like real businesses, not just a forgotten department that’s stuck in the back of the facility.

This is not meant to scare anyone, but rather a call to action. It’s time to decide— do you want your collision center to survive or not? I’m a firm believer that the single store collision facility can not only survive but prosper when done correctly.

Where to Begin

Your first step is to decide if you want to be in the business or not. If that decision is no, then find a great shop to partner with and move on. Sell parts to them, negotiate a discounted rate for your vehicles, and work out a way to get sales leads from the total losses. If your decision is yes, then you must continue to invest in equipment and your people.

Equipment

The equipment investment is the easy part. It’s not cheap, but it’s easy. The bare minimums include:

  • A high-quality paint booth
  • The latest welding systems
  • Bench systems for proper unibody repair
  • And (for most brands) aluminum repair

These can cost you several hundred thousand dollars, so you must be committed. If you are not willing to do this, and you try to operate with outdated and substandard equipment, then you have really decided to get out of the collision business. You just haven’t admitted it to yourself.

People

Your investment into your people is much more complicated. You need smart, reliable, and well-trained people to profitably run this complicated business. Let’s start with the manager position. It’s the manager who sets the tone for the whole department.

What was your hiring process like for this key position? Did you choose the manager based on their ability to perform in a leadership role or were they just the easiest person to place into the position so you could go back to ignoring the department? Their background can vary widely. They may have come up through the technician or estimator ranks, they may have come from the service side of the business, or they might have come from outside of the dealership world (like from the insurance side of the business). Where they came from isn’t as important as who they are.

Finding the complete package in this person is almost impossible. So, what compromises did you accept for this position? Do they know the repair side, but struggle with understanding the financials? Do they know how to produce as an individual, but not how to lead a team? Do they focus on the daily grind and not know how to build the future? Do they know how to make the tough decisions and operate a profitable business?

Whatever your compromises were, it’s time to take the steps to correct those shortcomings. What are you doing to make this person the complete manager that you need and desire? Here are a few tips/suggestions on where you can start:

  • Spend time with this person. You both can learn from each other, and only after you know them, can you properly assess their strengths and weaknesses.
  • Share the departmental financial information. If you feel they can’t handle that, then you have the wrong person leading the department.
  • Learn to speak the same language. Owners and GMs talk gross, expenses, and net, whereas collision managers generally talk total sales (parts, labor, and materials). You must both speak the same language to really communicate. Teach them your way or learn their way.
  • Clearly define what you expect, discuss the path to get there, and track accountability along the way.
  • Hire for character and train for knowledge. It’s much harder to train someone to be a better person, but you can always train a quality person new skills.
  • Help them become a student of the industry. Intellectual curiosity and continuous learning is a must.
  • Don’t just tell them but show them you’re committed to helping them succeed.

It’s not too late to decide that you want to be a survivor. Better yet, make a commitment to prosper and thrive. Now is the time to stake your claim and ensure you are here to stay.

Get the Most Out of Your Collision Center

If you would like additional support for your collision center, our automotive experts can help your team in a multitude of ways. From collision specific training courses, to our peer-collaboration based collision 20 Groups, we can work with you to develop the solutions you need to thrive in the current automotive landscape.

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