Thursday, 22 March 2012 08:56

‘Survival of the Fittest’ Also Applies to Collision Repairers

Written by Insurance Insider

The collision repair industry has too many body shops. I’m not sure anyone would seriously dispute that. The sooner we can rid ourselves of 15,000 body shops, the better all of us will be. Yes, it’s true, all of us will be far better off. This includes insurance companies, vendors, body shops themselves and consumers.

How can we make this happen at a faster pace? That may be beyond the limited scope of this mastermind, but it wouldn’t be an Insider article without a recommendation or two, so buckle up and get ready.

The car manufacturers should further develop their certification programs and join together as one voice to educate consumers at the point of purchase. “If your car is in an accident, you must take it to an OEM Certified Repair Facility to guarantee a proper repair. Taking your vehicle to a body shop outside the Certified program could result in an improper repair and compromise your safety.”

Sadly, that statement isn’t some trumped-up idea to scare people. It’s a fact and the motoring public should know that while there are more than 35,000 body shops in the country, too small a percentage are prepared to repair aluminum, identify substrates, weld “exotic” metals and use proper-sectioning procedures.

The complexities of today’s vehicles provide a significant challenge to repairers. And five years from now, the 2012 vehicles will look like a Model A does today.

Unfortunately, there aren’t a lot of people who fully understand the implications. Most industry pundits will probably tell you that I’m solely referring to the Mom-and-Pop body shops as being ill-equipped or lacking in necessary repair information. Au contraire, mon frère…I’m referring to shops that might be just like yours, maybe even most shops. I’m not trying to lose readers, just the shops that are clinging to their outdated business models and procedures like a mother bear to her cub.

And since we aren’t likely to see car manufacturers creating sophisticated certification programs that virtually eliminate the bottom-feeders, there is an alternative. One that is probably a little more humane. For the Rhodes Scholars and my fellow Ivy league compadres, I offer you: The Darwin Theory. Yes, a concept so primitive that a caveman could follow along. Flo? Maybe not.

It’s a simple but effective concept. Survival of the fittest is surely the answer to the ills of this over-populated industry. If you are from an area where deer are prevalent, you may be able to better relate to my body shop reduction initiative. In many states, deer have become a problem. There are too many deer and not enough predators to keep the population down. The answer to that problem is open season.

How does this relate to body shops? I’m not suggesting open season where we shoot the weak and vulnerable. There’s no need to suggest that when we have a natural predator. Consolidators are the ying to the yang, the french to the fry, and the predator on the bottom-feeding body shops.

Thankfully, the mega-mighty shops are slowly and steadily eliminating competition from the marketplace. It’s a slow, arduous process but one that will ultimately yield the positive result we all seek (even though you may not know you want it), which is fewer shops. Consolidators receive a substantial number of calls every month from shops looking to sell their businesses. It has become a buyer’s market, and those with capital are licking their chops but patiently waiting. Why buy today when the price tomorrow is going to be a little cheaper? The Mom-and-Pop shops are dying a slow death, and the longer they wait to sell, the less they are going to get.

Most insurance companies are happy to see the attrition of shops, although the rate of decline is less than desirable.

This isn’t about eliminating the Mom-and-Pop businesses that we were once the backbone of America and still play a big role. It is about eliminating the undersized deer, the one with a limp and the one that can’t see very well. By eliminating the weak, the larger, more astute operators can continue to grow at a rapid rate. That will raise the overall quality and efficiency of shops in this industry. The shops that can better serve our customer. Ooops, I mean our mutual customer.

The Insider is a corporate-level executive with a Top 10 auto insurer in the U.S.. Got a comment or question you’d like to see him address in a future column? Email him at Auto.Insurance.Insider@gmail.com.