Wednesday, 14 September 2016 13:30

MSO Symposium Looks at International Business Models, Slow-Down in Consolidation


Consolidation of the industry by the so-called “Big 4” multi-shop operators (MSOs) slowed significantly in the first seven months of this year, but that isn’t a sign that such consolidation is ending, a speaker at this year’s NACE predicted.

Industry consultant Vince Romans of The Romans Group kicked off the half-day “MSO Symposium” during NACE with a statistic-laden summary of the state of consolidation in the collision repair industry.

Romans said MSOs and the industry as a whole enjoyed a very good 2015 in terms of the growth of the overall market. He estimated 14.5 million accidents resulted in 11.3 million repairable vehicles in 2015, with total repairer revenue (insurer- and customer-pay combined) topping $34.1 billion. That’s a nearly 5 percent jump over 2014, “and 2016 could also remain the same,” he said.

To gauge the rate of MSO growth, Romans looked at the total sales of the shops that the “Big 4” MSOs – ABRA, Caliber, Service King and Boyd Group / Gerber – acquired in each of the last four years. Those acquisitions transferred $300 million in sales to the Big 4 in 2012, $265 million in 2013, and a whopping $964 million in 2014. But that dropped to $535 million in 2015, and totaled only $188 million in the first seven months of this year. While the Big 4 combined added 178 locations last year, they added just 61 this year (as of the end of July). ABRA in particular, he said, has “taken a breather,” not making any multiple location acquisitions in the first half of 2016, after being very aggressive in the two prior years.

Romans said he didn’t know what that decline means, other than things have clearly slowed down.

In terms of combined total revenues, the Big 4 have grown from $500,000 million in 2006 to $3.7 billion last year. Multi-location franchise networks (such as CARSTAR and Fix Auto USA) have seen much more modest sales growth in that time, going from $1.1 billion in 2006 to $1.3 billion last year. When other MSOs with annual sales of $10 million or more are also added into the mix, the MSO market as a whole has almost tripled its sales from $3.8 billion in 2006 to $10.2 billion last year. That means that large MSOs captured about 30 percent of the industry’s total revenue last year.

That said, Romans noted that the Big 4’s 1,400 shop locations is still a small percentage of the total number of shops, which he pegged at nearly 33,000.

“There’s still a lot of independents out there,” he said. “In my opinion, there’s still a lot of opportunity for the shops that not part of this consolidation group, or even part of a multi-location operator group.”

Previous Page Continue reading »