Mid-Sized MSOs Talk About Growth Strategies, Views of OEM Certifications

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Mid-sized MSOs talked about where they are---and where they foresee going---during a recent panel discussion.

Mid-sized multi-shop operators (MSOs) recently offered their views on automaker certifications, ADAS challenges, growth perspectives and other topics.

Steve Kelly, chief operations manager for Mike Rose’s Auto Body in the San Francisco Bay Area, said his company doesn’t have many OEM certifications, but has considered its Ford aluminum certification a good move, given the company wasn’t equipped and trained for aluminum repair prior to the introduction of the aluminum F-150.

“Our 17 shops are within a 40-mile radius, so we picked a couple locations that had excess capacity, and put those [Ford] certifications in there,” Kelly said during the MSO Symposium, held virtually in November. “So I would say our return on investment would be the ability to repair the Ford F-series.”

Stephen Kendrick Jr., CEO of Kendrick Paint and Body, which has seven shops in Georgia and South Carolina, said he hasn’t seen much return on the company’s investment in OEM shop certifications, though he acknowledged his company needs to do a better job marketing its certifications to consumers and insurers.

“I think one of the good things has been the education part of it, the classes on how to properly fix these vehicles,” Kendrick added. “That’s been very beneficial to everyone in our shop, even though it’s not a monetary [return]. It’s been good to have that education, that access to repair information.”

Matt Ebert, CEO of Crash Champions, which has 50 locations across six states, agreed some of any return he has seen is more intangible.

“There’s things that we can’t measure, like the level of confidence that it gives our customers, and the same with insurers, as well as even our technicians fixing the cars,” Ebert said. “I think as far as counting exact referrals from being OEM certified, I don’t think that’s there. But it’s starting to be important to insurers when they refer work, if you’re certified or not.

"So there’s some sort of return. I just don’t how measurable it is.”

Darrell Amberson said the business model at LaMettry’s Collision, which has 10 collision shops and two mechanical shops in the Minneapolis-St. Paul market, includes many dealer relationships, so OEM certifications have been a priority even if a return has been limited.

“We look at it as a long-term investment. It’s part of our character,” Amberson said. “Some of the high-end [automaker] programs, in particular, take a long time to get a return on investment, if you can get it at all, because some of them are quite expensive.

"But we do measure how many customers say they came to us because of our certification, and that number has grown significantly in recent years. So we know it’s going in the right direction.”

The panelists were asked if their company uses factory or aftermarket scan tools, or remote scanning services. Most panelists said it was a combination, but the MSOs are taking various approaches to what they do in-house versus what they sublet to others.

“We see this as a growing part of our business, and we’ve really embraced this high-tech portion of the industry, ADAS work,” Amberson said. “We’ve tried to develop our own internal expertise in it. So we use a combination of aftermarket and factory scan tools. More and more factory scan tools as time goes on.

"Frankly, we believe it’s less a question of what type of scan tool you use. We believe in high quality ones, whether factory or aftermarket," Amberson continued. "But the more important question is how competent the individual who is using it is. That’s where we put our emphasis.

"Let’s just say you use an aftermarket scan tool, a high quality one. Once in a while you run into a situation where that scan tool may not get into a given module," he said. "We want to have the tech be so competent that they know they have to get a factory scan tool, or another aftermarket one, that will get into that module.”

Ebert said Crash Champions, too, has both factory and aftermarket scan tools, but also sublets some of the work.

“We actually have another company that is ours that does the scanning and calibrations,” he said. “I saw early on that this was going to become a bigger and bigger part of the repair process. So the way we have it set up, the guys in the shop are able to do most of the pre- and post-scans. With the more difficult ones, we have mobile guys in a market with all the factory scanners who are able to do those.”

He agreed with Amberson’s assessment of the need for expertise no matter what scan tool is used.

“As was said, the technician using it makes a big difference,” Ebert said. “When I first went out and spent a bunch of money on tools, I learned real quickly that putting a tool in the hands of somebody who doesn’t know how to use it doesn’t do you much good.”

Crash Champions added 10 locations in 2020, and Ebert thinks the pandemic and economic downturn have played some role in the company’s growth.

“I think there [are shop owners who] are having conversations with us about maybe selling that wouldn’t have talked a year ago, just because of the uncertainty,” Ebert said. “”Maybe before they wanted a few more years before they considered it. Now they might have that conversation.

"I don’t think they’re selling any cheaper than they would have before COVID, because why would they? They could just wait it out. But I think people are considering it now that maybe wouldn’t have before.”

The other panelists said their organizations are currently less focused on acquisitions.

“I frankly see it as a pretty good place in the market to be,” Amberson said of his company’s footprint in the Twin Cities market. “I would see our company continuing to grow but at a more modest pace, growing more within our region, a shop or two every year, something along those lines.”

Kendrick, too, said he is more focused on growth within the company.

“I think COVID has brought some opportunities; I was able to bring some very talented people on board that were laid off to help us grow as a better organization,” Kendrick said.

Kelly said his company “looks for opportunities” to add shops but is being “real selective” currently.

“I want to grow [revenue] back to where we were pre-COVID first,” Kelly said.

John Yoswick

John Yoswick is a freelance writer and Autobody News columnist who has been covering the collision industry since 1988, and the editor of the CRASH Network... Read More

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