Fast-changing automotive technology means that expensive investments in tools and equipment for your collision centre are essential, but the key to profit lies in basic efficiencies in operations
One of the most complicated and challenging segments of the automotive industry is collision repair, and it’s a big one, valued at about $7.6-billion annually in Canada.
According to Statistics Canada, in 2014, there were a total of 4,869 outlets for the Automotive Body, Paint and Interior Repair and Maintenance industry in Canada, and it employed almost 22,000 people.
Desrosiers Automotive Consultants Inc. reported that sales per store reached $1.57-million in 2014, with a national average for the total annual compensation per job of $40,335.
But collision repair centres are facing ongoing increasing costs. The cost of each collision repair job is rising because of the plethora of new technology and materials in the latest vehicles, with multiple computers and sensors and safety devices, plus the use of new, hard-to-work-with materials such as aluminum and carbon fibre.
That means collision repair providers need to continue to invest in new equipment to properly repair newer vehicles. So how can dealerships that have their own collision repair facilities ensure the profitability of these operations?
“A facility today needs to be state-of-the-art as cars add more technology,” said Richard Marsh, collision manager of Brimell Toyota in Scarborough, Ont. Equipment like 3D measuring systems, which take the guesswork out of measurement, are now being required by manufacturers so a dealership facility can be certified, he said.
Brimell Toyota is a Toyota Certified Collision Centre. As well, it belongs to the Collision Solutions Network (CSN), a national network of collision repair shops whose purpose is to deliver superior collision repair services by assisting collision repair facilities to continuously improve their operations through performance assessments, ongoing training and marketing initiatives.
“The CSN brand is powerful in the insurance community,” said Marsh. “It’s an insurance-friendly network.”
All CSN collision repair centres offer insurance claims assistance, a national lifetime warranty, modern facilities, free computerized estimates and certified technicians. “We have seen our volume increase through our partnership with CSN,” said Marsh.
“We need to keep up with the repair tools to keep up with the latest car technology,” Marsh added, who has been in the body shop business for the past 38 years. “The investment for a body shop today is in the millions of dollars.”
As a result, we’re going to see the number of shops dwindle, he said.
There were about 8,000 collision repair centres in 2006 and that dropped to about half by 2014. Marsh feels collision centres affiliated with dealerships will benefit from this change. “A lot of the smaller shops don’t have the appetite or the capital for the investment that is needed.”
For example, the latest measuring and welding equipment can cost up to $100,000, Marsh said.
Investing in the latest technology and equipment is critical to running a successful collision shop, said J.R. Martino, manager of Budds’ Collision Services Ltd. in Oakville, Ont.
Budds’ shop, known to be one of the most advanced collision facilities in existence, is supported by the Budds’ Group of family-owned dealerships, encompassing nine stores and 11 brands. Martino said about 50 per cent of the shop’s business is with BMWs.
“OEMs are becoming more prevalent in the collision repair business with certified collision repair programs. They want first contact with the customer, instead of the insurance companies,” Martino said. “It’s all about ownership of the customer.”
Plus, he added, the OEM has the customer’s interest at heart, since it built the car, unlike the insurance company.
“We’ve been in business 30 years,” said Martino. “We’ve been slowly chipping away at these investments year after year.”
That means investments in equipment, tools and training are made every year, on an ongoing basis, and this has been supported by the dealer principal.
As aluminum body parts became more common, Budds’ was the first body shop in Canada to install a dedicated aluminum repair facility. “We probably have a million dollars of equipment installed in that room,” said Martino.
The next transition will be for carbon fibre body components, like those in the BMW i8, i3 and the new 750. Already, Budds’ said it’s one of only two certified carbon fibre repairers in Canada.
“Also, we’re the first body shop in Canada to be certified with Cadillac for the new CT6, which meant we had to buy a $15,000 riveting gun and a $10,000 wet vac to handle aluminum work,” said Martino. The chassis of this all-new sedan uses 11 different materials and a mix of high-strength steel and aluminum.
“You need to run your business efficiently and have what you need to fix these cars properly,” Martino added.
Marsh agreed. “One of the keys for success in the collision industry is not just all the equipment, which you need, but — to drive profit to the bottom line — you also need lean processes and to be super-efficient.”
