Fix Auto CEO: ABRA-Caliber Merger Should 'Wake Up' Independents
Dec. 6, 2018—Erick Bickett was one of the founders of Caliber Collision, back in 1991.
And, in that bygone era, it would’ve been difficult envisioning Caliber growing to the extent it has in 2018. With Wednesday’s official announcement of Caliber and ABRA entering a definitive merger agreement, the combined company will have roughly 1,000 locations.
The merger certainly caught the attention of Bickett, now the CEO of Fix Auto.
“We’ve heard rumors about this type of thing happening several times over the past 3 or 4 years,” Bickett said in a phone interview. “I just think it’s going to sharpen everybody’s game [in the collision repair industry]. I think it’ll probably create some frenzy, too, for the other two [consolidators] that are left on their own: Service King and Gerber.”
Bickett spoke with FenderBender about what ABRA and Caliber’s merger might mean to the collision repair industry as a whole. Some of the highlights of that conversation include the following:
What were some of your initial reactions to this ABRA-Caliber merger?
With this merger their share is probably pushing 10 percent. And, if you were to look in the primary markets they’re in, I would suppose it’s much higher than that. In a metro market it might be pushing 20 percent share. .. They are now longterm invested, and it’s a blue-chip business.
What might this merger mean for the rest of the collision repair industry?
What it means to the industry is they bring tremendous resources. Think about it this way: take some of our biggest problems [as an industry] and that’s training and bringing in new people to the business. I mean, the average shop spends very little on that ― the average, single shop maybe spends 1 percent of revenue on this one project; if you do that 1 percent times 1,000 shops and all of a sudden you have a nice budget. … That’s just one facet of it. If you take that p a couple notches to the scale they’re able to create their buying power, and all that kind of stuff, it just puts them at that much more of a competitive advantage.
What are some of the biggest benefits of ABRA and Caliber’s new, strengthened position?
As they improve their scale, their buying power, and solidify their position financially like they’ve done, they actually can offer better benefits and be more attractive for employees. However, I will say this: The entrepreneur body shop operator is much better at keeping employees than [consolidators] are because they’re so large they just have this corporate feel in their culture.
What does this merger mean for the industry in the foreseeable future?
The merger might spur some more competition for the acquisitions. … So the competition for grabbing share with somebody that large, that’s got an appetite for pretty rapid growth could kick up competition a little bit. There’s just a lot of implications. Generally, we’re excited. I operate collision shops and I’m a franchisor, and one of our biggest challenges is getting the independent to pay attention to what’s going on. … And certainly, independent shops, big challenges for them in the future to compete, because they just can’t assemble to scale. And we’re hopeful that this move might wake some of them up.