CARSTAR Pres.: ABRA-Caliber Merger Illustrates 'Power of Networks'
Dec. 10, 2018—As the president of CARSTAR North America, Michael Macaluso said he stays keenly aware of what’s happening across the collision repair industry.
That’s not to say the news on Dec. 5 didn’t raise his eyebrows, however.
When Caliber and ABRA announced a definitive merger agreement—thus creating a new company with roughly 1,000 locations—it altered an entire industry’s landscape.
“Something like this is big news that does require a lot of focus and attention,” said Macaluso, who oversees a company with 325 U.S. locations in its own right. “... It doesn’t change our plans. It could potentially accelerate those plans. We would love to continue to build our scale quicker.
“These types of changes within the competitive landscape may force individuals to think about their future in a different way.”
Yes, when Caliber and ABRA made their sizeable transaction it applied pressure to the rest of the industry. Still, Macaluso said the merger was simply the continued evolution of the consolidation seen throughout the industry recently.
“The continued pace of consolidation, predominantly through acquisitions,” Macaluso noted, “seems to be continuing at a strong and steady pace.
“It was likely, as in other industries, that one of the larger players would connect through and acquire one of the other larger players. So, I think it was [more] a matter of when than if.”
One thing’s for certain: Following the merger, the new Caliber-ABRA company has definite strength in numbers. Once the merger is finalized (likely in early 2019), the new collision repair supergiant will have locations spread throughout 37 states.
The merger, Macaluso said, “really continues to demonstrate the power of networks with scale; now, with 1,000 locations, they certainly have tremendous scale.
“As the industry continues to evolve, and the challenges persist, then the opportunities continue to be out there. We’re firm believers that those with scale, and the ability to quickly adapt, will thrive in the future and provide the best service, the best performance, and repair the vehicles with the right quality and the correct standards.”
The CARSTAR president feels that consolidators find mergers and acquisitions appealing because of the benefits that those transactions offer in the way of streamlined training practices, and group purchasing power, for starters. Plus, Macaluso noted, insurance partners tend to appreciate it when collision-repair companies have consistency throughout all locations in the form of KPI tracking, for example.
“I think it forces us, as competitors, to grow as well. It forces us to continue to re-focus on our key initiatives,” Macaluso added, in reference to Caliber and ABRA’s merger.
Macaluso says CARSTAR, for example, would like to grow to 1,000 locations by 2021 (of note: the company also currently has 300 Canadian locations under its belt).
With that said, even with consolidation running rampant among the collision repair industry’s largest companies, Macaluso still feels there’s a place for independent shops.
“I think for an independent shop—a strong, independent shop—there will always be a need,” the president of CARSTAR said. “I don’t ever foresee a future where there are no independents. But I do foresee a future where there’s a much greater footprint of the franchise groups across the U.S.—CARSTAR included.”