Shop Life Columnists

Cropper: Consolidation as Good News?

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A sign in a window that says "Business For Sale."

Remember peak gas prices back in the late 2000s?

The price per gallon in the Anchorage area topped out at $4.75, and it’s tough for me to forget how significantly it affected my market, which is full of heavy trucks and SUVs.

There’re a lot of similarities between then and now. In 2008 there was the Great Recession, a momentous presidential election … Heading into the summer of 2021, I’m interested to see what’s going to happen with gas prices, among, of course, plenty of other things. 

I remain bullish and expect a big consumer boom—a lot of folks’ pockets are full, which I wrote about last month—though recent history has also taught us to expect the unexpected.

Paying attention to all that’s happened recently and trying to predict how it could affect my businesses has been interesting to say the least. The level of the federal government’s action to help with pandemic recovery is incredible, as is the fact we switched presidents—between two guys who are quite different, I think it’s fair to say—during a global emergency.

Something else that’s unexpected, and perhaps easily missed but plenty relevant in the collision repair industry, is the continuing rate of shop consolidation. Did it ever really slow?

Industry in Flux

Earlier this year it took nothing more than a glance at FenderBender’s daily news to see that collision repair shop  consolidation was plugging right along, economic uncertainty or not.

Perhaps some of the bigger consolidators have pumped the brakes—I’ve heard of big brand name shops that were hit so hard they had to negotiate rent—but the industry buzz has been that consolidation is still happening at a rapid pace, with medium-sized brands making the moves.

It’s made me wonder: Just how much did this pandemic force longtime single shop owners to decide whether they wanted to stay in the game, or sell?

The industry has changed in so many ways over the past decade, when it comes to OEMs, insurance, and customers, that the pandemic really was just icing on the cake in terms of making an already difficult business more difficult. It’s the Amazon effect.

And in certain ways, especially for operators really battered by both the pandemic and the seismic change, I don’t blame shop owners for taking it all in and saying, “Maybe this isn’t the business for me, anymore.”  

This isn’t just conjecture on my part. I’ve seen shop owners that I knew, in the past months, get out of the business and sell.

Peace of Mind

Of course, I think most in the collision repair industry—even those worn out by change, both caused by the pandemic and not—can feel pretty good about their line of work right now compared to those operating movie theaters or restaurants.   

Deemed essential businesses in the midst of the COVID-19 crisis, body shops, disrupted or not, in my opinion, were shown to have a bright future.

There’s something else to keep in mind, too, especially if the industry being in such flux has worn you out. How come these investors, bankers,etc., are so interested in buying what you built?

When I see the consolidators growing at the same time that I’m growing, it makes me think that I’m not that nuts to be sticking with this.

And let’s face it, they have a lot of smart people—maybe even smarter than the average independent shop owner who has made a life working off gut feelings—looking at their investments and what’s going to be the next big thing. 

When I see big investment into this industry, it gives me peace of mind that my hard work is really worth something, because so many others want their own crack at it, they want a piece of the pie.   

Whether or not the pace of consolidation stays steady probably depends on how the rest of the year goes. If 2021 continues to improve, it could be eye-opening for some single shop owners who realize it might be worth sticking with the business after all.

Nationally, we’re seeing good things, and I’m hoping that shop owners and employees have learned a thing or two to make their business a personal lives a little better, since we always need to be prepared for the challenge that comes next.


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