Going Big With a Dealership Body Shop
As president of two luxury car dealerships in Annapolis, Md., George Criswell had countless reasons to interact with the collision repair shops in his area, both personally and professionally. What he saw was slow cycle times and lackluster customer service, prompting Criswell in 2008 to add a large-scale collision repair facility to his growing automotive empire.
With captive business from his nearby Audi and Acura dealerships, Criswell Collision Center is a 44,000-square-foot facility with an average monthly car count of 225 and $4.2 million in revenue for 2013.
In learning a new industry segment, Criswell found that profit margins in the collision repair business fell short of his initial expectations. Even so, the business grew quickly and became a linchpin of his automotive network.
I had trouble getting my own cars fixed in a timely manner. I’d refer people to other shops, and it often took too long to get their cars fixed. They complained to me, and we weren’t even the company fixing the car. That’s when I decided there was opportunity here to get cycle times down and add more professionalism to the industry.
We have people dedicated to taking care of our own internal accounts at the shop, so there’s direct communication with our Acura and Audi stores. It works great for our overall business, because we always have client cars that need to be fixed, used cars that need to be fixed, 55 loaner cars that frequently get damaged, and, of course, all of the parts. We sell an awful lot of Audi parts, because we’re an Audi-certified collision center, among many other OEM certifications.
The collision industry is an extremely difficult animal. Profit margins are thinner than I thought they would be. There are many opposing forces, and it’s hard to figure out who my client is. At first, I thought my client was the person that owned the car, but I’ve found out that I think my client is the insurance company of the person that owns the car and, sometimes, it’s actually the insurance company of the other person who hit that person. It’s a challenge, because they all have different expectations.
To turn a profit, you have to hire labor that is less expensive—A techs, B techs, C techs and D techs, all at different pay ranges. You have to have a variety of labor and talents that go along with that, and then allocate the appropriate tech to the appropriate job.
The insurance companies don’t recognize that. They look at all these cars the same, so they won’t pay us more in labor on an Audi A8 than a Toyota Corolla. I have to use an A tech on the A8, and I could probably put a C tech on the Corolla.
The hourly wages that insurance companies pay us have to increase, period. They don’t have to increase much, but a few notches. If it does, a lot of these blemishes and industry skirmishes will go away.
Think about the business model: Everybody wants cheap car insurance, but everybody wants the best coverage; everybody wants a rental car, but nobody wants to pay for the rental coverage in their policies; everybody wants OEM parts, but the insurance companies put severe pressure on us to use aftermarket parts that don’t always fit the car properly. There are these constant opposing forces at work on each job all of the time.
We’ve started a new plan to home grow new body techs. Our body techs used to pay for their own helpers, but we’ve started taking guys from other parts of our business that, frankly, are smarter than porters who just haven’t been exposed to anything more.
These new D techs are people we want to bring up into the ranks of the collision industry. I have about 115 employees company wide, so we take employees that we feel comfortable with and put them with a body tech, and we pay them out of our pocket to be assistants.
This new process is great. When you go to a porter and tell them we’re thinking about promoting them into a different position, their faces light up.
Some of our techs reacted negatively to this and some reacted very positively. The ones that like the idea are the ones who get these free helpers. We’re not going to force it upon them. I try to create win-win situations for everybody.
At first it slows the body techs down, because they have to show the helpers how to do repairs. It takes time—maybe 30 or 60 days worth of slowness to get the benefit of doing things quicker.
Our plan is to do it in six-month increments, then evaluate how the helper is doing and see if we can justify hiring them. Everybody learns at different speeds.
In our previous system, body techs pay their own helpers, but it is not outside of our payroll. The helpers’ pay came out of the body tech’s paycheck, and we apply those monies to the helper pay, so payroll taxes and the like are all within the laws of our county and state.
I have an excellent body shop manager. He is in charge of the body shop, so I’m not deciding which tech gets which job or anything like that. I look at the finances of the business, overall processes, short- and long-term goals of the shop, and help guide my managers toward those goals.
We have to decide whether to make big equipment investments to work on these sophisticated cars. He comes to me and says, “Do you want to spend this money or not?” We work together to decide how we want to invest in our business and where we want to go.
It takes a long time to justify big investments, because of the way we’re paid by our clients and the margins. It’s a long-term play. I’m not going to invest a million dollars in equipment and just see what happens.
I try to determine what our market is looking for and where there is a need. If there is a need for a specific service, we look into the future a bit, make an educated guess and make the investment.
For long-term forecasting, we look at the growth of our area with regards to population and income, and also our own Acura and Audi sales along with our pre-owned vehicles sales. We look at automobile sales in general as well. We then compare that to our body shop growth trend over the last few years, which insurance companies we are picking up with regards to DRP accounts and compare that to some insurance companies where we are seeing less growth.
I’m going to be in this industry for probably 25–30 more years, so I have a very long-term outlook. Because of that, my objectives are to take care of the clients properly and do the best we can with the high quality of our jobs.
I used to be the hands-on, get-dirty-in-every-detail type of person running my businesses. I had to let go and learn to empower my nine managers to handle their staffs and client base the way I would want them handled. It takes time, but not as long as you think. If you hire the right manager and allow them to make decisions that are logical and right for the client and company, it works great.
Our whole thing is, do the right thing for the client and do what makes sense for the company long-term. When employees are empowered to do the right thing, they’ll stay for a long time and work for you for years, because they feel good about making good decisions. It’s when they’re forced to make bad decisions that stress is added to the system.
The training we get from both Acura and Audi has been huge, and helped us set our business up this way. You can’t learn this in college. This training, and exposure to these people, has been a huge help in the collision industry, because a lot of them also have body shops and share the same challenges.