I had an opportunity recently to spend time catching up with some of my long-time colleagues from the industry. One posed a question to me that I’ve been asked a number of times over the past few years: Do you have any regrets about selling your collision repair business? (My multi-shop business was acquired by a large consolidator in 2015.)
I responded as I always have, that I have zero regrets about the sale (although maybe, with a bit more reflection, that’s just 99 percent the complete truth). I explained that one reason for that is this: If I were in the collision repair business now, I’d be spending a whole lot of money.
Why? For one reason, I’d be gearing up my shops for the coming wave of electric vehicles (EVs). Now some people think the “EV revolution” could be like the “aluminum revolution,” which has never upended the industry to the degree that some people, five or seven years ago, thought it might.
But from my perspective, EVs are going to be more like the “unibody revolution.” For those of you who weren’t working in the industry in the 1970s and 1980s, unibodies hit body shops back then like a ton of bricks. And just as unibody vehicles quickly became a large majority of the vehicles we were working on, there’s every indication EVs will become the mainstream powertrain of a large majority of new vehicles in just a few years.
Like the unibody revolution, EVs will require a significant capital investment for collision repairers in terms of equipment, training and, in some cases, facility upgrades. That might have some of you thinking: Do I want to make that investment? Revolutionary periods tend to prompt some business owners to consider their future perhaps a little sooner than they might have otherwise. So ask yourself: Do I want to gear up for the coming change, or have I reached the point where I’m ready to exit the business?
As someone who now helps buyers and sellers of shops connect, my advice is this: If you’re not interested in EVs and what else is coming down the road, you’d probably do best to step up your exit plan now. The value of a business that hasn’t prepared for the EV revolution is only going to decline in the next few years as those vehicles flood the market.
That’s because buyers are looking at a number of elements as they consider acquisitions. They will examine your business’ market, performance, relationships, infrastructure, versatility, culture, employees, equipment, design and layout. If you haven’t invested in the skills and equipment needed for EVs, for example, your “versatility” takes a hit. A buyer will have to make that investment – and thus may place a lower value on your business.
Many of you probably aren’t thinking of selling right away, and instead want to increase the value of your business over the coming years. You understand that at whatever point a buyer for your business comes along, they’ll pay a premium for a business geared up for EVs. For those of you in that camp, my advice is to get started. Look at the training available, and make sure your team understands the safety challenges involved. Do your research into the equipment. And start making the changes or upgrades to your electrical service or facility.
Now this doesn’t mean you need to go all-in on EVs immediately. The pioneers, I always say, are the ones who tend to get the bullets and arrows. Just as with aluminum, you don’t want to overbuild for EV repair too quickly. But I firmly believe that waiting or ignoring the investment in developing repair capacity for electrical vehicles would be short-sighted.
It comes down to: Should I stay or should I go?
