The leaders of CARSTAR Collision Centers said the collision industry in 2010 and beyond is one that has tremendous potential for collision shops that are prepared to withstand one more year of economic challenges.
"The collision industry has seen radical change in the past two years, as what used to be a modestly dwindling supply of business has turned down sharply, consumers are more frugal with their car repair dollars and insurance companies are more demanding of the performance of their collision repair partners," says Dick Cross, chairman and CEO of CARSTAR Collision Centers, the nation's largest chain of collision centers.
When asked to forecast what the year ahead holds for the collision industry, CEO Cross and Dan Bailey, president and COO, offered the following insights:
• What is your outlook for consumers and their cars in 2010?
Cross says that continued consumer cautions about big ticket spending will be a challenge. He expects no up tick in new car sales, which is good news for mechanical shops but not such good news for body shops since the higher incidence of repairs is on new vehicles. But, the continued diversions of collision repair settlement dollars from insurance claims on minor accidents toward other, more pressing needs for families will remain an issue.
Bailey seconds that trend, offering that higher consumer deductibles also will be a factor in the reduction of dollars flowing into the collision repair process. He also notes that the older average age of the vehicles on the road will cause additional business declines for collision repair providers, as vehicle owners choose not to have old cars repaired.
• What do you foresee for the collision industry in 2010?
Bailey doesn't see a relief from the economy in 2010, and expects to see more stores closing. But for stores with the vision, resources and support to look beyond the current times, the economy offers many opportunities to become better operations, and Bailey says we'll see such stores trying to become green and doing everything else they can to improve revenues, improve productivity and stay in business.
Cross warns that there will be no recovery of revenues in sight, and is concerned about the acceleration of store failures as owners with significant debt obligations, who are holding their breath for the recession to ease, run out of time. He says there will be continued pressures from insurers for superior productivity and shop performance, while consumers demand a greater emphasis on customer satisfaction. But the bright side for well-managed and forward- thinking shops is the resulting acceleration of flow of revenues from less well-managed shops toward more progressively managed shops.
• How would you describe consumers' perspective about their cars today and how has that changed in the last year?
Cross sees a fundamental shift in consumers and their cars, noting that consumers' need to drive new cars, and to keep their existing cars looking great, has taken a back seat to other pressing personal and family needs. He finds a greater emphasis on functionality of transportation, versus psychic benefits of car ownership. And for the younger generation, he sees a group that has less of themselves wrapped up in what they drive.
Bailey says that looks have taken a backseat to functionality for consumers on tight budgets. He believes people are thinking about what they can do to get three more years out of their car with spending the least amount of money possible. Mechanical first and looks second is the priority, he says.
• What is the number on thing you recommend consumers do to their cars in 2010?
Bailey recommends maintenance, maintenance, maintenance, both under the hood and on the exterior. He recommends that consumers wash vehicles regularly, remove the scratches and dings to prevent further body damage over the long run and repair any chips in the windshield to keep the cracks from spreading.
Cross also preaches the message of preservation --- both mechanical and body. He says that most new cars sold over the past five years have the potential to run 200,000 miles and more if properly cared for. Particularly in high salt areas, body corrosion from minor nicks and scrapes kills many vehicles well before the end of their useful service lives. Annual check-ups and preventative maintenance at reputable body shops can add years, and in many instances a decade, to vehicle lives.
• What are the current issues in car construction and car repair that consumers should know about?
According to Cross, new materials and assembly methods have made many of the routine repair methods in body shops obsolete. Only the leading edge shops have access to the information and technologies required to keep pace with the rate of change in car construction and, therefore, to ensure safe and non-value-degrading repairs on many vehicles. He guides consumers to look for industry and maker certifications, along with national warranties, in selecting both mechanical, and particularly, body repairers.
Bailey warns consumers to know who is making their repairs. As a 30-year-veteran of the business, he says many of the metals in vehicles today can only be repaired or replaced by a trained professional who has access to the correct equipment in the shop. He notes there are fewer body shops everyday that are trained and equipped to repair the vehicle sold today.
Both Cross and Bailey are working closely with the CARSTAR stores around the country to continue technology training programs, improve customer service and help guide consumers through the repair process. For collision shop owners, CARSTAR Collision Centers offers a unique resource of insurance relationships, business management programs, margin improvement initiatives and movement toward green collision repair.
CARSTAR Collision Center's leadership team remains positive on the collision industry, and believes that the store owners and operators will emerge from today's economic challenges stronger and as better business people than before.
For more information, visit www.carstar.com.
