Editor's Note: This is the 12th and final installment of a FenderBender-exclusive series, excerpted from Ledoux’s book, YesterWreck: The History of the Collision Repair Industry in America, available here. Find the rest of the excerpted series here. 

Overview 

As the millennium turned over, many people thought all computers — personal and otherwise — designed and built in the 20th century would crash and burn at 12:01 a.m. at the turn of the century. It didn’t happen. But the period was not without calamities. On September 11, 2001, the world watched as aircraft flown by terrorists took down the World Trade Center, punch a hole in the Pentagon, and dig a furrow in a field in Pennsylvania.  

And society was changing. Over a billion songs were downloaded via the internet, putting brick-and-mortar music store Tower Records out of business. Montgomery Ward went out of business after 128 years of retailing, a victim of larger retailers like Walmart and the convenience of shopping on the internet. The global economy took a beating in December 2007. From early 2008 until around 2014, the country continued a slow, painful, and sometimes erratic climb out of the worst economic downturn since the Great Depression of the 1930s. The economic downturn would plague the automotive industry as a whole — and the collision repair industry, in particular — for years.  

OEMs in the 21st Century 

The early part of the decade was also a time when the OEMs started getting more involved in areas of the business they had heretofore ignored. One of these was certification programs. One of the earliest certification programs belonged to Toyota, who concentrated on dealer-owned shops. As late as 2017, Toyota focused on dealer shops but noted publicly that dealer shops could not meet total demand; it would take independent shops to serve the universe of Toyota, Scion and Lexus owners. 

The other area OEMs began to get involved with was “price-matching” programs, also known as “conquest” programs. These programs were enabled through a technology supplied by a company called OEConnection, a company initially supported by Chrysler, General Motors, Ford, and Snap-On. Their program, CollisionLink, digitally connected OEM dealers and body shops in ways never before thought possible.  

More or Fewer Cars To Repair 

During this period, due to stiffer drunk-driving laws, accidents caused by inebriated people were down – while accidents caused by “texting-teens” were up. Vehicle miles traveled was down — caused partly by the recession and the price of gasoline — and partly because some younger people just don’t care to drive anymore. Due to the recession, new vehicle sales were down for some time. In 2000, vehicle sales topped 17 million. This dropped to a little over 13 million in 2008. And in 2009, the U.S. actually scrapped more vehicles (14 million) than were purchased (10.4 million), thanks in no small part to the federal government’s Cash for Clunkers program. This not only caused the U.S. fleet to shrink but also caused the U.S. fleet to be the oldest it had ever been. This meant a higher degree of accident totals – and fewer cars to fix, placing a greater strain on the collision repair industry. Also due to the recession starting in 2008, more people were out of work or otherwise struggling financially. This drove up the average insurance claims deductible. The old-school rule of the $100 deductible has now become $500 for more and more people, and $750 was not unheard of. In some dire cases, unemployment has caused policy cancellations.  

Insurance in the 21st Century 

In the insurance world, a smaller number of carriers serviced an increasing number of policy holders. In 1960, the top-10 auto insurance carriers served 37 percent of the entire driving public. In 2008, this changed to 68 percent. 

Insurers also figured out that how quickly and efficiently a claim is handled drives customer satisfaction. Since many people now bundle their auto, homeowner’s and even life insurance with the same company, and they are more apt to have an auto claim than a homeowner’s claim, settling an auto claim in a quick and equitable manner has become all-important, placing more pressure on repairers to control costs, increase efficiency, and deliver a memorable customer experience. 

Fraud Exposed 

In the spring of 2000, the industry “went Hollywood” when a segment of the popular TV news-magazine show, 20/20, profiled the collision repair industry, focusing on a few shops who made bad repairs, committed fraud, and pocketed a handsome profit at the expense of the insurer and the customer. Interviewed for the program was former shop owner and now a post-repair inspector, Rocco Avellini, who noted that the insurance companies were as much to blame for poor repairs as the shops. He said, “Shops can’t perform proper repair at a price the insurance companies are willing to pay.” The show gave an overall negative view of the industry that angered a number of shop owners. Others said despite all the negativity, at least it brought some attention to the industry. 

Paint Companies Expand 

In the new millennium, paint companies were looking to do more than just sell paint. In the fall of 2000, PPG launched its CertifiedFirst Auto Body Repair Network. Its objective was to develop and promote an image of professionalism, quality, and high customer satisfaction for participating collision repair centers. Other paint companies would follow suit. 

Getting Engaged in a Shrinking, More Sophisticated Market 

Industry pundits noted that shops must learn how to grow and retain their share of a shrinking market. This would be especially tough for independent shops as they also competed against MSOs and OEM-certified shops. Insurers and shops would increasingly look to analytics to identify growth opportunities and measure performance. The shops that identified and took advantage of those opportunities, and invested in training and equipment would emerge the winners of the next decade. For those that didn’t, just like the early 1980s, it would be only a matter of time before the vehicles that they could repair would no longer be roadworthy, and the shop cease to exist. 

Removing Customers from the Repair Equation 

In the summer of 2003, Progressive, the nation’s third largest insurer, launched, on a national scale, its new claims-handling program called “Concierge,” which removed customers from the repair process and completely eliminated the body shop/customer relationship. Progressive was the first insurer in the industry to take control of the entire claims process providing, what they claim, as a “simpler” way for a policy holder to have his/her wrecked car repaired. Policy holders no longer will have to shuffle back and forth between the insurance company and the body shop. This could indeed be more convenient for the customer. However, the shop actually doing the work became nameless and faceless to the customer, so the shop would never see any referral business from it. Perhaps the worst of this arrangement could land on the insurance company if they were held liable for the repair. 

Technician Shortage Ongoing 

What was true at the beginning of the automotive age in the late 1890s, through the 20th century, and into the 21st century, good technicians were hard to find. At the end of 2006, well-trained service and repair technicians were a hot commodity. This was particularly true in the U.S. body shop industry, where numbers of entry-level techs were on the decline. The U.S. Department of Labor’s Bureau of Labor Statistics predicted 60,000 new technicians would be needed each year, but only 40,000 were available, creating an annual deficit of 20,000 jobs in all automotive fields. According to the Bureau, the need to replace experienced repairers who transfer to other occupations, retire, or stop working for other reasons would account for the majority of job openings. To fill the “employment holes,” shops had turned to cannibalizing each other’s work force. Perhaps partially because of that, and the fact that they were better trained and experienced, the top ten percent of collision technicians made about $77,000 per year.  

Excerpted from Ledoux’s book, YesterWreck: The History of the Collision Repair Industry in America, available here.