MSO Outlook: Navigating Industry Shifts: Top 5 Trends Reshaping Collision Repair and MSOs

The last six years have been some of the most turbulent ever in the collision repair industry. Market fluctuations representing famine to feast and back again. Vehicle complexity and other technologies have changed at an unprecedented rate. Insurance policies and premiums have changed dramatically. Claim handling procedures reinvented. New business alliances. The influence of the original equipment manufacturer (OEM) on our industry has never been greater. The consumer and how they look at auto repair has changed.  

In light of these recent trends and more, how does an MSO anticipate and prepare for the future? Let’s look at some current trends and consider how they will shape our industry going forward. 

ADAS 

Advanced driver assistance systems (ADAS), a term we never heard till recent years, has become arguably the biggest driver of change in our industry. It’s been “the wild west” with our industry learning how to address it, including creating training, pricing models, process changes, and understanding safety and other high-risk concerns. We know from data from the information providers that there are too many shops who don’t perform as many pre- and post-repair scans as OEMs tell us to. And our industry is even worse at compliance with required calibrations. There is already evidence of litigation activity in this area, and we no doubt will hear more of the personal safety and business exposure implications in the future.  

As ADAS repair has become more accepted and common, we’ve seen the different approaches to how it’s performed and how it’s compensated for. As we’ve seen in the past with other innovations, we’ve seen some vendors partner with some insurers and create their own pricing and procedure models, no doubt in an effort to gain market share. In many cases, pricing is being accepted and others are following suit. Usually what happens with these kind of schemes is that competitors drop prices to match those who partner with insurers and at the end of the day market share doesn’t change as much as hoped and everyone is doing similar work for less compensation. And in this case some vendors are endorsing mobile calibration work, which in many cases is substandard based on manufacturer procedures. 

As we’ve seen many new ADAS oriented companies developed and ADAS businesses created by collision repairers, it’s obvious that this is a rapidly growing industry segment with much more potential. And when there’s a lot of dollars at stake, there is controversy. There are now new ADAS trade associations emerging, many with an interest in defining how work should be performed. Insurers are taking more stances on pricing and procedures. A couple of OEMs, Ford and Rivian, have separate certifications for ADAS work.  

Congress has been looking at regulating ADAS. A good example is the ADAS Functionality and Integrity Act already approved by a house subcommittee. It would give the National Highway Traffic Safety Administration (NHTSA) authority to develop calibration guidelines. It would require NHTSA to study ADAS on vehicles that have been modified or customized. (There is a fear that this could be used to force OEMs to provide ADAS data that works with aftermarket parts, including windshields. Aftermarket windshields are the most common cause of forward-facing camera calibration failures.) The bill would affect shop billing and liability issues. Included in this activity, there are those raising questions regarding whether ADAS calibrations should be performed regularly as a maintenance issue, which would also have insurance claim implications. 

There is also ADAS regulation being considered in some state legislatures.  

I see two forces at work here. One side would like to create some modest standards, perhaps certification, that implies credibility. They are receptive to compromising where they think it’s ok. Static calibrations performed in parking lots are one dramatic example. This credibility is handy for DRPs and some collision businesses to create the impression of competence and safe/thorough repairs. It keeps the cost down and may simplify the process. Many insurers appreciate the cost factor and appearance of credibility. And they realize that it is the repairer that carries the primary burden of being responsible for the consequences.  

The other side is saying “no” to compromising OEM repair procedures and standards. This side feels that we already have most of the standards we need within OEM procedures and it is unwise to become “amateur engineers” in deviating from them. This side wants any accreditation to be meaningful in truly representing competence based on OEM standards.  

I have personally experienced conversations with insurers who refuse to cover some appropriate costs because our shop “could have had a mobile calibration company perform the repairs” cheaper and without moving it to a formal calibration center. 

This story is far from written. It will have a significant impact on the direction of the MSO and other repairers, and bears watching closely.  

Diversification 

Most large MSOs have already created ADAS departments or separate businesses, including calibration centers. Some have glass businesses. Some collision businesses are dabbling with mechanical work (internal and/or retail), towing, EVs, medium-duty truck repairs, and fleet work.  

To do this well, one must understand that different businesses come with different processes/practices, KPIs, management systems, staffing/compensation, and more. To maximize opportunities, one must have an open mind and perform research. Many MSOs tend to be so focused on their model, often evolving around DRPs and one management system, that they don’t get the maximum benefits of different businesses. They try to “collisionize” other business models. While there are some commonalities and synergies, there are some important differences. Think of a grocery store operator trying to manage a shoe store. 

 I know of one large 20 group of collision repairers who claim to have increased the group’s total 2025 sales, primarily through diversification. 2025 was a year where many MSOs sales dropped 15%-20% from the previous year. 

Increasing vehicle complexity and a soft collision repair market are causing diversification to make more sense for some. This may change how our industry looks and operates in the future. It bears watching. 

Responsibility Shift from Insurers to Consumers 

For years we’ve wondered if the collision repair industry will become like the health industry, in terms that there is typically a difference between health care charges and what insurers cover. It has become the norm that consumers expect some out-of-pocket expense, beyond deductibles, for health care.  

Today, the number of situations where customers are paying for some differences for collision repair has increased significantly. No doubt, it is driven by how insurance policies are now written, increased repair complexity and costs, increased prevalence of right-to appraisal (RTA), and increasing reluctance of insurers to cover some charges that they feel are excessive or unwarranted. New technologies and safety concerns have provided many repair steps that insurers often question.  

Based on what I often hear from repair staff, it seems that many insurance claims people are not concerned that the consumer will have out-of-pocket expenses. In fact, it may even provide them with some relief.  

The tremendous increase in policy costs (I believe an average of 61% since pre-COVID, and a 46% increase just for 2022 through 2024) has caused many consumers to be reluctant to file claims. A trend towards higher deductibles also drives the current increases in customer-pay. 

We as MSOs will have to adjust accordingly as this trend plays out. 

Insurer Profitability and Claims Practices  

If you follow the trade press, you see lots of reports on insurer profitability. State Farm’s net income was $5.3B in 2024 and $12.9B in 2025 (though they will be returning a portion of the increase to qualifying policy holders.) The company’s net worth in the same time period grew from $140B to $175N. Allstate’s net income to shareholders was $4.6B in 2024 and $10.2B in 2025. GEICO generated pre-tax underwriting earnings of $6.8B in 2025. Chubb reported a record-breaking profit of $10.3B in 2025. To illustrate the point further, you may also see in the press reports of insurer CEOs being compensated in the range of $15M to $28M. 

What does this mean for the collision industry and particularly MSOs? We know that despite insurers’ current rosy situation, they are more aggressive than a few years ago about keeping costs down. Despite some existing inflation, State Farm has reduced labor rates in most regions, in many cases $6-$8 per hour. If there is a pattern, it seems that insurers are most flexible when collision repair demand is high. Remember 2021-2024, when we saw regular and unprecedented rate increases and more flexibility in negotiating? It feels like many insurers use soft markets to their advantage, strong arming shops to squeeze costs, knowing that they could drop a shop from a DRP and quickly gain another one. 

In the late 1990s and early 2000s, State Farm was often considered one of the tougher companies to deal with for a collision repairer. Then they made some intentional changes. They rolled out the first version of Select Service and training shops along with their claims people. Estimators were coached to write complete and thorough estimates. They had an open platform for estimating systems and CSI providers. They limited the use of alternative parts. Their posture and behavior made for an obvious and significant change, for the better in the eyes of most repairers. Why? Was it because of the Avery case on aftermarket parts? Leadership changes? Could be. And in recent years they have strived to get their severity in line with other large competing insurers and have evolved into a more restrictive, dictatorial company again.  

Today, the insurers are facing more tough competition, including new OEM insurance companies. They are facing a lot of regulatory challenges, including some states requiring that they refund some of their large profits. (Insurers are the third-largest industry in terms of what they spend on lobbyists, only behind pharmaceuticals and electronic manufacturers.) 

While sometimes it is difficult to predict insurer trends, it certainly has a big effect on collision repair and bears watching. 

OEM Influence 

In recent years, OEM certification of shops has become much more prevalent and the OEM’s influence in our industry has never been higher. New technologies and stricter safety standards are driving it. Plus, there are those who refer to shop certification as the “new DRP”. While I believe the influence on our industry has been significant and continues to grow, it hasn’t been happening as fast as some expected, or desired. Many vehicle manufacturers report that only a small and disappointing number of their vehicles receive collision repairs in a certified shop. (Numbers in the 10%-20% range are common.) It is expensive. (Many certifications can cost the shop $100,000 to $400,000 in equipment and training. And that doesn’t include lost production and wage expenses for employees who often travel and spend days, or weeks, on training.) Some of the largest MSOs only seem to embrace certification in a very limited way.  

Yet the number of vehicles arriving at shops due to certifications is increasing. Manufacturers continue to add new aspects of their programs to get more of their damaged vehicles to certified shops. Some are taking steps to take more control of first notice of loss (FNOL). One is piloting a program to get vehicles from the accident scene directly to a certified shop. Some manufacturers are requiring their dealers to use only certified shops for warranty body repair. Some brands are significantly increasing the number of restricted parts (by only allowing certified shops to purchase them.) Insurers are just starting to take note that many of their DRP shops cannot repair some models and types of repairs. 

Will we eventually see separate insurance relationships for certified shops? New forms of DRPs? Will the manufacturers gain influence on FNOL? Will the required certified training and equipment become a necessity for all or most shops? Stay tuned.