CARSTAR recently held one of its annual teleconferences with the media to discuss the state of its network’s business along with the overall state of the collision repair industry.
Participating in the discussion were: David Byers, CEO; Dan Young, senior vice president and head of insurance relations; Dean Fisher, vice president, field services; and Scott Robertson, vice president of development.
Byers kicked things off by noting some facts and statistics:
• By the end of 2012, CARSTAR had more than 410 stores in 32 states and 10 Canadian provinces with $604 million in total sales
• Same store sales increased for the year, owners received “record rebates,” and corporately managed insurance programs saw double digit growth
• New stores were added in California, Texas, Florida, Washington, Wisconsin, Ohio, Illinois and Georgia
So far in 2013, Byers said the number of stores has increased significantly (including 20 in Canada), and stores in both the U.S. and Canada have experienced double digit sales growth.
“Winter storms and early hail storms probably had some impact, as did the advent of MSOs having more corporate insurance work than necessarily some independents,” said Byers.
The CARSTAR leaders also commented on issues affecting the industry:
Electronic Parts Procurement
Dan Young: “Our position is that this is an industry issue, not just a CARSTAR issue, and we need to look to the industry to arrive at a solution that works for everybody. Organizations like CIC and SCRS, and the OEMs and the alternative parts providers, need to play a role in this process moving forward so we have quality shops that are trained and have the equipment to do the work. And a lot of that has to do with having the money to reinvest in their businesses to stay current with equipment and everything else.”
Vehicle Complexity
Dean Fisher: “Within our EDGE performance platform is a specific structure that includes I-CAR Gold status. We’re currently working on OEM certification and how we can have an approval process internally in regard to that to help our stores. With the advent of aluminum complexities and material complexities and how those materials will be repaired in the future, we may even have quarantined areas within the facility that you’ll have to work within. We’re working to design a new process to help our facilities understand and equip themselves for that through a production system that’s tiered in nature with specific identifiers within it – for fast track operations, steel operations and aluminum operations. We’re also building some really great vendor-related programs, working in conjunction with them to operationally improve our stores. Some of those programs are as short as 90 days, and some are as long as 18 months.”
Aftermarket Parts
Dean Fisher: “There has been some debate as to the quality of aftermarket parts. We’ve found in our facilities that some work well and some don’t, and it continues to be an ongoing struggle for us to create an identifier and a process that is industry acceptable as to what parts will and won’t be used on a vehicle and how to reject and identify those parts. There are some platforms we can use specifically to identify some estimating practices and time alignments to real-world repair costs, but there’s nothing really in place to document the cycle time issues that confront us with those parts.
“In the future, OE certification processes may have a greater bearing on the use of those parts, and as we potentially move toward more OE certifications, it will be interesting to see what the OEs may or may not demand from the industry in order to repair their cars. I think there is a place for aftermarket parts, but I’m not sure it’s something that should always be dictated across the board. I think most insurers are working to try to create an identifier on that. Certainly, you see some different levels of identification going on internally on their side where they’re trying to identify a higher level and quality part and how to get it to the facility. It’s not always a manufacturing issue but a shipping and container issue. We’re trying to work through that and negate some of the delays caused by damaged parts.”
David Byers: “CARSTAR has worked successfully over the past few years with alternative parts suppliers to ensure we’re receiving the best quality and delivery in the industry. In fact, CARSTAR is proud to be the MSO using the highest percentage of alternative parts in the industry, significantly above both the other MSOs and the industry as a whole.”
Consolidation
David Byers: “We saw a report this past quarter that showed a slight increase in the number of body shops in the U.S., but it remains to be seen whether that is an anomaly. We believe it is, based on the consolidation we’ve seen and the acceleration of MSO consolidation. Each year, MSO consolidation is doubling over the prior year. If that continues, we believe the number of independents will continue to decline, in particular as it relates to other issues such as the need for training to deal with new vehicle materials. Those kinds of issues are presenting a capital concern to those independents who won’t necessarily have access to capital to hire and train people and buy equipment.”
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