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Repairers Reflect on 2010, Make Predictions for 2011

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Jason Stahl has 28 years of experience as an editor, and has been editor of BodyShop Business for the past 16 years. He currently is a gold pin member of the Collision Industry Conference. Jason, who hails from Cleveland, Ohio, earned a bachelor of arts degree in English from John Carroll University and started his career in journalism at a weekly newspaper, doing everything from delivering newspapers to selling advertising space to writing articles.

Nearly everyone in the business world was happy to see
2009 go away after experiencing sales decrease 30 percent on average no matter
what business they were in. In a BodyShop Business poll, approximately 63
percent of collision repairers reported some sort of decline in sales. So
everyone said the only place business could go was up in 2010 – but did it?

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According to the latest BodyShop Business poll, the
answer appears to be "yes and no." Approximately 45 percent of
respondents reported an increase in sales, while 45 percent reported a
decrease. Still, this was better than 2009, when 63 percent of respondents
reported a decline in sales, while only 23 percent reported a gain. The
breakdown is as follows:

How did your sales volume in 2010 compare to 2009?


23%     Up
1-10%


16%     Down
1-10%    


15%     Down
10-20%


14%     Up
10-20%


10%     Unchanged


8%      Down 20-30%


5%      Down more than 30%


4%      Up 20-30%


4%      Up more than 30%

Approximately 56 percent of respondents expect 2011 to be
better than 2010, while 30 percent expect it to be flat. Only 14 percent expect
it to be worse. Asked specifically what percent increase in sales respondents
expect, 45 percent predicted a modest increase of up to 5 percent, while 26
percent predicted 5 to 10 percent.

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Not Much of a Change

Steve Wurtz, owner of Blue Ash Auto Body in Blue Ash,
Ohio, hasn’t seen much of a change in his gross sales over the last three
years. In 2010, he hit $1.6 million, versus $1.5 million in 2009. His best year
was in 2003, when he was on State Farm’s Select Service program and did $2.2
million, but the relationship was mutually ended.

"[State Farm] was unhappy with my numbers,"
Wurtz says. "We do a lot of high-end cars like Mercedes and Jaguar, so
it’s hard to compete when a Jag hood is $1,200 versus $200 for a Honda
hood."

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The one thing he says that has been notably absent in
2010 is the end-of-the-year rush by parents to get their kids’ cars fixed.

"We usually see a race around September through
Christmas to get the kids’ cars put back together before they go back to
college," Wurtz says. "We didn’t see it this year, and I think it’s
because the parents are struggling to make ends meet, and if the kids’ cars
look a little rough, oh well."

Far more damaging, Wurtz says, was Cash for Clunkers in
2009, when "anybody with $4,000 to $5,000 of damage traded the car in and
kept the cash."

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"I’m in an affluent area, and people still fix older
cars because it’s a matter of embarrassment having them sit out in front of the
house," Wurtz says. "But with kids’ cars, not as much. If the kid is in high school and the car is sitting out front all the time, yes, but if it’s
away at college, parents don’t worry. They’re more worried about the car being
safe: aiming the headlights, installing a radiator, etc."

Wurtz feels that his business will see no significant
increase in 2011, which is why he’s considering investing in other services to
shore up sales. He has added his own fleet of rental cars and has boosted
mechanical work. He’s even thinking about getting into the salvage business.

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Working Harder for the Same Result

Harry Walat, owner of Collision Technique Center in
Wauconda, Ill., says gross sales at his shop this year have been flat, too. The
difference, he says, is that he and his staff have been working harder for the
same number.

"Insurers are paying less, and we’re fighting that
hard," Walat said. "They’re paying less or not at all for certain
procedures anymore. I see a lot more companies trying to adapt to that ‘partial
blend refinish within’ nonsense."

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In 2010, Walat – whose shop has 13 employees, one DRP
(State Farm) and over $1 million in sales – has also seen more damaged cars on
the road he believes are the result of more people cashing out and higher
deductibles. He also says he has experienced more steering.

Walat’s strategy for future success is simple: try to get
more lean, watch the numbers and "beat up" vendors and suppliers
more. "Let’s all share the wealth; or if I’m getting paid
less, I’m going to have to beat up the vendor and say, ‘What are we gonna do
here?’"

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I Miss 2007

Beth Meckel, manager of Mile One Collision Center in Glen
Burnie, Md., says her gross sales in 2010 beat 2009’s but were still down from
her shop’s high-water mark in 2007 of almost $3 million. After hitting $2.2
million in 2009, she expects a slight uptick in 2011 to $2.4 million,
especially because right now she’s "swamped" with work.

Like Walat, Meckel has also felt the effects of insurers
seeking more cost-effective repairs.

"Insurers want things done cheaper using cheaper
parts," Meckel says. "But I’m lucky because I have 65 car dealers
that are part of my organization, so I opt for OE and match the parts price
differences. That hurts me a lot, too, but my quality is better. I get to work
with my own dealers so I can finagle things a little, but if the price is too
much, I’ll go with aftermarket instead of taking a loss."

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The other trend she has been seeing lately is more people
fearful of filing insurance claims because their rates will go up. That,
coupled with higher deductibles, has many customers paying for repairs out of
pocket. She says one customer had a deductible as high as $2,500.

"I have a lot of cars sitting waiting for customers
to even get their deductibles," Meckel says. "I tell them I can’t
release the car without the full deductible because once the car is gone, I
have no recourse to get the money. I’ve had some cars sit for 30 days, but I
won’t do liens, especially if customers are communicating with me."

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Meckel hasn’t experienced a lot of cash-outs, but she has
seen more total losses she feels are the result of a new Maryland law that set
the total-loss threshold at 70 percent.

"A lot of cars have gone to the salvage yard that
could’ve been fixed," she said.

Bouncing Along the Bottom

Charles Dillard, director of finance of Precision Auto
Body & Paint, a $6 million, 47-employee shop in Beaverton, Ore., that’s certified to do Audi, Porsche, Volkswagen and Volvo repairs, says
his business was down 11.5 percent in 2010. Overall, sales were off 22 percent
in total over the last three years. He sees sales in 2011 being flat.

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"We think we’re at the bottom and will bounce along
the bottom for the next 12 to18 months before we see any kind of upswing,"
said Dillard. "Remember that Oregon usually is the last to get hit with a
recession and will be the last to pull out."

Dillard says he saw more totals and cash-outs than usual
in 2010 and echoed other repairers’ comments about insurers being even tougher
than normal.

"The insurance companies kept beating us up,
refusing to pay for shop supplies, saying that they’re part of overhead,"
he says.

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A new shop that Precision opened on Nov. 16, 2010, in
Bend, Ore., about a 3-1/2 hour drive from its original shop, has already had to
hire another body technician and currently has about a two-week backlog.
Precision’s reasons for opening another shop were numerous.

"Bend is a vacation destination, and a lot of our
customers have vacation homes there," says Dillard. "Bend got hit
very hard in the recession, and an opportunity came up that gave us very low
lease payments for the next two years. A lot of people, including Audi, wanted
to have a certified and quality shop over there. We also felt we may have
reached our saturation point in Beaverton, and the Portland metropolitan area
has too many shops, so we felt it wasn’t a good idea to open another one
locally." 

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More information:

Repairers Reflect on Business in 2009, Look Ahead to ’10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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