For most of you reading this, the year 2020 was more of a year of survival than satisfaction and prosperity. The COVID-19 pandemic threw the proverbial “wrench” into most businesses across the country, which created a great deal of stress and uncertainty for all business owners, employees and consumers.
The collision repair industry was not excluded, and many continue to experience a great deal of uncertainty as to what will happen in 2021.
The New Normal
Because of COVID-19, there will be many long-lasting changes in the way we live, work and play.
Many large companies, including insurers, have already changed their normal business operations due to COVID-19, and many of these changes will likely become permanent.
For example, fewer on-site inspections by appraisers. Many insurers have arranged for claims people to work from their homes, using phone and e-mail and basing repair decisions on photos provided by others. While this gives “in-house adjuster” a whole new meaning, it has also created new and significant savings for insurers through the reduction of office workspace rent, utilities, administrative staff and benefits, vehicle expenses and insurance.
Many insurers have arranged for claims people to work from their homes, creating significant savings for themselves.
Prior to the pandemic, many insurers had been trying to steer consumers to DRP shops for the initial damage repair estimate. In the future, if the vehicle is not operable or the photos suggest the vehicle may be a total loss, they’ll attempt to have the vehicle moved to a damage inspection/assessment center with free storage (i.e. auto auction, salvage yard, etc.) for evaluation. If the vehicle is deemed to be repairable, the insurer will aggressively encourage (steer) the consumer to a local DRP service provider for repair. If the vehicle is deemed to be a total loss, it will be where it needs to be. Insurers will avoid many charges often assessed by non-DRP repair shops, such as:
- Written damage/repair assessment fees
- Admin fees
- Labor charges for dismantling
- Protective coverings
- Gate fees
- Relocation fees
- Stall/rack tie-up fees
- Stall cleanup fees
- Removal of license plate and personal property fees
If the owner takes their damaged vehicle to a non-DRP shop, the claim will likely be handled via phone and e-mail. In some situations, video phone apps such as FaceTime or Skype may be used to answer questions regarding damages that may be hard to see or understand via photos.
Such claims cost savings will be a huge incentive for insurers to monitor claim staff performance closely and offer rewards for their successes or provide further education and supervision for those who fail to perform to their minimum goals and standards.
In the future, such claims handling will involve “machine learning” using artificial intelligence (AI). With this technology, upon notice of a claim, vehicle damage photos will be submitted and, within minutes, the determination of repair or total loss will be made. The vehicle’s replacement value (which was necessary to determine if the vehicle would be repaired or totaled) will also be determined.
Other major industries will continue to be seriously impacted by COVID-19, including the hospitality and travel industry, due to the risks involved in large in-person gatherings where social distancing cannot be maintained. This will affect major conventions and industry gatherings and the cities where they’re held as well as those that support such gatherings: hotels, caterers, food and drink suppliers, rental cars, Uber, taxis, local restaurants, lounges, local entertainment and others. Travel will diminish significantly as a result of no one driving or flying to attend conventions, training seminars, etc. The conventions and training meetings will likely be conducted via Skype, FaceTime, GoToMeeting, Zoom, Google Hangouts and others even after COVID-19 is history.
A reduction in miles driven due to a greater number of drivers working from home will lower the number of accidents. This will be further compounded by the ongoing advancement in vehicle collision avoidance technologies. However, the cost of repairs will increase due to the higher cost of components related to ADAS and the OEM recommendations/mandates required to repair today’s vehicles properly and thoroughly.
Some shop owners embraced the uncertainty of COVID-19 and bravely “made lemonade out of lemons.” Instead of hunkering down and waiting for the storm to pass, they seized the opportunity to take massive and courageous steps – and risks – to enhance and improve their business.
Not knowing what the immediate or long-term future would look like, some shop owners chose to step up and make daring investments of their time and resources when others were heading for cover.
Not knowing what the immediate or long-term future would look like due to COVID-19, some shop owners chose to step up and make daring investments of their time and resources.
One example is Clay Hoberecht of Best Body Shop in Wichita, Kansas. Hoberecht is a well-known shop owner (and ADE client and friend) who grasped the opportunity presented by the quarantine and shut down his operation to reconfigure, remodel and retool his shop – and also purchase his property! Given the uncertain times, this was a gutsy move. Hoberecht took advantage of the Payroll Protection Program (PPP) to keep his people working on the shop modifications and equipment installations. He is hoping to have the loan forgiven, which would be a home run for him and his business.
Another shop owner (also an ADE client and friend) who owns and operates a shop in the southeastern U.S. doubled his marketing budget to include professionally produced commercials and radio spots to help keep his business volume high during the projected slowdown. The result was that his shop thrived while others in his market felt the hurt. This success showed so well in his profit and loss statements that he was able to sell his business (and retain the property) at a very good price – a price based primarily on past sales performance and the significant stability he was able to create from the onset of the pandemic in March through December 2020.
It will be up to you to make 2021 a happy year. Will you be the one who hunkers down until the storm is over? Or will you seize the opportunity to fly your kite?