The Romans Group LLC announced it has released its 13th annual white paper, “The 2018 Profile of the Evolving U.S. and Canada Collision Repair Marketplace.”
“The auto physical damage industry is at a complex intersection, where we see all segments related to the auto physical damage ecosystem managing the benefits and risks associated with the continued migration from traditional legacy businesses to a multitude of digital new age business models,” said Vince Romans, founder partner of The Romans Group. “Adjusting and normalizing to this new age marketplace is driving accelerated change, creating uncertainty, and unmasking opportunities for growth while sometimes facilitating a planned business and industry exit or forcing reluctant capitulation.”
Growth of U.S. Market
In 2018, the U.S. collision repair industry market grew 1.65% from 2017. Since 2006, market size estimates for collision repair grew approximately $7 billion with a CAGR of 1.74 percent. In the near term, The Romans Group expects the total industry market size to move in a forward direction and expects growth of 1.25% to 2.50% for 2019 and 2020.
MLO Consolidation
Unlike the slowdown witnessed from 2015 through 2017 with multiple-location operator (MLO) acquisitions by the four multi-regional consolidators (Caliber, Boyd-Gerber, ABRA and Service King), 2018 saw an increase in acquisitions by the four consolidators as well as some super regionals. In early 2019, the largest ever private equity deal within the collision repair industry closed when Caliber Collision and ABRA finalized their merger, creating a more than 1,000-location MLO with a presence spanning 37 states. The year 2019 was the busiest and most dramatic year for MLO transactions, with revenue transferred through MLO acquisitions north of $1.8 billion. Even if the ABRA transaction revenue is removed from the current $1.8 billion in total revenue, 2019 will be the second year of an upward trend.
The super regionals and regional consolidators, like Classic Collision and Joe Hudson, have also turned up their M&A activity in the last 15 months. The Romans Group expects an Illinois-based MLO, Crash Champions, which recently closed its private equity investment relationship with A&M Capital, to be on the hunt for MLO, single-location, brownfield and greenfield expansion opportunities. Service King continues to sit on the sidelines (it has now been two years without any MLO acquisitions) as they focus internally. Caliber and Boyd have been the most active and aggressive consolidators in 2018 and 2019.
Trends
According to the white paper, there are a number of secular trends that exist today that will continue to have a material impact and influence on the collision repair industry and within the broader constellation of the connected auto physical damage industry segments:
- Transformative auto insurance industry – insurtech claims processing models reinforce insurers’ preferred business economics
- Private equity’s buying spree and continued influence
- OEM certification program proliferation; place your bets on which repair standard (insurer, OEM, hybrid) and whose authority will prevail
- Time is right for business diversification, differentiation and segmentation
- Connected car: IoT, telematics, 5G, ADAS, autonomous, electric vehicle movement
- Technician shortage – sourcing, recruitment and retention has morphed into search, seize, capture, train and retain at all costs
- Artificial intelligence, machine learning, computer vision
The 2018 Profile of the Evolving U.S. and Canada Collision Repair Marketplace, which includes over 65 charts and graphs throughout 80 pages with historical trends and a future view, can be purchased by contacting Mary Jane Kurowski of The Romans Group LLC at [email protected].
