February 1991 Feature
Collision Repair in the 90s

It is obvious that the 80s introduced more change to the collision repair industry than any other decade in history... But we're just now getting into the 90s, and all the indicators point toward a decade of even more significant change for collision repair professionals. Advances in vehicle design, construction, electronics, and factory finish systems precipitated the explosive technological upheaval in the collision repair industry that characterized the decade of the 80s. The industry will continue to be affected by technological change. So much so, in fact, that this kind of change will now be a constant management concern for the typical collision repair operator...

In the 90s, it is essential for successful collision repair executives to fully understand the challenges presented by change. Here are what we see as the most important factors influencing the collision repair industry:

Vehicles in Operation
For many years, collision repair professionals could count on the rapid expansion in the number of vehicles on the road to fuel at least a portion of the industry's growth. Based on current trends we project a sharp decline in this growth rate to an average of 1 percent per year through the 90s, or approximately 190,000,000 vehicles in operation in 1995.
Collision Repair Costs
In 1980, the average collision repair estimate, excluding deductibles, was $940. By 1990, this average grew to $1,650, representing a 75 percent increase in the value of the average job. Expecting no significant change in these repair cost trends, the average estimate will be approximately $2,150 by 1995. The implications are important. The increase in repair costs has outstripped the rise in used vehicle replacement values. Progressively more vehicles will be declared total losses and consequently not find their way into the shops as repair orders. Profitably reducing/controlling the cost of repair offers significant and positive implications for repair businesses as well as for insurers.
The Trends
The important indicators all seem to point toward a permanent downsizing of the market in terms of the number of collision repair jobs, and in the number of shops performing collision repair work. Vehicles are fundamentally safer than those on the road a decade ago. Social issues, such as the increased concern with drinking and driving have also had an effect. Perhaps most important of all is the "graying" of the population. As a group, 18-25 year olds are involved in more accidents than any other age category. As the baby boomers move into their 40s and 50s, they simply are having fewer accidents.
What's in Store?
Shops will see fewer collision repair jobs at steadily increasing average repair costs. The industry should experience an average growth rate of between 2 and 4 percent per year (in constant dollars) throughout the 90s. These vehicles will be repaired by fewer, but larger, more thoroughly equipped collision repair facilities. Repairing the cars of the 90s will require a combination of skill, capital investment, and management sophistication that will be beyond the capabilities of today's 2 to 3 technician shops. Obviously, there are a variety of positive implications to having half or more of the total market controlled by larger, better managed, and more adequately equipped businesses. Repair quality will improve, customer satisfaction and image will also improve, and it is entirely possible that the relationship with the insurance industry will stabilize. The 90s will be a decade of refinement, as shop owners seek to maintain and improve profitability in an increasingly competitive market environment. Five factors exert major influence in terms of achieving high levels of labor productivity:
  1. The quality and completeness of the initial estimate
  2. A sufficient backlog of work
  3. An effective compensation plan
  4. The experience level of the technicians
  5. The level of shop management
Profitability will require more focused management in the areas of sales, marketing, and merchandising, as well as cost control. In the decade ahead, the jobs will be bigger and tougher, there will be fewer of them, and the competition will be keener. Shop owners who make the commitment to more effective management can prosper personally and professionally in the 90s. The collision repair business will truly come of age in the 90s as a dynamic and sophisticated service industry. The decade will be characterized by a steady and relentless refinement in production operational methodology, sales, marketing, and merchandising sophistication, and the management systems necessary to control it all.