Well, it’s off to the races for collision repair industry consolidators. On the first page of this issue of INSIGHT we detail the recent announcement by Caliber Collision Centers of a $20 million equity investment by two investment firms. One firm is the investment arm of the insurer Zurich International Group. This is the first investment in a collision repair consolidator by an insurer in the U.S.- as far as we know. There has been activity along these lines in Europe as we’ve detailed in past issues of INSIGHT. Expect to see more of these investments, and larger ones, this year!
In conjunction with the announcement of the equity investment, Caliber also announced their first three corporate acquisitions in the Southern California market. More acquisitions are planned to expand beyond their current market area.
Lost in the mist, for most of the collision repair industry, are the consolidation efforts that are affecting the new vehicle dealers. If you follow the news, you’ve probably noticed that Republic Industries, led by H. Wayne Huizenga of Blockbuster video fame, became the largest dealer group in the U.S.- in a little over two months of acquisition activity. While most of the automotive press and business press have been focusing on the impact on vehicle retailing- quite a few collision repair centers came along in the transaction.
While we do not currently have exact figures on the number of collision repair facilities and their size -in the week leading up to our deadline Republic closed deals on two more dealer groups. It’s safe to say that Republic is the largest single collision repair entity in the country. Look for a detailed examination of Republic’s collision repair holdings in a future issue of INSIGHT.
So where are the immediate impacts of these consolidations to be felt? That is the $64,000 question. Surely, suppliers have already experienced pricing and technical support pressure brought on by consolidators. Volume discounts and corporate tie-ins are par for the course. The larger question centers on insurer relations. How will large collision repair chains handle DRP agreements? Can they negotiate company wide DRP accounts?
In the medical profession, consolidators look to gain an overwhelming marketshare- as defined by the number of available doctors in a local market- to improve their negotiating position with HMOs. This could be tough for collision repair consolidators with insurance company investors.
Get your money out and place your bets.