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Letter to the Editor

The State of Consolidation

What a difference a year makes... Or does it? Consolidation continues...

This month’s feature profiles 15 of the major consolidators who are working to transform the collision repair industry by rolling up existing collision repair centers under a single brand or by building new facilities.

INSIGHT first performed this detailed consolidator profile in the December, 1997 issue. At that time we profiled nine consolidators. That issue, coupled with our followup survey published in the December, 1998 issue, have been the most requested back issues and scored very high marks from our subscribers during our readership survey this past summer.

Due to the large number of changes over the past year, INSIGHT has updated the profiles of those consolidators detailed a year ago and added new entrants to the list.

On page 8 of this issue, we also update our annual TrendLine Survey on how leading repairers feel consolidation will affect the industry.

Beginning on page 10 of this issue, we provide detailed company profiles of each of the consolidators, including information on the number of facilities they currently operate, sales (where the company was willing to share figures) and their strategy for the upcoming year. All are aggressively pursuing acquisition opportunities and relationships with insurers or fleets in their market area.

First, let’s take a look at our TrendLine results this year compared to last.

TrendLine Data

This year we see a slight change in attitude toward whether consolidation will increase or decrease business among the repair facilities surveyed. Those that feel consolidation will increase their business continued to decline to 16.2 percent from the high of 33.2 percent in 1997. Most repairers, fully 68.3 percent now believe consolidation will have no effect on their business.

When asked if consolidation will move the balance of negotiating power towards insurance companies or towards repair facilities, fully 47.4 percent of repairers feel the insurers will benefit. This represents a statistically insignificant rise of 1.2 percent over last year’s answer but is 10.3 percent over 1997 response. Only 20.7 percent of respondents feel the balance of power will swing towards shops- down 7 percent from last year.

Our questions regarding business expansion show very close responses to last year’s results. Facilities that report planning existing building expansion and new equipment purchases showed sharp increases over last year in the mid-50 percent range from the mid-30 percent range last year.

Consolidator Profiles

This year’s field of multi-region consolidators has grown from a field of nine identified by INSIGHT in 1997 to 15 this year. Additions include: AutoNation USA, the OE-dealer consolidator, FIX Auto, Master Collision Repair and Service King Collision Repair Centers.

On page 10 we compare the growth in facilities among consolidators we reported on in previous surveys to their results this year.

ABRA recorded impressive growth, adding 18 stores over the past year to total 49 through November. When we first survey the company in 1997, ABRA had 22 company-owned facilities.

AutoNation USA appears in our consolidator charts for the first time this year. INSIGHT estimates that AutoNation has approximately 107 collision repair facilties acquired as part of their dealership acquisitions.

The Boyd Group based in Canada made big news this year. First, they entered the U.S. market after missteps in 1997. Then, they announced a $17 million supplier deal with BASF Automotive Refinish to help finance expansion. In November, Boyd reported 43 repair facilities, up from 32 in 1998.

CARA, the operation founded by Randy McPherson after he left ABRA, has sold off their six Indiana operations and continues to focus on reorganizing their remaining 19 operations.

CollisionMax, the repair arm of the fleet and insurance claims management firm CEI, operates nine locations in PA and NJ and is looking for acquisitions east of the Mississippi. They added no new facilities in the past year.

Caliber had a solid year, adding fifteen stores to bring their total to 43. Caliber CEO Matthew Ohrnstein’s focus on a buy-and-build strategy is paying off with strong, planned growth.

M2 Collision Centers reports 27 stores this year versus 24 during last year’s survey. M2 has received an investment from Blue Capital Management, an investment that Blue Capital termed an acquisition in their press release on the subject. M2 has used the money to make a select few acquisitions as they continue to work on their operating model for growth.

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