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Consolidation within the collision industry is showing a decrease in the number of independent collision businesses. According to the U.S. Bureau of Labor Statistics, 37,547 independent collision repair businesses employing 219,912 individuals existed in the United States in 2000. This is a decrease of 233 businesses from 1999. The number of employees has increased by greater than 7,000 from the 212,877 people in 1999.

Currently, a total sales figure for independent collision facilities equal an ASA estimated $24,986,000,000 for 2000. These figures do not include the approximate 10,500 auto dealerships with body shops, which generated $7.5 billion ($4.15 billion in labor and $3.35 billion in parts) in 2000, according to the National Automobile Dealership Association (NADA).

Shop Profile

With the number of independent collision businesses showing a slight decrease, the size of the business is actually showing an increase. According to business owners (91 percent) and managers (9 percent), the typical collision facility has 20 bays and encompasses approximately 11,817 square feet. This is a one-bay, 800-square-foot increase from 2000 averages. The longevity of collision business holds at 26 years.

Although consolidation is occurring, 92 percent of collision businesses remain independent. Six percent of business respondents are from franchises and 2 percent are dealer owned. Consolidators do not show up in the owner makeup of this survey. The most popular franchiser mentioned was CARSTAR (10 out of 14).

In 2001, 85 percent of businesses are family owned. This is down slightly from 87 percent in 2000.

Gross annual sales were up for facilities. The largest percentage of businesses (35 percent) posted gross annual sales in the $1 million to $2 million range. An additional 20 percent experienced gross annual sales between $2 million and $4 million. Eighteen percent selected the $750,001 to $1 million category. Eleven percent of collision businesses have gross annual sales in the $250,001 to $500,000 range and 10 percent are in the $500,001 to $750,000 sector. Near-equal percentages are represented at the top and bottom of the scale, with 2 percent under $250,000 and 3 percent collecting more than $4 million in gross annual sales.

New to the 2001 survey were questions regarding city population. Respondents said 26 percent conduct business in cities with populations from 25,001 to 100,000 people; 23 percent are in the 100,001 to 500,000 range; and 24 percent inhabit cities with greater than 500,000 people. Fifteen percent are in cities under 10,000; 12 percent are in cities from 10,001 to 25,000.

Internet access within collision businesses is reaching the saturation point of 95 percent, up from 89 percent in 2000. That's exciting and speaks positively of collision businesses and progressive ownership.

Internet usage has changed a bit over the years. In 2001, researching products and information decreased slightly (from 74 percent to 58 percent) in importance while advertising one's business increased (from 46 percent to 56 percent). Both the activities of ordering parts (from 17 percent to 24 percent) and getting repair procedures (from 22 percent to 44 percent) notably increased. Two new activities were added to the list: purchasing tools and equipment (34 percent) and Web-based technical training (22 percent).

As the survey shows, collision businesses and their staffs are an Internet-savvy group. Other activities on the Internet include looking up news (40 percent), entertainment (33 percent), transferring funds (19 percent), chat/discussion groups (11 percent) and other (15 percent).

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Owner Profile

Like the ASA mechanical shop owner, the ASA collision shop owner exemplifies skill and experience. The average collision repair facility owner is 47 years old with 26 years of experience and manages slightly more than one facility (1.31).

Keeping up standards of excellence, 65 percent of survey respondents are ASE certified and 11 percent have completed their Accredited Automotive Manager (AAM) designation. Fifty percent of business owners are currently taking AMI courses.

Although owning and managing a collision business is a “full-time and then some” endeavor, 34 percent of business owners are also participating on a secondary or postsecondary educational advisory board. That speaks to the dedication of those involved in the collision industry.

In 2000, ASA asked business owners if they were willing to sponsor an apprentice or work-study student; 71 percent said yes. In 2001, the survey checked follow-through and found that 44 percent are actually participating in a school-to-work or apprenticeship program.

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Staff Profile

Number of Employees - Click here to enlarge graph.

Employee-related questions were more detailed in ASA's business survey this year.

Staff layout is fairly extensive. According to survey result averages, a collision business has one to two entry-level technicians (1.71), four journeyman technicians, two office/claims staff, one to two entry-level painters (1.65), one to two journeyman painters (1.74), one to two estimators (1.74), one production manager, one general manager and one parts manager.

Survey respondents provided average wage rates for the above positions. These are national averages and vary by market size. Compensation for entry-level collision technicians rose compared to last year's salary. In 2000, entry-level technicians received $20,457. This rose to $21,519 in 2001. Journeyman technicians earn an average of $46,055, up from the $44,139 in 2000. Entry-level painters are paid an estimated $23,153. Journeyman painters collect $49,372 annually. This is up from $47,387 in 2000. In 2001, estimators' salary averages $41,752. This too increased from $40,229 in 2000. Office/claims staff are paid an average of $26,614 in 2001. In the management area, parts managers receive an average of $34,107 annually. Production managers earn $49,372 in 2001 and the general managers earn $61,948. This was the first year to break management out into specific titles, so annual comparisons are not available.

Technician Benefits - Click here to enlarge graph.

In addition to monetary compensation, 96 percent of independent collision repair facilities offer employees a paid vacation and holidays (93 percent). Eighty-six percent provide training, seminars and uniforms. Eighty-four percent provide medical insurance. And 56 percent are also offering 401(k) retirement plans. Nearly half of the collision businesses (49 percent) give a yearly bonus to their staffs. Life and dental insurance rank a bit lower at 41 percent and 31 percent, respectively. Tools (21 percent) and eye care (26 percent), although in the 20s, come in at the bottom of the benefits list.

The way a technician's compensation is determined varies among facilities. Fifty-one percent of technicians receive an hourly wage and 26 percent are compensated from a percentage of the flat rate. Salaried technicians averaged 4 percent and 10 percent of technicians received a percentage of the labor rate. Hourly plus commission pay is earned by 5 percent of technicians. The remaining 3 percent is scattered among salary plus commission team plans.

Certification of technicians still remains a large focus of both technicians and business owners. Currently, an average of 54 percent of technicians are ASE certified. Of the refinishing technicians, an average of 82 percent are certified by specific paint manufacturers.

The percentage of I-CAR trained technicians has remained constant the past two years at 73 percent.

Annual Continuing Education Hours - Click here to enlarge graph.

According to the 2001 survey, 85 percent of employers are taking the initiative to fund the education of their technicians. That's a nice incentive and necessary in keeping a shop up to date within an industry that is constantly changing and improving. Within 14 percent of collision repair facilities, the funding of a technician's education is cosponsored by both the employer and the technician. Only 1 percent of responding businesses require the technician to foot the entire bill.

Ninety percent of business owners are also supportive of technicians training during the workday; 10 percent say they would not allow it.

When asked to approximate the number of updated education hours a typical technician undergoes on an annual basis, business owners stated an average of 16. This is a decline from 18 hours in 2000.

Independent collision repair facilities rely on many sources for technical training and education. The source cited by most respondents was paint companies at 89 percent. Product manufacturers showed up second at 72 percent. Jobbers are getting the training job done among 70 percent of technicians. Association seminars remain a strong source of training for 60 percent. In-house programs saw a slight reduction in 2001 at 36 percent from 39 percent in 2000. Trade magazines (34 percent) also showed a decrease in 2001; down from 49 percent in 2000. Independent training programs (28 percent), OEM training and Web-based training (7 percent) are three new options listed on the survey that are being used by technicians and business owners.

Although there was a slight reduction in the number of collision businesses in 2000, the number of employees increased. When asked to rank the employee categories shop owners will need most in 2002, 40 percent cited journeyman technicians followed by entry-level technicians (30 percent). Management and claims administrators are going to be the focus of 10 percent of businesses. The remaining 9 percent is divided fairly evenly among entry-level painters, estimators and journeyman painters.

Curious about the availability of technicians, ASA asked survey respondents to give the number of technicians leaving their business in 2000 and the number of technicians being hired. Rounding up showed that two technicians left (1.72) and two replaced (2.19) them. This is similar to numbers in 2000 and 1999.

Sources for finding collision technicians closely resembled those used by mechanical businesses. According to survey results, 61 percent of new hires come from referrals and word-of-mouth contacts. Vocational schools produced 16 percent of new hires and a smaller percentage of 8 percent was garnered from other collision repair businesses. Paid classified advertising had a return on investment for 12 percent. This is up from 6 percent in 2000.

The apprentice/ industry program option for locating technicians still remains low at 3 percent. This is a curious point considering 34 percent of owners reported serving on educational advisory boards and 44 percent participate in a school-to-work or apprenticeship program. Perhaps we can look forward to the apprentice source percentage increasing over time.

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Sales

Businesses were asked to estimate the average number of repair orders per month along with the average ticket price per repair order. In 2001, it is estimated that a collision business will experience an average of 92 repair orders per month and an average ticket price of $1,888. Of that ticket price, 44 percent is devoted to parts and 48 percent is devoted to labor. Incidentals such as tape, film, etc. account for the remaining 8 percent.

No business likes a comeback. Currently, collision businesses are experiencing an average of 3.24 comebacks a month. That's a .8 weekly average or 3.5 percent of the monthly repairs. Of the comebacks, 23 percent is attributed to parts fit or quality.

With time being money and money being profit, cycle time is kept at an average of 6.5 days. That's up slightly from last year's six days.

In 2000, businesses were asked what they expected 2001 sales to do. An overwhelming 81 percent felt sales would increase. That has held true for approximately 64 percent who responded in 2001 that sales in 2001 had increased compared to sales in 2000. Nineteen percent felt no change had occurred while 17 percent noted a decrease in sales. Of those with an increase, the difference was an estimated 17 percent sales increase. Of those experiencing a decrease, the difference was an estimated 14 percent.

Sales increases were attributed to many things. Marketing strategies and advertising received the highest marks (40 percent). This is up from the 24 percent in 2000. Following closely is improved customer service (38 percent). Increased services provided, such as towing, was cited by 23 percent. Technician proficiency increased sales for 29 percent.

The collision industry is one that smiles when it rains and dances when it snows. According to 20 percent, weather conditions brought an increase in business. Acquiring a new account also helped out 20 percent of business owners.

An increase in labor rates improved the sales of 19 percent of collision businesses. Sixteen percent cited a better economy; 9 percent attributed sales increases to the use of a management system.

When comparing profits in 2000 to profits in 2001, 59 percent see an increase in profits. This relates to the 62 percent who also see an increase in customers in 2001 compared to 2000. It seems that the same 62 percent also are taking note of an increase in the number of jobs being performed.

A decrease in profit, customers and number of jobs for 2001 is noted by 22 percent, 10 percent and 16 percent, respectively. The remaining percentages are held within the no change or difference area from 2000 to 2001.

Projecting into 2002, collision shops appear to be optimistic in regard to sales. A strong majority of 79 percent are expecting an increase, followed by 16 percent expecting no change in sales. Only 5 percent are preparing for a decrease in sales in 2002.

Direct repair programs (DRPs) continue to be an intricate element of collision repair business. According to 2001 survey results, 90 percent of collision businesses participate in an average of 4.5 direct repair programs. This participation brings in an estimated 44 percent of sales, up from 42 percent in 2000 and the 36 percent in 1999.

Participation in DRPs doesn't necessarily equate to liking DRPs. Currently 20 percent of businesses feel DRPs have a negative impact on the collision repair industry. Forty-eight percent said DRPs have a positive impact on the industry. The remaining 32 percent is undecided.

Business respondents were asked to define by percentage the types of parts used within their facilities. OEM parts are used the majority of the time (76 percent). Recycled OEM parts (12 percent) follow this, as do non-OEM parts (11 percent) and recycled OEM parts (8 percent). Although this is greater than 100 percent, the information is beneficial and serves as a good point of reference.

When inquiring about the busiest time of year, two seasons, again, ran neck and neck. According to survey results, 38 percent of ASA collision businesses are busiest during the summer followed closely by 35 percent who recognize winter as their busiest month. Fall brings the most business for 17 percent of shops and spring strikes a high customer chord for 10 percent.

Resembling mechanical businesses, the busiest day of the week was cited as Monday, according to 66 percent of collision businesses. Workdays in the middle - Tuesday, Wednesday and Thursday - were cited to be the least busy for new job acquisitions with a combined percentage of 15. Completing the cycle and picking up the pace for the weekend occurs Friday for 19 percent of collision businesses.

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Customer Demographics

This year's customer profile shows a bit of a change. The percentage of women customers is on the increase and has taken over the majority (52.5 percent). With that in mind, business waiting areas and rest rooms are all the more important to gain and retain business.

In 2000, 56 percent of customer makeup was repeat business (customers with comeback loyalty). That decreased by 4 percent in 2001 to 52 percent. Although it's only a slight decease, 4 percent of assured total sales adds up and could make a notable profit difference. Sixty-five percent of shops are now using customer satisfaction surveys. Analyzing those results is key to retention and new customer growth. This is a 10 percent increase over last year.

The current customer base is 26 miles, shrinking a bit from 31 miles reported in 2000. Knowing one's customer base enables business owners to conduct efficient and effective marketing.

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Marketing and Advertising

Marketing and advertising campaigns were cited by 40 percent as the reason for sales increases. In 2001, $18,159 went into advertising, promoting and generating sales for independent collision businesses. That's up from the $15,125 in 2000. As it's been said many times before: “You gotta spend money to make money.”

According to survey results, 88 percent of collision businesses use advertising to promote their businesses; 12 percent said they do not.

Advertising comes in many forms, and collision businesses like to spread the money around. Word-of-mouth and customer references win again with 78 percent of respondents saying these are their best business promoters. And it doesn't cost a dime - other than the investment in one's self and team members to build a positive image and quality customer service.

More than half (60 percent) keep their name and number in the Yellow Pages. That's still a good point of reference for an off-the-street consumer.

Other prevalent advertising sources include newspaper (26 percent), the Internet (27 percent) and radio (23 percent). These media are often used in combination with one another.

A neighborhood shopper is used by 12 percent, and direct mail is used by 11 percent of respondents. Cable television (9 percent) and billboard advertising (9 percent) are used by nearly a tenth of collision businesses. And broadcast television garnered the lowest praise from business owners with 6 percent. The "no advertising" group dropped from 12 percent in 2000 to 4 percent in 2001.

Collision business Web sites continue to increase. In 2001, 55 percent of businesses have a Web site or Web page. That is up from 47 percent in 2000. Without a doubt, collision businesses are well advanced in technology and dealing in many aspects on the World Wide Web.

Often, businesses become involved in the community in one way or another because of their owners' interests and the added benefit of public recognition. When the survey asked for the percentage of businesses involved in customer “know-how” programs, 25 percent said they participate in providing the public with collision education.

Community involvement and various advertising campaigns are having positive effects. According to 67 percent, the public's image of the collision repair industry is improving. This improvement comes down to quality business owners who have pride in their businesses and believe in the work they do. Only 4 percent have a notion that the public's image of the collision repair business is declining. The remaining 29 percent believe things are staying the same.

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Industry Issues

Issues having the Largest Impact on Business - Click here to enlarge graph.

ASA collision repair facilities were asked to pinpoint the top three issues having the largest impact on their business. Finding good technicians (55 percent) was the first on the list again this year. ASA's Collision Division is currently working with the I-CAR Foundation and Vocational Industrial Clubs of America (VICA) on programs regarding technicians and encouraging individuals to enter the industry.

Second, the insurance industry's influence on collision repair is reported to have an impact on half of collision business owners. The type of impact is not defined. ASA communicates with both business owners and insurance companies in hopes of establishing a productive, working relationship.

Third on the list is DRP programs (45 percent). This is up from 36 percent in 2000. (DRP involvement was cited earlier in the survey.)

Being paid for necessary repairs (38 percent) is the last of the major issues cited by collision business owners. Hopefully, improved estimating skills and a more comprehensive understanding between vehicle owner, vehicle insurance representative and business estimator will better that.

Other issues include keeping up with technology (15 percent), industry image (14 percent), aftermarket crash parts (13 percent) and cycle time (11 percent).

Regulatory compliance (8 percent), finding good middle management (8 percent), salvage parts (5 percent), and consolidation (4 percent) finish out the list of issues affecting independent collision businesses.

Each year, ASA's “How's Your Business?” survey provides a detailed picture of the independent automotive repair industry. Without the involvement of ASA's membership, such descriptions wouldn't be obtainable.

This willingness allows business owners throughout the United States to gauge themselves and see areas where sales and profit growth is possible.

It also points out the high-quality characteristics of mechanical and collision business owners. The list of benefits, salary ranges, the importance of certification and education and the willingness to become involved in the community are all tangible attributes of these business owners - attributes worth promoting to the community, high school administrators and legislators.

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