2006 How's your Business?

Business Profile || Owner Profile || Staff Profile || Sales ||
Customer Profile || Marketing and Advertising

With 2006 coming to a close, the Automotive Service Association is estimating a growth in the collision repair industry - from 34,184 shops in 2005 to 36,330 shops in 2006. ASA is also estimating growth in collision repair employees, from 226,179 in 2005 to 227,036 in 2006. Those collision specialists are responsible for fixing an estimated 23 million vehicles involved in collisions in 2006.

ASA is estimating annual sales for the independent side of the collision industry to be a conservative $24 billion. This figure is based on the actual annual sales listed by the U.S. Bureau of Economics Analysis for 2003. These figures do not include the approximate 8,383 franchised dealerships with body shops generating an estimated $10 billion in 2005, according to the National Automobile Dealership Association.

Business Profile

In 2006, the number of service bays and the size of the average facility match 2005 figures with 17 bays and approximately 13,160 total square feet. Square footage averages include 1,325 square feet of office space and 10,513 square feet of shop space, with the remaining space being used for parts and storage.

Bay distribution statistics show 6 percent of collision shops have one to four bays, 18 percent have five to nine bays, 23 percent have 10 to 14 bays and 23 percent have 15 to 20 bays. Eleven percent of members indicate operating with 21 to 25 bays and 18 percent have more than 25 bays.

Internet Usage Extensive, Popular

Ninety-nine percent of repair facilities reported having Internet access. Internet access areas included the office (99 percent), service bays (13 percent), customer areas (11 percent), and other locations such as parts areas and break rooms (3 percent). With respondents being able to select more than one area, the results netted more than 100 percent.

Internet technology is evolving as service providers offer faster and more attractive plans. Shops with dial-up or modem connections have declined to 8 percent member usage. ISDN usage in 2005 at 3 percent, declined slightly to 2 percent. DSL usage declined slightly from 61 percent in 2005 to 60 percent in 2006. Cable connectivity has climbed to 27 percent from last year's reports at 18 percent.

The primary uses for the Internet include e-mail (94 percent) and accessing service and repair information (71 percent). Also, picking up the pace, from 58 percent in 2005, is locating industry news (69 percent), purchase tools and equipment (59 percent), transferring funds (58 percent), performing product research (52 percent), and ordering and tracking parts (42 percent). Other uses include Web-based technical training (35 percent), customer contact and retention (24 percent), Web-based management training and entertainment share 23 percent equally, and participating in chats and discussions online, 14 percent.

Added in 2006 are paint booth and frame machine counts. ASA members average two of each. Fifty percent of members have one paint booth, 40 percent have two and 6 percent of respondents have three paint booths. Twenty-three percent have one frame machine, 41 percent have two and 22 percent straighten damaged vehicles with three frame machines.

The independent collision repair business continues to be family-owned, time-invested businesses with 90 percent of businesses being in operation more than 32 years. Three percent have been in operation one to five years. Six percent have been in operation six to 10 years; 5 percent have been in business 11 to 15 years; and 9 percent have been in operation 16 to 20 years. Twenty percent of shops have been in business 21 to 25 years. Fifteen percent have operated 26 to 30 years; the same percentage (9 percent) have operated their businesses for 31 to 35 years, 36 to 40 years and 40 years or more.

Seven percent of the collision repair business market can be found in cities with populations of 10,000 or less. Eight percent are located in cities of 10,000 to 25,000 people. Cities with populations over 25,001 to 100,000 provided 35 percent of the responses; 29 percent came from businesses in cities with populations between 100,001 and 500,000, and 20 percent are in populations of 500,001 or more.

Most collision repair facilities continue to be open five days a week, although 24 percent open for business on Saturday and 1 percent are open on Sunday.

Seventy-six percent of collision shops selected Monday to be the busiest day of the week, followed closely by Friday.

Winter continues to lead in this year's survey as the busiest time of year, according to 39 percent of collision repair businesses. Those continually busy all year around are equally shared. The rest of the respondents picked summer (11 percent), spring (5 percent) or fall (16 percent) as their busiest season. Some respondents selected more than one season but not all year, so the percentages totaled were more than 100 percent.

Owner Profile

ASA collision business owners possess many skills and extensive industry experience. The average survey respondent is 50 years of age with 29 years of experience. The majority of owners (43 percent) are between 45 and 54, followed by 33 percent in the 55 to 64 category, and 17 percent between 35 and 44 years of age. Five percent of the population is 25 to 34. Two percent of respondents are 65 and over. No survey respondents reported from the under-25 age group.

Internet Usage
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Three percent of business owners have less than 10 years of experience; 13 percent 11 to 20 years of experience; 39 percent 21 to 30 years of experience and 36 percent have 31 to 40 years of experience. The remaining 9 percent report 41 or more years of industry experience.

Education levels achieved by respondents include high school (41 percent); vocational and trade school training (19 percent), two-year college programs (22 percent); four-year college programs (14 percent); and graduate school (4 percent).

This year's survey asked respondents about their current ASE certification status. Of those who report having ASE certification, 41 percent are currently certified; 19 percent of collision shop owners have ASE certification that is no longer current; and 40 percent report no ASE certification.

Seventy-eight percent of collision survey respondents report being I-CAR trained, down from 84 percent in 2005.

Thirty-eight percent of respondents have attended an AMI-approved course within the past 12 months. Nine percent of collision shop owners have earned their Accredited Automotive Manager (AAM) designation.

In addition to the full-time role of owning and managing a collision business, 23 percent of business owners serve on a secondary or postsecondary educational advisory board. Twenty-two percent of survey respondents have school-to-work students in their businesses. Of those 22 percent responding, 17 percent have one student on staff, 3 percent have two, and 1 percent has three.

Staff Profile

Not all collision businesses have all types of employees. According to survey results, 42 percent of collision businesses have one apprentice technician. Forty percent of businesses have one entry-level technician. A majority of collision businesses (97 percent) have four experienced technicians. Eighty-five percent have two office staff personnel, and 32 percent have an entry-level painter. Eighty-six percent have two experienced painters, and 72 percent have two estimators.

Approximately one-quarter (27 percent) of survey respondents report having one production manager on staff. Nineteen percent of shops have an outside sales person who works full or part time. Sixty percent of shops have a shop manager, and 41 percent have a parts manager.

Internet Usage
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Apprentice technicians earn an average of $23,386. Entry-level technicians earn an average of $30,994. Experienced technician salaries climbed a bit from $49,828 in 2005 to $53,872 for 2006. Entry-level painters earn an estimated $29,465. Experienced painters receive an average salary of $59,279. Estimators, whose task may also be fulfilled by the shop manager, earn an average annual salary of $49,751.

Office staffers and claims professionals average $34,192 annually. Parts managers earn $36,477, production managers, $55,638; and shop managers, $64,493.

Flat rate continues to grow as the most common form of payment for technicians. Forty-eight percent of technicians are compensated on a flat rate system consistent with those reported in 2005. Thirty-two percent receive an hourly wage. Sixteen percent receive hourly wages plus commission and 11 percent receive a percentage of the labor rate.

Salaried technicians evened out at 10 percent, 6 percent of technicians are part of a team pay system and 4 percent receive salary plus commission. Allowing respondents to check all forms of payment that apply accounts for results greater than 100 percent.

Benefits and training are common elements of an employee's overall compensation package for 99 percent of respondents. Ninety-four percent of independent collision repair facilities offer employees a paid vacation. Shops that offer paid holidays (85 percent) surpassed major medical insurance (84 percent) in the 2006 survey. Uniforms, which benefit both the technician and the shop's image, are provided by 83 percent of collision shops. Seventy-four percent of collision shops provide technical training as a benefit to the shop, employees and customers.

Retirement plans such as 401Ks or simple IRAs are offered by 57 percent. Annual bonus (44 percent) and management training (41 percent) are additional benefits provided by many collision shops.

Life insurance is provided to personnel by 34 percent of shops. Other benefits include dental insurance and cafeteria plans, both sharing a 24 percent benefit classification; vision insurance (26 percent) and tool reimbursement (10 percent). These benefits are equal to those of last year's responses. Technician training is a two-way benefit offered by 74 percent of collision shops. Eight out of 10 businesses allow technicians to attend training during the workday. Of those, 49 percent compensate technicians who attend training during the workday.

Results show 83 percent of collision businesses fund the education of their technical staff. Eight percent are sharing the cost of training with their employees. Five percent require sole funding from their employees. The remaining 4 percent does not participate in training.

It is estimated that 17 percent (40,460,000) of the 238 million registered vehicles are involved in vehicle collisions annually. Of that amount, 15 percent (6,069,000) are totaled, and 28 percent (11,328,800) will disregard repair. That leaves approximately 23 million vehicles up for repairs, according to Collision Repair Industry Insight's Annual State of the Industry Report.

To perform these repairs, training is critical to the industry. Apprentice technicians received an average of 24 hours of training. This is slightly misleading in that some shops consider all hours spent as an apprentice as hours of training. Entry-level technicians (painter and frame) received 24 hours of training in the past 12 months. Experienced technicians attended 20 hours of training, and managers received 27 hours of training.

Owners reported that an average of $653 was spent on trainingper apprentice technician position. About $933 was spent per entry-level technician, $885 was spent on an experienced technician and $1,443 was spent on managers.

Respondents were asked to select all applicable training sources. Similar to years past, technicians garner a large portion of their training from paint companies (89 percent), I-CAR (83 percent) and jobbers (66 percent).

Forty-nine percent of shops cited equipment manufacturers as a source for technician training. Trade magazines averaged 53 percent, in-house training programs averaged 43 percent and another 48 percent cited trade show seminars as a means of technician training.

Web-based training (29 percent), association seminars (28 percent) OEM training (26 percent) are popular among the collision shop population. Remaining sources include independent training providers (13 percent), community colleges (8 percent) and lastly, technical schools (6 percent).

ASE certification has real value for collision technicians. According to survey results, 69 percent of collision shops are ASE-certified facilities employing an average of four ASE-certified technicians. Even more common is paint company certification, with 91 percent of collision businesses relying on paint manufacturers to train an average of two technicians.

I-CAR training is also common with 91 percent of collision shops polled. Most shops have approximately five I-CAR-trained technicians.

The need for qualified technicians continues to be heard throughout the industry, making technician retention as important as ever. According to survey results, 44 percent of facilities promoted an average of two technicians in 2005. Fifty-nine percent of collision repair shops had an average of three technicians leave in 2005. Fifty-six percent of collision shops said they hired an average of three technicians in 2005.

Examining these industry stats, we see that approximately 58 percent of collision shops saw technicians come and go. When asked to select the employee type for which their business would have the most need in the upcoming year, 40 percent said experienced technicians. This is followed by entry-level technicians (21 percent), apprentice technicians (18 percent), estimators (16 percent) and finally, experienced painters (14 percent). Other positions registered only a slight percentage. Note: The survey did allow "None" as a response option, which was chosen by 31 percent of respondents.

The main source of new hires comes from word-of-mouth referrals, down slightly from 86 percent in 2005 to 83 percent in 2006. Fifty-five percent of respondents choose to recruit employees by classified advertisements; 41 percent, vocational technical schools; and 40 percent attract personnel from other businesses. Other sources of attracting technicians include apprenticeship programs (17 percent), the Internet (10 percent), school-to-work programs (8 percent) and high school programs (5 percent).

Sales

The 2006 survey results showed the average repair order in 2006 to be $2,350, with an average of 38 percent attributed to parts and 46 percent attributed to labor. The remaining 16 percent goes to incidentals such as tape and cleaners. This is a significant increase from survey results of $1,740 in 2005.

DRP Participation

Ninety-one percent of businesses participated in an average of four direct repair programs (DRPs) that accounted for an average of 40 percent of repair orders, down from 49 percent gathered from 2005 survey results. DRP participation categories include one to three programs (42 percent), four to six (29 percent), seven to 10 programs (13 percent), 11 to 14 and 15 or more programs account for 4 percent of responses each.

DRP volume percentage categories include one to 10 (9 percent), 11 to 20 (14 percent), 21 to 30 (12 percent), 31 to 40 (14 percent) and 41 to 50 (9 percent). Percent of DRP volume categories of 51 to 60 accounts for 7 percent of responses, 61 to 70 (13 percent), 71 to 80 (12 percent) and above 81 attribute to just over 1 percent of business.

By categorizing repair order amounts, we find 3 percent of respondents averaged $500 or less per repair order, 9 percent averaged $501 to $1,000 per repair order and 16 percent averaged $1,001 to $1,500. Twenty-seven percent billed an average of $1,751 to $2,000; 14 percent billed $3,001 and above per order; 13 percent averaged between $2,001 to $2,500; 10 percent averaged between $2,501 to $3,000 and nine percent had repair orders in the range of $1,501 to $1,750.

With 38 percent of the value of a repair order being attributed to parts, respondents were asked the percentage of parts types used in their businesses. Respondents said 70 percent of parts were OEM, 18 percent were aftermarket parts and 16 percent were recycled OEM.

This year, respondents have averaged 98 repair orders per month, up from an averaged 94 in 2005. Thirty-three percent of businesses completed up to 50 repair orders monthly. Another 41 percent completed 51 to 99 repair orders. Fourteen percent completed 100 to 150 repair orders. Thirteen percent, larger facilities, completed an average of 151 or more orders.

The 2006 survey also asked respondents to estimate the average number of estimates written per month. Results showed an average of 170 estimates written monthly. Of those, an average of 14 percent were evaluated as total losses. Twenty-five percent wrote up to 50 estimates monthly, and 15 percent wrote 51 to 75. Another 18 percent wrote 76 to 100 estimates, 5 percent wrote 101 to 125, and 10 percent completed more than 126 to 150 estimates monthly. Four percent wrote 151 to 175 estimates and 8 percent wrote 176 or more per month.

The average repair cycle time steadied in years 2005 and 2006 to six days. Eighteen percent have a cycle time of one to three days. Fifty-seven percent of shops cited a cycle time of four to six days. Sixteen percent fall into the seven- to nine-day category and 9 percent cite a 10-day or more cycle time.

Written standard operating procedures continue to be used by 62 percent of the population, down a bit from 67 percent in 2005.

Respondents were asked to estimate their gross annual sales for 2006. Those earning under $250,000 averaged 6 percent; 7 percent said $250,001 to $500,000; and 10 percent said $500,001 to $750,000.

The $750,001 to $1 million category showed a narrow shift from 15 percent for 2004 annual sales to 14 percent for 2005. The largest area continues to be from $1 million to $2 million, with 41 percent selecting this category of sales, up from 33 percent in last year's survey. The $2 million to $4 million category garnered 16 percent of the population. Five percent noted sales in the $4 million to $6 million category. The remaining percentiles of sales are unknown.

Internet Usage
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The 2005 survey asked respondents if they expected 2006 annual sales to increase, decrease or remain the same. Last year's survey showed great optimism, with 71 percent projecting a sales increase, 20 percent holding for no change and only 10 percent bracing for a sales decrease.

That prediction fell slightly short this year. Forty-five percent of businesses cited an average 12 percent increase in annual sales when comparing sales of 2005 to 2006; 36 percent noted an 11 percent decrease in annual sales; and 20 percent noted no change in annual sales, concurrent with last year's expectations.

For the 45 percent experiencing a 12 percent increase in sales, improved customer service was cited as a reason by 49 percent, followed by marketing and advertising (41 percent), equally shared at 31 percent are increased services provided and improved management skills followed by economic conditions (13 percent).

Other key areas cited as contributing to an increase in annual sales were technician proficiency (26 percent), and weather conditions (18 percent). Economic conditions and addition of new major accounts (13 percent), each are factors of improved sales. Increased labor rates (10 percent), percent of parts profit (5 percent), management software (8 percent) and quality of parts (3 percent) are declared as contributors to annual sales growth.

Reasons for the 36 percent experiencing a decrease in sales were also collected. Overwhelmingly, the economy was cited as the main reason for change by 66 percent of respondents. This was followed by weather conditions (34 percent). Totaling 13 percent each are labor rate losses followed by technician proficiency as basis in the reduction of sales. Marketing/advertising, percent of parts profit, management skills and quality of parts equally share 3 percent in sales decrease in 2006.

When comparing profits in 2005 to profits in 2006, 34 percent noted an increase. This relates to the 40 percent who also saw an increase in customers and the 40 percent with an increase in repair orders per month.

A decrease in profit (49 percent), customers (33 percent) and number of jobs (35 percent) for 2006 corresponds with the 36 percent citing a decrease in overall sales for 2006. The remaining percentages are held within the "no change or no difference" area from 2005 to 2006.

As in previous surveys, the 2006 survey asked respondents what they expect their annual sales to be in 2007. Fifty-eight percent of collision businesses project an increase in annual sales for 2006, 28 percent anticipate no change and 14 percent expect sales to decline.

Of the average 98 repair orders completed monthly, three resulted in comebacks. Collision shops attribute 3 percent of those comebacks to defective parts.

ASA collision members reported purchasing a variety of part types including OEM parts (70 percent), recycled aftermarket (23 percent), aftermarket (18 percent) and recycled OEM parts (16 percent). Eighty percent of aftermarket parts purchased are certified, leaving 20 percent uncertified.

Collision repair businesses are running comeback interference by rejecting defective parts in the beginning. According to survey results, 8 percent of OEM parts purchased are rejected due to fit or quality. Thirty-seven percent of aftermarket parts are rejected due to fit or quality, and 29 percent of recycled OEM parts used are rejected due to fit or quality.

Of the noted aftermarket part rejections, members classified that 53 percent are certified and 52 percent are non-certified.

The survey asked collision shops what type of warranty they provided to customers. Ninety-two percent provided a parts, labor and paint warranty, 5 percent provided a labor-only warranty and 2 percent offered a warranty on parts only. Just over 1 percent of respondents do not offer any type of warranty.

Customer Profile Gender classification for the customer base of independent collision repair facilities today is almost balanced at 49 percent female and 51 percent male.

Sixty-four percent of businesses operate a Web site to reach new and established clients. Establishing a relationship on the first visit is essential. According to survey results, 61 percent of the customer base represents repeat customers.

Sixty-three percent of businesses conduct some type of customer satisfaction survey for their customers and established that the customer base extends 31 miles from their location.

Marketing and Advertising

Internet Usage
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Marketing and advertising are part of doing business for 98 percent of the independent collision repair population. There was a slight increase in the average amount of advertising dollars, from $19,289 in 2005 to $20,022 in 2006. The survey shows various levels of spending in advertising dollars from $1 to $999 (2 percent), $1,000 to $4,999 range (28 percent), followed by $5,000 to $9,999 (19 percent), $10,000 to $14,999 (16 percent), $15,000 to $19,999 (5 percent), $20,000 to $24,999 (2 percent), $25,000 to $29,999 (14 percent), $30,000 to $34,999 (2 percent) and $35,000 to $39,999 (6 percent). Three percent spend more than $80,000 in advertising expenses and equal in average spent are $1 to $999, $50,000 to $74,999 (2 percent). Other categories averaged in the 1 percent range.

Collision repair businesses use several forms of advertising. Word-of-mouth came in first (88 percent), followed by Yellow Pages (76 percent), signage (57 percent), community involvement (52 percent) and Web sites (49 percent). Survey results show 64 percent of collision shops currently have a Web site with the possibility of reaching the more than 205 million surfers in the United States.

Newspapers at 33 percent led radio in advertising popularity at 31 percent. Additional advertising methods are church bulletins (30 percent), specialty advertising (24 percent) neighborhood shoppers (16 percent), direct mail (14 percent), and cable television and broadcast television each capturing 3 percent of advertising shares.

An element of community involvement is providing customer "know-how" programs or clinics to citizens. Sixteen percent of collision repair business owners participate in such programs.