HOW THE RISING COST OF REPAIRS EFFECT COLLISION REPAIRERS
Story by SARAH PERKINS
Vehicles are packed with advanced technology—and as such, repair expenses climb higher and higher. These expenses apply pressure to various verticals of the industry. From the intricacies of new electronics to the rising price of specialized parts, collision repairers are facing an increasingly challenging landscape with costs passed down through the value chain.
Collision Repair reached out to members of the industry to learn how understanding these dynamics is essential for staying ahead and maintaining profitability in a rapidly evolving industry.
When speaking with Robbie Shreenan, owner and operator of Topcoat Automotive Collision repair in Halifax, Nova Scotia, he highlighted how increases in labour costs have contributed to the broader spectrum of rising costs in the industry.
“We are all short-staffed and keeping techs costs more. Despite this, insurance companies are still paying the same labour rates and margins are getting very tight,” he said. Shreenan said price of material and shop supplies is another point of pressure. “Small but essential things like rags, tip of the seam sealer and razor blades are rising every time I look, and these are not things we can easily bill to our customers. These costs hit our bottom line.”
“A third factor in rising costs is the need for a more diverse variety of tools and equipment. Scan tools, welders, rivet guns—every year, we need to add more and more to our toolbox. Repairing vehicles is becoming more and more technologically advanced.” Technology-associated expenses are costly on multiple levels, he added.
“Technology affects us the most when it comes to time. We don’t always have the right scan tool or calibration tool. So, getting a dealer to scan the car is very time consuming. They are all booked for weeks. The cost of these scans are very expensive, and these costs translate to the customer.”
To navigate this changing environment and retain profitability, shop efficiency is paramount.
“At Topcoat Automotive Collision repair, we focus on techs, shop flow and making sure we are as efficient as possible. We need to be able to make each move and each minute count in the day. We can’t control the cost of things, but we can control how hard and smart we work.”
Jeff Labanovich, vice president of operations for Fix Network Canada, emphasized that near everything the automotive industry does has the potential to impact collision repairers later down the line.
“The global economy touches everything. From parts delays to issues in shipping, every aspect of the automotive industry creates a ripple effect for collision repairers,” said Labanovich.
“This is then further impacted by the increase in the complexity of individual parts. Take the headlamp for example. Before, a vehicle’s headlamps were just for lighting the road, but now, they serve multiple functions and feature complex technology like sensors and advanced driver assistance systems.”
In a time where cars have more complex parts than ever, the collision industry must strive for efficiency. Labanovich has some suggestions.
“I have seen shops make deals with suppliers and investing in equipment and training.
New technology also offers opportunities for increased efficiency. Techniques like glue pull repair and other less invasive repairs help to increase repair time and reduce costs.” A former shopowner himself, Labanovich believes the rise in repair costs and collision repair expenses has prompted an air of collaboration.
“I’ve seen certain insurers pay enhanced door rates for certifications. [Insurers] understand there’s a rise in cost and that it’s outside of the shop’s control. As such, insurers have also become more interested in having a branded facility and providing support to facilitate this kind of partnership.
“The collision repair industry has always been founded on community and collaboration, and the rising cost of repairs is one facet that is continuing to drive this. As the industry continues to change, so, too, will repairers continue to adjust to these changes.”
Prochilo, CEO of Simplicity Car Care reiterated that “costs in repairs are consistently rising based on a series of both micro and macro economic factors.”
As noted by Shreenan and Labanovich, this includes factors such as advanced vehicle technology in the form of vehicle sensors, cameras and advanced safety systems; labour costs; increased material costs, such as those for paint, adhesives and parts; and an increase in the complexity of repairs requiring more intricate and time-consuming repairs. Prochilo further noted that the rising cost of repairs considerably impacts all stakeholders, specifically the consumer.
“As a repairer, we’ve doubled down on investments in technology and training to increase the percentage of repaired versus replaced panels. Obviously, OEM guidelines are always considered in the decisions, but we have identified that greater repair versus replace reduces costs to the customer and increases the profitability of a repairer, generating a win-win scenario for all parties involved.”
Prochilo also stressed that ADAS and other advanced safety technologies, as well as new vehicle substrates has impacted both repairability and costs.
“Plus,” he added, “the overall complexity of modern vehicles, with their interconnected systems and components, makes collision repair more intricate and time consuming which in turn, can lead to longer repair times and so higher costs.”
He said, at Simplicity, reducing repair costs and cycle times are a paramount goal.
“We believe that leveraging opportunities for repair versus replace as well as the inclusion of green parts in the estimatics process, not only helps reduce costs and cycle times, but also helps reduce carbon intensity—which is a massive win for all stakeholders and the planet.”
Michael Macaluso, group president and executive VP for the paint, collision and glass segment at Driven Brands, pointed out that repair expenses and complexity goes beyond things like ADAS or electric vehicle repairs—similar trends can be seen in refinishing.
“There is a steady rise in consumer demand for complex colours and special effects, and these trends in advanced colour development will only continue to evolve. This includes more transparent colours, colours with unique metallics, increased frequency of three stage paint procedures and requirements for specialized ground coats resulting in four stage paint procedures. These were formerly custom offerings. Now it’s available on nearly every make and model of vehicle sold.” Given the sheer breadth of complexity in modern repairs, Macaluso believes shops deserve to get compensated for their commitments to the future.
“Vehicles are now made with more technology, and that technology is more expensive to repair or replace. The cost of replacement part prices and materials, such as paint, have also increased substantially,” he pointed out.
“All of these factors drive up administrative cost of managing the claims process. At CARSTAR, we want to fix cars right and with the best customer experience. This requires investment in people, process and technology, and we need to be properly compensated for that.”
He acknowledges that balancing the scales is not an easy feat.
“It’s challenging, there’s no doubt about it, but every industry has its challenges. Our focus is on how we maximize the opportunities in the current market. We have these conversations more and more with our industry partners and this collaboration will continue to be essential to keep the total cost of repairs at a manageable level for insurers, but also allow us to meet the OEM requirements of a safe and quality repair on a modern vehicle.”
