It seems like the quest for the lowest repair price will soon be over. Thank goodness!
By DARRYL SIMMONS
It may be a new year, but here’s a not-so-new prediction: well-trained and well-equipped collision repair centres will be in high demand in 2023.
In my opinion, we will see facilities with the knowledge and capability to perform proper, compliant repairs soon turning ample profits as we venture deeper into the increasingly complex world of vehicle repair.
The number of shops has been thinned already, and many shops are already backlogged. Starting as a whisper, the mantra is getting louder… Profitability for shops is needed in the new Auto Claims Economy. A growing number of insurer “partners” are not just paying lip service, but they are starting to pony up to the bar. I predict we’ll soon see increased labour rates across the board, flat fees for appraisals, payments for admin duties and much, much more.
Insurers have painted themselves—well, their customers, actually—into a corner by trying to get the cheapest price as opposed to the best partnership at the local levels. Thank goodness the quest for the cheapest repair price is over. That race to the bottom is soon to be reversed. They are realizing a cheaper price does not bode well in today’s market. At the end of the day, insurers need their customers’ cars repaired properly. They will be reliant upon the progressive collision centres who can conduct these repairs safely and profitably . Insurers can no longer put one shop against the other to get the best price. This is not a revolution, it’s an evolution. For the first time, repairers are well positioned as insurers and customers scramble to get their cars repaired according to procedural dictates, supply chain and chip shortages, and an ever-growing backlog at the shop level.
Traditionally, repairers sat at the bottom of the food chain when it came to the Auto Claims Economy—at the mercy of those who paid them. Insurers have always had the negotiating power as they were the ones who controlled the purse strings.
Now, as repair capability declines, new questions demand profitable answers. Who is going to pay for storage while waiting for the repairs and the parts? Who is going to pay for the increased administration needed for the estimates that are now much more complicated as they include EV materials as well as other alternative options, such as self-drive and ADAS.
Savvy insurers recognize the importance of profitability and will pay more for qualified repairs in order to get better service. That’s where the customer wins. And, with OEMs eyeing cycle times and cradle-to-grave strategies, progressive shops—i.e., the good ones—will get more business. But the key is not just volume, it’s profitability. If shops don’t make a profit, sooner, rather than later, they will close down. And insurers know this. The tide is turning. Collision repair facility owners and managers now have a platform to voice their concerns on a national level and actually be heard. Yes, I can see just over the horizon—higher labour rates, better payout tables, better pay for administration costs, and much more. Stay tuned. This is bound to be collision repairers’ brightest hour.
The only reason they control the purse stings is because the industry lets them. Stop rationalizing folks. Your customer is the vehicle owner. Make sure you look after them first and foremost.