IBIS Preview: Bradley Mewes on widespread automotive consolidation

Bradley Mewes will speak at IBIS 2016 on the consolidation trends in the collision repair, jobber and wider auto industry.

By Jeff Sanford

Toronto, Ontario — February 16, 2016 — Collision repair experts from around the globe are set to descend on Barcelona, Spain this spring for IBIS 2016. Collision Repair magazine is the exclusive Canadian Media Partner for the annual symposium that gathers together the key influencers and thought leaders in collision repair.

Brad Mewes is one of those scheduled to present on consolidation. Mewes is an industry analyst with Supplement, based in Irvine, California. A self-described “business geek,” the MBA-holding Mewes does corporate finance, management consulting and strategy work. He also has deep roots in the collision industry. His father owned a collision repair facility, so it’s no surprise he has ended up working in the automotive industry.

“It’s a big deal to be asked to speak at this event,” said Mewes in an interview with Collision Repair magazine. He is appearing in the same slot that Rex Green of BB&T Capital Markets did at IBIS 2015. At that time Green famously came up with the phrase “The Four Horsemen of Consolidation” to describe the four banner companies rapidly consolidating the US collision repair space. For more on this, please see “IBIS Athens 2015: Will consolidation sweep the world?

At that time Green predicted the four big consolidators would increase their share of collision repair revenue from 10 to 65 percent of revenue over ten years. “Rex Green did the presentation in this slot last year. I’m very honoured to follow him and to provide an update,” said Mewes.

His presentation will bring attendees up to date on what’s gone on in the consolidation story in the twelve months since. “Looking at the US market, the consolidation story has changed,” says Mewes. “The big four continue to aggressively acquire multi-store operators and single store locations. However, we’re seeing some changes in the way they’re growing.”

Mewes says the Big Four are beginning to open brownfield and greenfield locations. That is, they’re either converting existing buildings to collision repair centers, or building all new structures to expand their business. Building a new location makes sense in an area where existing locations have already been bought up, but there are a variety of reasons for doing a green or brownfield expansion, according to Mewes.

“This method of expansion is taking off. Over the long-term it presents a better return on investment. You have a longer time horizon to realize return. You don’t need to pay a premium to a competitor to get a shop. It’s a longer term strategy,” says Mewes.

Going on to chat about some of the other trends in the industry today, Mewes mentions the remarkable amount of consolidation taking off in Australia.

“’Taking off’….that’s an understatement. Australia … it makes North America look slow,” says Mewes. He mentions the publicly-traded chain AMA Group. “They’re on a tear. The head of the company, Ray Malone, is just an incredibly sharp individual. He’s taken a page out of what’s going on in the rest of the world. But they’re doing a great job. They’ve done in a compressed time what has been going on in North America for years,” says Mewes.

Mewes notes that the consolidation in the collision sector is also driving events in related areas.

“Look at the jobber and paint distribution sector. As we’re seeing their customer base consolidate, we’re seeing consolidation in the jobber business. We’re seeing a greater need for a nationwide trading partner,” says Mewes. “These trends are reverberating through the entire sector.”

Consolidation is even taking off in the dealership space.

“Consolidation on the dealership side is widespread,” says Mewes. He notes the acquisition this past spring by Warren Buffett of Van Tuyl Group, the fifth largest privately held dealership group in the United States. That company provide the base for a company that will be known as Berkshire Automotive and is expected to acquire dealerships across the continent. That the world’s “great investor” is in the space is some kind of confirmation of the excitement around the auto industry right now.

“Warren Buffett has been been very open that he bought Van Tuyl with the very explicit goal of consolidating the dealership space. Automotive in general is a big, hot investment play right now,” says Mewes.

IBIS Global Summit tickets are available for £1,795 (approximately $3,607 CAD) and include full access to the Welcome Reception on May 23, access to the full day’s conference, including lunch and breaks, on May 24, the International Dinner on the evening of May 24, as well as the final half day’s conference and delegates’ lunch on May 25.The price also includes two nights’ accommodation (May 23 and 24) at the conference venue, the Hilton Diagonal Mar.

To confirm your place, email Nicola Keady Nicola@ibisworldwide.com or visit ibisworldwide.com.

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