By Mike Davey
Toronto, Ontario -- July 24, 2015 -- Executive Vision is a regular feature focusing on discussions with key players in the auto claims economy and the auto industry, their views on the present industry and their vision for the future. Desmond D’Silva is the CEO of Assured Automotive, one of the largest multi-store operations in Canada, and the largest corporately owned chain in the country. The company operates collision repair facilities throughout the Greater Toronto Area, Southern Ontario and the Ottawa region.
Collision Repair magazine: What do you see as the three most critical issues for the collision repair industry?
Desmond D’Silva: The first piece of the puzzle is profitability and sustainability, and I list those together because they are interdependent. An unprofitable business is simply not sustainable in the long term, which is obvious, but a unsustainable business also isn’t profitable in the long term, which may not be as obvious. If the model is unsustainable, you will eventually reach the point where investment has grown past profit.
Second, there’s vehicle technology and repairability. Consumers demand more and more, so the OEs supply what they want. This leads to further complications in the repair process.
Finally, there’s attracting and re¬taining staff, which relates to both repairability and profitability.
CRM: What’s the single most important issue, and what would you suggest to a collision repair facility owner who is trying to deal with that?
DD: It’s definitely profitability and sustainability. Owners need to have a sound cost management plan in place to ensure that they are aligning themselves with the right companies. They also need to focus their efforts on operational efficiencies. Owners cannot control the market. They cannot control the number of claims. These are outside factors that occur entirely beyond our control. An owner who wants to focus on profitability and sus-tainability must put their attention on what they can control, and that’s the internal organization and process.
CRM: It seems like we’ve seen an increase in capital financing in the collision repair industry, both for repair facilities and suppliers. What do you think is driving this, and how can repairers take advantage?
DD: Capital financing, to date, has focused on investments in organizations that have scalability, market share and effective management controls and systems.
The attraction has a lot to do with the fact that the collision repair industry is still relatively fragmented compared to other industries, despite enormous increases in consolidation in the last 10 to 20 years. There is still opportunity for consolidation and therefore growth.
Unlike many unconsolidated industries, the collision repair industry is mature. The revenue side of the equation tends to revolve around sound customers who are financially solvent, i.e. insurance companies. This gives firms looking to invest financially a considerable ability to implement strategies and systems to enhance the industry’s value offering to their customers. Therefore, the opportunity for growth within the industry is large.
CRM: In your view, what are the most important steps for a shop to take to secure longevity?
DD: A strong focus on operational excellence and customer service are crucial to ensuring your business remains relevant. You will hear a lot of people say that the industry has changed. They’re right, of course. It has changed significantly. However, what they sometimes leave out is that it continues to change.
Customer expectations continue to rise. A clean, inviting facility and polished customer service will soon be the new normal, and will therefore stop impressing customers. You must go further.
Regarding operational excellence, this is already known to be a continuous process. It’s not certain that you will continue to find ways to improve simply because you are looking. What is absolutely certain is that you will not find them if you stop looking. In any case, both of these areas need constant improvement or you will inevitably be left behind as your competitors seize the opportunity to be the best.
CRM: Thinking solely of how it’s going to change the business of collision repair, what’s the biggest change we can expect in the next few years?
DS: Vehicle technology and repairability will prove to be the most significant disruptor in the collision repair industry going forward. In general, cars are not becoming less complex. The OEMs are in competition with each other to produce the most advanced vehicles, while increasingly stringent mileage requirements mean they must also turn more frequently to weight saving materials such as high-strength steel and aluminum. Repairing today’s vehicles already requires a significant investment in both equipment and training. This will likely continue to increase as we move into the future. We’ve already seen numerous collision repair facilities close their doors in the last few years because they ei¬ther couldn’t keep up with the investment needed, or couldn’t compete with more modern and progressive collision centres. The right equipment, training and alliances will be the keys to success in this environment, even more so than they are today.
CRM: What does the future hold for Assured Automotive?
DD: Assured Automotive is, and will remain, focused on the relentless pursuit of customer satisfaction and operational excellence. We always keep our customers top of mind. Each and every decision we make has a direct impact on our customers and our ability to meet their service expectations. This is not just about the insurance companies, but about the motorists we serve directly. It is the policy holders who we interact with at ground level, and it is the policy holders that we must strive to satisfy. Any negative experience will affect their view of us and likely of their insurer, and this in turn will impact on us. That’s why it’s our top priority. We employ a third party company to contact our customers to ensure they have had a positive service experience with Assured Automotive, and this lets us know that we are delivering service in a timely, friendly and efficient manner.
I listed it separately, but pursuing operational excellence is really part of the customer service piece. The more efficient and accurate we are at repair, the more we please our customers. Just like sustainability and profitability, customer satisfaction and operational excellence go hand in hand.