Brad Mewes

By Brad Mewes

Irvine, California -- November 8, 2017 -- Recently I was asked to fly out to Phoenix to present at the Assured Performance annual meeting. Each year they host a meeting for members to discuss industry trends and OEM certification. 

I was excited to attend the event because it gave me the opportunity to get in front of companies that are actively investing in growth and OEM certification. I was honoured to be able to present, as well as to sit on a panel to discuss future trends in the collision repair segment of the auto aftermarket.

For literally every segment of the collision vertical, (dealers, repairers, insurers, dealerships, parts providers, software companies) re-investment is a necessity, but for decades the collision segment of the automotive aftermarket faced very little technological disruption.

Businesses did not have to re-invest in training and equipment as they do today. Vehicle structures, metallurgy, and technology evolved at a predictable pace. Tooling and education was standardized and predictable. The results were companies that could skimp on both investment and maintenance CAPEX yet still generate attractive cash flows.

Today, technology in the automotive aftermarket is evolving at a breakneck pace. This impacts both vehicle hardware (structure, metallurgy, sensors, etc.) and vehicle software (ADAS, diagnostics, “info-tainment”, etc.). The tools, training and technology required to repair vehicles has never been greater, or costlier.

Now, a significant investment must be made in tooling, training, and technology to earn OEM certification increasingly required to compete in the industry. Because OEM certification is on a per location basis, multi-location dealer groups and collision repairers are required to make a proportionally larger investment as well.

OEMs are increasingly involved in developing repair procedures and establishing tooling requirements. They are also increasingly focused on leveraging telematics and technology to further enhance their repair networks.

The increasing role of the OEM and OEM certification in the aftermarket will have lasting implications. 

The major players in the industry are already adapting. Multiple national MSOs were in attendance as were large dealer groups. These same groups have the resources to significantly re-invest in their business and pursue OEM certification.

For companies with a medium-term time horizon, increasing complexity represents an opportunity to invest in growth. Investment in growth and OEM certification creates sustainable competitive advantage that is difficult to replicate quickly. It also creates value at the time of a sale.

Of course, if your time horizon is limited, now may be an excellent time to exit to a larger, well capitalized organization that has the resources to continue to invest in growth. The industry is evolving rapidly, and what worked in the past will not work in the future.

More information from Brad Mewes can be found on his website at supp-co.com.

 

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