By Darryl Simmons
This year was a challenge—let’s make 2021 great
Man, oh man, what a year. But I’m not telling you anything you don’t already know.
Despite the challenges, we saw phenomenal advancements for certain sectors of our industry: training, network growth, certification, and exciting new products and profit opportunities. Network action in 2020 was huge. Simplicity Car Care mushroomed to more than 50 locations; The Boyd Group announced plans to double its franchise size in five years; CSN made its move south; Fix Auto also brought ProColor to the US; and CARSTAR had its best year ever. But is this the end for the small shop or the large independent? Not yet, not by a long shot. If COVID taught us anything as an industry, it’s that being nimble is the key to success. Smaller shops can turn their business model on a dime, while most—dare I say, all—large independents have locked in relationships with either fleets or select OEM which for the most part guarantee their financial success.
One of the biggest announcements of the year and a harbinger of things to come is GM’s deal with Mitchell to set up a certification network in Canada. They’ve held off a while—my guess is because of the need for French in the software and collateral—but now that it’s here we may see other OEMs doing the same.
The difference between this and the thirdparty certifications is huge. Checks and balances won’t need to be randomly evaluated a couple a times a year. The software and programs will be monitored constantly and adapted as needed. The feedback will be instant. This is about as close as you can get to complete control from sale, to first-notice-of-loss from OnStar, to shop locator, parts ordering, rental, to final hand off of keys. It will take a while for the model to be thoroughly tested and tweaked, but it will chart the course.
My prediction going forward is a closer tie between insurers and OEM. In parts of the US, Tesla and Porsche are already selling insurance. That’s the thing about market leaders in multibillion-dollar industries—when it comes to competition, it’s a lot easier to buy your way out and barring that, figure out a way to work together.
As is often said, keep your friends close, but your enemies closer. These behemoths are realizing that together they can control the whole automotive lifecycle. Scary thought, but OEM and insurers are global based. Laws and financial statements in different countries don’t necessarily affect their global bottom line.
The most likely model is one where they cooperate, with the OEM selling name-brand insurance along with vehicles. Or the carmakers might just do it themselves, bankrolling and selling insurance like they do with financing. Doesn’t really matter as it seems a natural product extension regardless. My guess is cooperation, due to the myriad of logistical problems with legislations and the fact most families have different car brands and combine their home and auto policies.
A few years ago, at IBIS, there was a speaker from VW who bluntly stated that it was their goal to be produce more cars worldwide than anyone else. They also wanted to sell insurance. So, I’m not sure exactly what the business model will be—either insurers who make and sell and fix cars, or OEM who sell insurance. Mark my words, it will happen; and this will factor high in the future success of progressive repair facilities who invest in proper training and equipment.
All the best for the New Year. It’s going to be a great one