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WRECKONOMICS

Canadian repair organizations ranked by the Romans Group

The 17th annual whitepaper, A 2022 Profile of the Evolving U.S. and Canadian Collision Repair Marketplace, by the Romans Group LLC, is now available. In this annual report, the Romans Group takes its yearly insights into the U.S. and Canada collision repair marketplaces to establish trend predictions, annual highlights, repairer rankings and more.

Despite the Canadian collision repair industry’s “continued uneven recovery from the pandemic,” the Romans Group notes that 2022 brought plenty of opportunities for revenue growth.

“Opportunities to increase revenue production have carried forward throughout the year due to increased sales driven by higher repair costs and parts inflation, vehicle repair complexity and increased scanning and calibration,” noted the Romans Group’s report.

Still, 2022 was not without hardships. The whitepaper notes persisting risks and challenges like artificial intelligence; OEM— insurer relationships re: implementation of OEM repair standards and continued consolidation. Romans Group says the Canadian markets’ challenges are fairly consistent with that of the United States.

The report also says that, beginning in 2022, up to 70 percent of repair facilities in the Canadian market began refusing non-driveable vehicles, noting that some shops were booking out seven to nine months in advance. “[It was] thought that avoiding non-driveables would make more space for quicker turnaround repairs.” When ranking all the types of repair organizations, the Romans Group’s top two rankings are represented by one franchisor and one banner.

The remaining companies reflect a combination of independent and dealer, banner, and franchise organizations.

The company notes that, during 2022, a “more aggressive group of mid-size private equity-funded consolidators” accelerated both single and multi-location acquisitions and geographic diversity.

“The strategic focus at this time for many consolidators continues to be to pursue both new and existing market growth through single and multiple-location acquisitions,” writes the Romans Group. “However, this expansion has been slowed by the economic realities associated with increased financing costs for acquisitions and re-capitalizing businesses.”

Finally, the whitepaper suggests that industry growth and expansion is creating an opportunity for “inevitable change and shift among MSOs, insurers and OEMs in the balance-of-power dynamics,” particularly in highly consolidated markets.

“The industry is one step closer to a tipping point where the consolidated MSO’s revenue outnumbers the remaining independent and dealer consolidated revenue and industry scale.”

Some overall industry highlights and trends noted in the report include:

• Total vehicles miles/kilometres traveled have been on the upswing since early 2021 and are now approaching pre-pandemic levels, causing a spike in claims.

• More severe accidents due to bad driving behaviour, such as increased speeding, distracted driving and decreased seatbelt use that began during the pandemic. o According to Cambridge Telematics, there has been a 23 percent surge in distracted driving since 2020, resulting in an estimated 420,000 crashes in 2022.

• Not all claims are accident related. According to Allstate, catalytic converter replacements jumped 1,155 percent between 2019 and 2022 nationally.

• Average repair costs “skyrocketed” due to greater repair complexity, higher inflation-based labour expenses, more parts and higher parts costs (plus supply chain delays, diagnostic scans and calibrations, as well as costly new materials like aluminum and carbon fibre).

“THE INDUSTRY IS ONE STEP CLOSER TO A TIPPING POINT WHERE THE CONSOLIDATED MSO’S REVENUE OUTNUMBERS THE REMAINING INDEPENDENT AND DEALER CONSOLIDATED REVENUE AND INDUSTRY SCALE.”

– ROMANS GROUP, A 2022 PROFILE OF THE EVOLVING U.S. AND CANADA COLLISION REPAIR MARKETPLACE

The Romans Group’s five-year forecast to 2027 has the ≥$20 million segment and the Top 3 Consolidators aggressively growing their businesses while maintaining their significant market share lead over the Franchise Networks and the $10-$19M MLO segments. “We expect that by 2027, the top three consolidators will grow from their 2022 market share of over 22 percent to up to 32 percent,” reads the report. The full annual report, A 2022 Profile of the Evolving U.S. and Canada Collision Repair Marketplace, is now available. The report contains the complete results of Romans Group’s research and analysis for 2022, including over 75 charts and graphs throughout more than 100 pages with historical trends and a future view. The report can be purchased by contacting Mary Jane Kurowski of The Romans Group LLC at maryjane@romans-group.com.

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