The ABP club recently gathered feedback from 28 of the country’s largest body shops that account for £588 million in turnover across 245 repair sites.
The club’s chairman David Cresswell talked members through the findings this month at their annual convention. Plan Insurance Brokers were invited to attend as the club’s recommended business partner. As a result, we’re pleased to be able to share the following insights.
The total body shop repair market is valued at £3.5 Billion. Via acquisition Nationwide have become the single largest company with a 9% share, that still leaves them plenty of room for growth before the competitions authority might look to intervene.
There’s recently been large growth in one-day fast track repair centres.
Insurers are now applying more pressure on work shops by offering guaranteed repair times.
The Van repair market has exploded due to high levels of internet shopping and delivery drivers being prone to having accidents and lacking tools like heavy duty jack stands etc.
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Ben Waller of not-for-profit research organisation ICDP painted an equally gloomy picture for ABP Club’s members.
He praised the body shop repair industry for acting collectively to halt declining revenues but pointed out a looming long-term downward trend.
There were, however, 5 areas he pointed out where the sector needs to improve – or at least be more aware – in order to achieve success in a declining market:
Margins in UK Body Repair Shops are the lowest in Europe. He believed this was due to insurer and claims company interventions that focus primarily on cost.
Technology such as telematics is proving a disrupting influence for repairers. But tech may also present opportunities to “miss out the accident claims company middle men” and reach the client directly post incident.
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Price comparison sites have driven down insurance premiums. Though higher excesses have encouraged proposers to more frequently organise their own repairs.
When they do so they pay a higher margin than a corporate client. Many body shops no longer advertise their business to the public as they are entirely focused on insurance work. In order to stay profitable small body shops have to think and be different.
Independent, medium & large workshop numbers have stabilised in recent years compared to franchised and small workshops. This contrasts France and Spain where small work shops still make up a high percentage of numbers.
Morgan Stanley estimate that, despite the recent uplift in premiums, insurance costs will fall by 4% over the remainder of the decade and by up to 80% once adoption rates of the innovations accelerate. Fleet News event predicted that road travel could become as safe as travelling by train.
A typical body shop needs to be 2000 square meters in size to achieve a 1-2% profit. So a standard body shop would only make £20 on a £1000 job. Technology can improve efficiency and drive up these numbers but it requires a lot of investment. Therefore it is unsurprising to see a high number of small body shops exiting the market.
There was wide spread agreement from all speakers at the ABP Club convention that the repair industry needs to find talent and nurture it.
Telematics, Connected cars, hybrids and fully electric vehicles all present fresh challenges. A more tech-savvy, highly skilled and deeply knowledgeable talent base is needed.
Thin margins aren’t attracting a great deal of investment into the trade which would enable an ageing generation of owners to exit. Without their roles being replaced with the fresh energy of young hungry entrepreneurs the market risks stagnation.
Great work is being done to start attracting more young people into “trailblazing” apprenticeship schemes such as the Collision Repair Centre Group and Autoraise.
The Department for Business, Innovation and Skills are overhauling old processes in the hope of encouraging businesses to take a chance on young people. Large funding opportunities exist and the Institute of Apprenticeships will go live from April 2017. More information can be found at www.apprenticeships.org.uk
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