Local Smash Repairers Face Extinction

Updated: Nov 1

The Australian motor vehicle repair industry is worth $12billion and although it has grown over the past 5 years, the growth has been modest, and it hasn’t been universal.

Look a little deeper and you’ll find there are fewer independent smash repairers this year that last. That’s because more of them are closing-up shop and it’s a trend that started long before Covid-19. Even if the pent-up demand for new cars after Covid is as strong as predicted and we see a return to bumper-to-bumper traffic on our roads; it won’t be enough. The fact is - independent/local panel shops are closing at an accelerated rate.

So, what can owners do to future proof their business? To answer this question, you need to identify the changes taking place and determine which of these are having the greatest influence. Depending on the panel shop, some might be positive, while others could be negative or have no effect at all.

Here are a few:

  • Growth in household disposable income due to historically low interest rates has supporting continuous growth in the sales of passenger vehicles, resulting in more vehicles on the road.

  • With more disposable income consumers are more likely to engage professional repair services rather than opt for DIY repairs.

  • European prestige vehicles have increased their market share.

  • Insurance companies are exerting greater control and increasing pressure on repairers to improve cycle times and reduce average repair costs.

  • Insurers are establishing their own network of repairers who they enthusiastically encourage their policyholders to use; often dictating which parts are used, the methods of repair and how much they will pay. These repairers are rewarded with a continuous flow of new clients.

  • Improved vehicle safety and collision avoidance technology, together with higher petrol prices and road safety initiatives such as speed cameras and drink driving campaigns have aimed at reducing vehicle accidents.

  • New vehicle construction methods and safety systems require repair shops to invest in new equipment and staff training. Those that do, can take advantage of economies of scale to increase volume and productivity. This has led many businesses to increase their shop footprint to allow for a higher volume of generally similar-style repairs.

  • Car owners have shown a growing preference to have all maintenance and repair services done through dealerships. Some believe it is due to the growing number of cars purchased with lease finance from dealerships. But the real reason is most likely - convenience and trust. Consumers fear local auto repair shops lack the knowledge, expertise and technology needed to repair todays advanced vehicles.

  • There has been an increase in vehicle manufacturer approved repairer networks. One reason for this is to encourage the use of OE parts when many insurers specify aftermarket or recycled parts.

Despite these dynamic changes, one thing is certain and that is - the Australian motor vehicle repair industry is set to remain fiercely competitive. To survive and grow under these conditions, owners need to think long and hard about their business model and be willing to change.

In short, the owners of independent/local panel shops have 5 options to choose from:

1. Diversify

Move into other areas of motor repairs.

2. Expand

Increase their footprint and invest in equipment and training/acquire competitors.

3. Specialise

Identify a niche market/align themselves with a brand and exploit their point of difference.

4. Join Insurer Networks

An insurance company network to secure a volume arrangement.

5. Downsize/Exit

Sell, scale down or leave the industry.

To make this decision, careful consideration needs to be given to the circumstances that apply to each individual business. But if you're panel shop is well established with a good reputation and a loyal client base, your best interests may likely be served by capitalising on these strengths and establishing yourself as a specialist repairer. Aligning yourself to a specific car manufacturer and being elevated as an approved or accredited repairer can bring great rewards; provided the manufacturer openly supports the association by actively promoting your business and referring their customers to you.

Regardless of the business model or strategy, there is one thing that can help independent panel shops to survive - a visually strong and effective website. While there’s no guarantee this will generate new customers, it will help prevent losing exiting ones to competitors and make it easier to win new clients over. Covid 19 restrictions have shown just how important a website can be to a business, no matter how well known it is.

idResults are experts in web strategy and design for aspirational brands, trades, and services as well as healthcare professionals. For an obligation free and confidential discussion about your website or web strategy Call Us on 0419 491 485 or use our Contact Us Form