With warranty jobs on the decline, AutoNation Inc. is adding collision centers to bolster revenue.
The nation's largest retailer will open its 69th collision center on Sept. 19 in Manhattan Beach, Calif. It's part of a $12 million investment that AutoNation is making this year alone in collision.
The company opened or relocated five collision centers in 2010 and plans more projects -- four to six -- for 2012, said Craig Stephens, director of collision services. Next year's investment amount, while not finalized, is expected to be about the same as 2011's $12 million. The average project is about $3 million and generates a good return, he said.
Customer retention and diversifying fixed-operations revenue are the main drivers of the strategy.
"We're looking at any way we can to keep the customer doing business with our store," Stephens said.
For dealerships without collision services on site but within a 15-mile radius of an AutoNation collision center, AutoNation employs a collision concierge in the store's service department. That person takes the car in, works with the insurance company and transports the car to and from the collision center for the customer.
While the collision business is profitable, AutoNation declined to share specific numbers. Revenue is growing. AutoNation says collision represents about 10 percent of all fixed operations revenue. That makes it about a $100 million business, up 5 percent from the first half of 2010 to the first half of 2011.
With new centers coming, AutoNation expects revenue growth to continue. The company currently is looking for a collision center location in Bellevue, Wash. It also plans more expansion in Southern California, where it will soon have four centers for its 41 stores.
A more ideal ratio is two to four dealerships per center, depending on the size of the store, Stephens said. In South Florida, AutoNation has 12 collision centers and 38 stores. In Texas, it has 13 centers and 42 stores.