Editor's note: An earlier version of this story used an incorrect surname for Jefferies LLC's Rex Green.
Why shouldn't franchised dealerships just give up on collision repair?
Just two of every five U.S. new-vehicle dealerships have body shops. A fine-tuned Google alert will provide a chronicle of dealers who are selling their shops to, or entering into partnerships with, independent chains and consolidators.
Such a search also will show who the big players are in collision-center operations these days. They carry names such as Gerber, ABRA, Caliber and ServiceKing. And they're getting bigger.
These four own nearly 1,500 of the nearly 38,000 collision repair centers in the United States and Canada -- almost four times the number they held five years ago. An industry analyst predicts their share of the revenue pie will rise to two-thirds by 2025.
So why not give up? For one thing, collision repair is a $35 billion-a-year business in the United States. That's a lot of money to cede to competitors. And as anyone old enough to remember 2009 can attest, car sales blow hot and cold.
But collision repair? It's "a stable business," says Rob Cochran, CEO of #1 Cochran, a group of 18 dealerships based in the Pittsburgh area.
In his latest defy-the-trend moves, Coch-ran acquired his sixth collision center in March and plans to open a seventh early next year.
One trick, Cochran says, is to impose standardized repair processes at every collision center. The workloads at each body shop are balanced centrally to achieve peak efficiency.
Cochran isn't the only contrarian. AutoNation Inc., the largest U.S. dealership group, said last month that it is unifying its 70 collision centers under its retail brand -- and plans to open or acquire at least 15 more free-standing repair centers within two years.
AutoNation also is launching its own line of repair and maintenance parts and is expanding its used-vehicle dealership network, including collision repair facilities. The goal of these initiatives, says CEO Mike Jackson, is improved customer retention in the service departments of all AutoNation dealerships.