Dealerships face tough competition from independent and chain stores when they open or expand body shops. The well-capitalized big fish in the collision repair space keep gobbling up small independents. And some of the big fish are joining forces: The merger this year of Caliber Collision and ABRA Auto Body Repair created a chain of more than 1,000 stores in 37 states and the District of Columbia.
Greater economies of scale and price undercutting among the largest body shop consolidators can make it hard for some dealerships to carve out a place in the market. The well-financed conglomerates also can better weather the headwinds posed by the rising costs of doing collision work, such as service technician certifications needed to meet automakers' repair standards and the expense of body shop equipment. As a result, new-vehicle dealerships capture only about one-fifth of the $36.2 billion annual U.S. collision repair market, according to industry consulting firm Supplement Advisory in Costa Mesa, Calif.
But Diehl says she isn't intimidated. She already operates three small collision centers at dealerships. When the new center opens, scheduled for this month, Diehl plans to convert the body shop at Diehl of Robinson, a Chrysler-Dodge-Jeep-Ram store, into nine service bays. The two other collision centers will remain open.
The shop features 14 repair bays and eight refinishing bays. It will handle repairs of all makes and models.
Based on how busy her existing shops are, Diehl says she is confident the center will thrive.
"There always is competition," she says. "But we already schedule three to four weeks out at the existing shops. And with more technicians and a new state-of-the-art facility, we'll be able to turn more hours, so I know this will work. Having the right people is always a key to success, and I have an amazing team."
Still, Diehl's venture is a bit of an outlier. From 2011 to 2018, the share of new-vehicle dealerships that operate body shops hovered steadily between 35 and 40 percent, according to the National Automobile Dealers Association.
"The total number of stores isn't dramatically different than it was 10 years ago," says NADA senior economist Patrick Manzi. "There's no explosion of new body shops."
Whether a dealership runs its own body shop depends greatly on local market conditions, Manzi says. Rural dealerships are more likely to operate body shops than urban ones, he adds.
Another dealership group in western Pennsylvania, Stuckey Automotive, also is all in on collision repair. The three-dealership group is consolidating its two on-site body shops in a 170,000-square-foot former factory building. The facility is scheduled to open early next year. Total capital outlay: north of $2 million, says Matt Stuckey, the group's owner.
The new shop will include roughly 30 repair bays and four paint booths, and it also will handle used-vehicle reconditioning and commercial truck repair. It's a far cry from six years ago, when Stuckey was thinking about getting out of the body shop business because it wasn't making enough money.