Over Capacity

I think quite a few of us have been struggling with the "over capacity" statements about the collision industry.  I have been in many discussions about this topic but I never found a logical comparison to create a visualization of the over capacity issue.  I watched Greg Horn's Mitchell Industry Trends Webinar and found a good visual on page six.

It was created by Frost & Sullivan for Mitchell and the comparison between Tire Dealers 12.1% of the Automotive Service Providers and 13.3% Collision Repair Facilities.  To me that was eye opening and shows that there is a definite over capacity of collision repair centers.  What is more disturbing this is after CollisionWeek shows we dropped from 36,529 shops in 2005 to 34,143 in 2009.  What did that percentage look like in 2005?

The reason this picture is so vivid for me is in most instances cars need tires a lot more than they need collision repair.   It is said that a vehicle owner needs collision repair every seven years, I also have heard that average is moving closer to ten years.  Most tires have a 45,000 to 60,000 mile rating on them so if a drive maintained the national average of 15,000 miles per year they would need tires every three to four years. 

Seems there would be a lot more demand for tire stores than collision repair centers.  If this ratio was more aligned I would suspect that the numbers should be reversed at a minimum. 

This shows me that in order for a collision repair center to stay in business they have to be at the top of their game.  I have several articles in ABRN relating to this such as How to Prosper in a Down Economy and Creating Profit Centers to Develop Upsells.

I encourage you to look at these articles and do what it takes to move your business forward.  A reduction in collision centers is inevitable, I just do not want it to be you!