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Integration: Coming Together

Collision and mechanical shops are finding common ground.

I n the 1920s, as cars evolved from buggies with engines to motorized vehicles, the need for speed produced cars that could go much faster. And, when combined with the aspect of mass-production of vehicles like the Ford Model T, along with rough roads and inexperienced drivers, the risk of breakdowns and collisions grew exponentially.
Some repair mechanics decided they were panel restorers and started to specialize in fixing and painting the repaired cars. Suddenly, collision repair was an industry.
Today, the collision industry is very much a world of its own, but as we move into the future, the collision and mechanical repair specialists are finding each other once again. There are green shoots of an integrated industry poking through the repair landscape as it continues to evolve with new brands, a variety of new vehicles and new ways of servicing them.
Five into one
CMD CARSTAR—an MSO in Calgary— acquired a mechanical shop, Ramsay Auto Select in July 2015. The company took the one-time muffler shop, gutted it and rebranded it as a full mechanical facility. According to Dave Stretz, Chief Operating Officer at CMD, the concept was to operate the shop both as a profitable area mechanical repair shop and also to use it as the in-house source for mechanical repairs required in the collision restoration process.
Like most collision facilities, mechanical repairs that are primarily suspension related are done in-house but when it comes to major mechanical work, electronics and other specialized tasks the work is sub-contracted. Often an OEM is involved or a skilled mechanical shop. Experience has taught CMD that when the vehicle went to an outside mechanical shop, the cycle time became much harder to control. There’s also the 20 percent markup to contend with.
More readily controlled
By adding the six-bay facility to the mix, costs and scheduling are more readily controlled. Stretz indicates that the ratio of five collision shops feeding a single mechanical shop is very efficient, although he notes that a rough winter in Calgary and a high volume of repairs could create a need for more mechanical capacity.
Last July, Fix Auto acquired three new brands: Speedy Auto Service, Minute Muffler and Brake, and Novus Glass. Daryll O’Keefe, General Manager of Fix Auto Ontario, explains that Steve Leal, the company’s President and CEO sees horizontal integration as the future of the service business. The three areas—collision, mechanical and auto glass—intersect naturally and that offers a breadth of opportunities from geographic integration into a service mall, an interchange of services or more. The way cars are brought to market, like Tesla is doing by selling cars with no service facility on premises, may well offer opportunities for outside suppliers to undertake an increasing share of the world’s auto service needs.
In the short term, the shops share a family relationship and may well find some synergies. That said, currently there are no plans to integrate their functions. In the future, however, there will likely be many opportunities to offer a pallet of auto services and Fix Auto wants to be in the forefront of that integration. Like a century ago, it seems the panel beater and gearhead are coming together again.

Categories : Collision

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