With claims work down for many shops, reconditioning used vehicles can provide some very good opportunities.
The COVID-19 situation has caused many disruptions for our industry. Not only have many shops seen a reduction in claims, due to less miles being driven and people staying at home because of the pandemic, some of the other work that shops like ours traditionally perform has also been impacted, including transit damage on new cars being shipped from the assembly plant to the dealer.
Because people are traveling less, many are using what disposable income they have to invest in upgrades to their house and also to the upkeep of their vehicles.
Additionally, with new car inventory continuing to run low as a result of OEMs shutting down production in the early spring, many dealers are turning their attention to used cars–not only paying a premium for them because of demand, but also looking for quality reconditioning work to be performed.
For collision shops, recon work can provide a steady stream of income in times like these when the number of traditional collision repair claims are significantly lower.
There are some things to consider though. While there is currently plenty of recon work out there, the high prices that many used cars are bringing due to demand, means that for many used car sales managers, the margins are slimmer than in the past, which means for collision shops, they are paying attention to every penny, so you need to ensure your processes for reconditioning are as tight and orchestrated as possible.
One big advantage of reconditioning work is that you can often assign it to your junior, less expensive technicians, freeing up your more senior employees to handle larger collision repairs.
With reconditioning work, you’re often dealing with things such as dents, bumper scrapes, stone chips, wheel rash and other smaller repair items. Utilizing services such as paintless dent repair (PDR) and wheel refinishing in-house can add profitability, while ensuring you’re able to control the process.
In our case we are often asked to upgrade the wheels and tires on used vehicles, by painting them a different colour or changing the texture of the paint finish, such as using matte sheens or painting the wheels black. It’s a simple addition and an upgraded wheel/tire combination not only adds revenue to your bottom line but also a premium to the price of that used car, so if done right, everybody wins.
Although, in our case we are starting to see insurance claims rise again, following the trough experienced in March and April, steady reconditioning work has proved to be a welcome source of revenue while also providing our junior technicians and even co-op students with a chance to gain experience by performing smaller repairs, setting them up for bigger jobs in the future.
And, with new vehicle inventories expected to remain low for the foreseeable, demand and prices for used vehicles are likely to remain high, so if you haven’t embraced reconditioning work on large scale at your collision facility, there’s arguably never been a better time to do so than right now.
J.R. Martino is Vice President and Managing Partner of Budds’ Collision, one of the most progressive facilities of its kind in North America. He can be reached at [email protected]