Many challenges lie ahead in collision repair, but also some great opportunities.

There was no question that CARSTAR’s 30^th Anniversary Velocity Conference in Victoria, British Columbia was an exceptional event. Not only was it an opportunity to celebrate past achievements of franchise partners and the network, but also the future, by planting seeds that aim to drive significant change and success.

People, performance, profitability

The Restore the Star panel discussion on July 10, was a key example: Moderated by Dave Foster and featuring Joe Saputo, from CARSTAR Ancaster West; Sebastian Torres from CARSTAR TORCAM Group; Mike Cherneta, CARSTAR Mississauga 401; Jeff Brown, CARSTAR Don-Mor (London) and Tony Mammone Vice President, Strategy & Analytics for CARSTAR Canada, the panel focused on ways to become the leading collision repair network in terms of operational performance, profitability and attracting and retaining the right people.

In terms of what Restore the Star meant to the panellists, Joe Saputo emphasized the need to get back to basics and focus on repairing vehicles right the first time, which means focusing on OEM repair procedures and certifications. Sebastian Torres noted that for him, Restore the Star represents unity within the network and open, solid communication— talking cohesively as a team and sharing best practices to enable the network to further elevate its reputation and operational excellence. Mike Cherneta concurred, adding that by collectively working together, everyone in the network can be part of something truly great and significant. Jeff Brown noted that in his view, Restore the Star means elevating the CARSTAR brand to the point where it is recognized as the undisputed leader in the collision repair space, with accountability and best practices being two core fundamentals essential in achieving that goal. Tony Mammone agreed, noting that the solutions to the challenges in becoming the leading collision repair brand “are in this room,” and “the Restore the Star group allows us to speak about them and put them all on the table.”

Restore the Star focuses around three key principals

• Profitability
• Operational Excellence
• People

In terms of profitability, Joe Saputo noted that education and proper communication between stakeholders is essential and following proper repair procedures is a must when it comes to profitability, as are having properly written estimates that ensure every process and procedure is accounted for.

Managing shop capacity

On managing operational costs, Sebastian Torres said that a key thing he and his team have been focusing on over the last year has been managing shop capacity and looking at ways to optimize vehicle scheduling. By doing so, he stated, the result is less risk of having to redo vehicles, of extending rental periods, plus making sure that the vehicle is fixed properly, and profitability in an efficient manner.

Jeff Brown explained that often, the industry spends a lot of time talking about the technology in vehicles, but not a lot talking about technology when it comes to shop operations and processes. CARSTAR Don-Mor has invested a lot of time in utilizing technologies to improve workflows within the shop, such as Microsoft Teams and SharePoint which have reduced waste and over-processing, resulting in far more efficient operating procedures.

On the subject of people, Jeff Brown talked about involvement with local trade schools as an effective way to attract and recruit young talent into the collision repair industry. CARSTAR Don-Mor has been highly successful in working with Fanshawe College in London, in attracting graduates, but Brown stressed that all too often, there aren’t very many collision centres that are actively involved with trade schools and that needs to change if the industry wants to build a robust pipeline for future talent.

Once you’re able to attract people into your business, being able to keep them is also of paramount importance. Mike Cherneta talked about organizational culture and creating a process where the business looks at the aptitude and character of each individual, rather than just the skills they bring to the table. Cherneta also discussed the importance of having a work environment that’s dynamic but also fun, where employees are able to get involved in after-hours activities and competitions, creating a sense of community and teamwork that extends beyond the day-to-day responsibilities of each employee.

Collision industry trends

Ryan Mandell, Director, Claims Performance, Auto Physical Damage for Mitchell, took the stage next, delivering a session that focused on collision industry trends and defining what the needs for collision shops in the future are likely to be. Mandell noted that among all service businesses, collision repair has gone through more changes and disruptions in the last decade than just about any other sector. 

“The fundamentals of how you go about operating your business on a day-to-day basis have completely changed,” said Mandell. “This is both an exciting and scary time to be in this business,” he stated, “and events like this [CARSTAR Velocity Conference] are so important because they allow you to step back from your business, look at the bigger picture and understand what are the trends that are shaping the way your organization operates.”

With that in mind, Mandell dived into three different trends that are shaping the industry today and how they are likely to impact the way in which collision centres operate and do business.

These trends are:

• Total loss vehicles
• Vehicle complexity
• Electrification

On the subject of total losses, Mandell noted that the COVID-19 pandemic era created an anomaly in that used vehicles were selling for the same price if not more than their new counterparts. For collision centres, this meant that more vehicles were deemed fixable, resulting in fewer write-offs. Today however, things are shifting. In 2024 we’ve already seen a continuing trend of used car prices declining, both in the U.S. and Canada, meaning lower values and total loss frequencies increasing once again.

As a result, collision centres need to be prepared for these kinds of situations. “So, all the conversations you are having in your shop around efficiencies and improving profitability and operations in your shop become so critically important, because over the next few years there simply isn’t going to be same amount of [repair] volumes as we’ve been seeing over the last year or so or even pre-COVID.,” Mandell explained.

Insurance affordability

Another issue that will likely influence declining repair frequency will be insurance affordability. Deductibles have been increasing significantly over the last few years—by, on average $200 over the last three years, when for the previous decade, they largely remained flat.

As a result, more and more consumers are having difficulty affording insurance premiums, and in some cases dropping their first party coverage entirely, and/or electing to go with products with far higher deductibles, in some cases as much as $5,000.

This situation, combined with inflationary pressures and a decline and stabilization in used vehicle values, represent potential headwinds for the collision repair industry.

Another trend impacting costs and repair volumes is the type of vehicles that most shops are having to repair. Over the last decade, Mandell noted that trucks and SUVs have become the overwhelming choice of vehicle type for the majority of consumers. In 2024, 71% of all new vehicles sold have been light trucks and SUVs. Mandell explained that some of the reasons for this, are the greater utility these types of vehicles provide and, also, the marginal difference in fuel economy between modern trucks and SUVs and passenger cars.

More costly

For repairers, this is significant because trucks and SUVs tend to be more expensive to repair than equivalent passenger cars, plus today’s vehicles are far more complex and a typical crash part repair today, such as a front fascia or bumper assembly, incorporates more components and more steps than it did in 2017, meaning more cost and more time is required to fix the vehicle properly.

Further adding to the complexity of the repair process is the types of substrates used in vehicle construction, with ultra-high strength steel, aluminum and even carbon fibre becoming increasingly common. “These materials don’t respond the same way as mild steel,” Mandell explained and that because of that, new repair processes are required in order to return the vehicle to fully functioning, pre-collision condition.

Additionally, the growth in Advanced Driver Assist Systems (ADAS) means that more and more vehicles will require not only pre- and post-scanning, but also calibration to ensure these systems are functioning correctly following repairs. Furthermore, shops and technicians need to pay close attention when repairing panels or refinishing, since incorrect procedures or paint can interfere with sensor and camera operation.

Higher volumes, more repairs

On the subject of EVs, Mandell noted that in terms of a North American context, Canada is currently leading the way in EV adoption, particularly in Quebec and British Columbia. Mandell said that currently, one in every four new vehicles sold in B.C. is an EV. Repairable claims in Canada regarding EVs continue increase and according to Mitchell’s data in Q2, 2024, EV claims represented just under 4% of total vehicle claims. “We continue to see higher sales numbers for electrified powertrains,” said Mandell “and consumers are buying [EVs] more frequently.”

More EVs on the road means more collisions, and shops need to prepare themselves for this. A key consideration is cost. Overall, an EV costs more to repair than its internal combustion engine equivalent and in many cases EVs have more crash parts, since the absence of a gasoline or diesel fueled engine, means they absorb impact differently and need additional components to ensure occupant safety in the event of a crash. And, because they are engineered differently, crash impacts are likely to result in different types of damage, such as a higher likelihood of airbag deployment and sensor damage, with EVs on average requiring twice as many sensor operations as their traditional counterparts.

Stick with us for part 3 of our CARSTAR 30^th Anniversary Velocity Coverage where we will bring highlights from the final day’s keynote sessions as well as some of the onsite breakouts, trade show and awards gala.