From the Magazine: Collision repair at a crossroads

The dynamics of revenue, profit and relevance are undergoing rapid disruption

Of late, I am hearing a lot of noise around the collision industry. Many of my clients experienced revenue drops last year and are struggling to find their way to increase their takings.

The harsh reality is reflected in overall sector numbers as well. Industry revenue was down or flat last year across competitors — both OEMs and aftermarket — across both the U.S. and Canada. Many independent shops went out of business. Others were acquired by national or regional chains or mid-sized operators. 

Now, 2024 was an unusual year with one of the mildest winters recorded in recent history. Insurance claims, arguably the largest driver of revenue, were down which directly impacted collision topline. Industry insiders expect the trend to be transitory. A return to normal weather patterns will likely stabilize revenue. Similarly, a sudden drop in used car prices from post-COVID highs resulted in many vehicles not being repaired.

Seasonal and periodic factors may be temporary, but there are other headwinds. For instance, as vehicles become more complex, the cost of repairing crash parts with all the added sensors and technology might lead to higher total loss ratios as these cars depreciate. If a vehicle gets too expensive to repair, insurance companies are more likely to write it off, depriving the market of revenue.  Similarly, advanced driver assistance systems (ADAS) may reduce overall collisions – another hit to dollars generated.  

For market players, the next five years present both challenges and opportunities that demand proactive adaptation and strategic foresight. Here’s what lies ahead and how the industry is preparing for the changes.

The rise of ADAS

As I alluded earlier, ADAS technologies — such as lane-keeping assist, automatic emergency braking and adaptive cruise control — are now standard in many vehicles, driving up repair complexity. A simple bumper replacement often entails recalibrating sensors and cameras, adding significant labour time and requiring OEM-specific tools.

Shops like Caliber Collision have already invested heavily in ADAS calibration centers equipped with state-of-the-art diagnostic tools. The integration of OEM-certified ADAS repair programs will differentiate shops poised to handle these intricate systems.

Electrification of the vehicle fleet

The rapid adoption of electric vehicles is also shifting the repair landscape. High-voltage battery systems require specialized handling protocols and equipment to ensure technician safety. Tesla, for example, has created its own network of certified repair facilities, requiring shops to undergo rigorous training and purchase proprietary tools.

Shops like Gerber Collision & Glass are also building EV repair capabilities by obtaining certifications from manufacturers such as Nissan and GM. Additionally, partnerships between OEMs and insurers, such as the collaboration between Rivian and State Farm, are paving the way for streamlined claims processes tailored to EVs.

 If a vehicle gets too expensive to repair, insurance companies are more likely to write it off, depriving the market of revenue. 

Digital transformation of the industry

In future, shops will have to rely increasingly on digital technology. Estimating platforms, AI-driven damage assessments and remote diagnostics will become indispensable. CCC Intelligent Solutions, a leader in estimating software, is already collaborating with insurers to provide AI-powered tools that enhance the accuracy of damage assessments.

Repair facilities leveraging these tools are improving efficiency, reducing cycle times and enhancing customer trust. For example, Caliber Collision’s mobile app allows customers to schedule appointments, receive updates, and access estimates seamlessly, creating a superior customer experience.

Talent shortages and workforce development

The skilled labour shortage is a pressing issue. The retirement of experienced technicians is outpacing the entry of new talent. Multi-shop operators such as Caliber Collision are implementing in-house training academies, such as their Technician Apprentice Program, to attract and train new talent.

Competitive wages, clear career pathways, and a focus on workplace culture will be key differentiators in this challenging labour market.

Rising repair costs and insurance challenges

The complexity of modern vehicles is driving repair costs higher, placing strain on both insurers and customers. Progressive Insurance has introduced programs that partner with certified shops to streamline repair approvals and ensure quality work. Shops must navigate the delicate balance between insurer expectations and maintaining repair quality.

Transparency is paramount — from detailed repair estimates to clear explanations of OEM-mandated procedures. Shops that can demonstrate value through quality and efficiency will strengthen relationships with insurers and customers alike.

Consolidation and industry partnerships

All of the above trends will drive further consolidation. MSOs like Driven Brands and Crash Champions will expand their footprint, benefiting from economies of scale, centralized training and consistent branding.

Independent shops face mounting pressure but can thrive by carving out niches in high-demand areas such as ADAS calibration, EV repairs or advanced material work. Independent operators will have to rely on the buying group format, enabling them to compete with larger chains through shared resources and branding. For instance, the Certified Collision Group (CCG) recently moved into Canada. Companies such as CCG and Fix Auto will allow repair shops the benefits of scale that will be critical for future success.

Kumar Saha is vice president (U.S.)/managing director (Canada) of global automotive data firm Eucon. He has been advising the North American automotive industry for over a decade and is a frequent conference speaker and media commentator. He is based out of Toronto.

This article originally appeared in the January 2025 issue of Jobber News