Once considered a key part of dealership operations, the body shop is becoming an endangered species. More than 70% of all new-car dealerships had a body shop in 1974. Today, it's 40%. But there's hope.
The decline isn't because of dwindling business. Collision repairs cost $24 billion-$30 billion a year. Vehicle accidents went from 4.8 million in 2001 to 6.6 million in 2002, according to the latest government data.
Yet just capturing more business won't make body shops attractive profit centers once again.
“Dealers we talk to say, ‘We're close. We just need a couple of more cars,’” says John Sweigart, a dealership body shop veteran. “But we see shops doing $5 million in business that are losing money.”
Insurance companies control the pricing for most repairs and have transferred much of the administrative burden to the shops.
But dealerships still own the database of customer information. And dealerships can control costs. Waste in the body shop leads to unnecessary costs, says Sweigart.
Eliminate inefficiencies, he says. Areas that quickly become problems are excessive people and down time.
Sweigart and body shop pro Brad Sullivan co-founded The Body Shop@, (www.thebodyshop-at.com) a firm that helps dealers increase profitability in their collision shops by using principles from Toyota Motor Corp.'s lean manufacturing system.
Their firm did a study of 600 body shop repairs and found that 14 days is the average time a vehicle is in the shop. Yet the average time a technician spends actually working on a vehicle is 14.5 hours.
“That's not because technicians are bad or lazy people,” says Sullivan. “It's because of the inefficiency in the process.”
Dealerships that find ways to repair cars faster, better and cheaper can dominate their market, he says.
Identify each task that is required to repair the vehicle, then sequence those tasks throughout the entire process. “The problem is that at most dealerships, thinking in terms of flow or sequence is nonexistent,” Sulllivan says. “We want to keep the product moving downstream.”
Also important is mistake-proofing each task. “You want to cut out doing work twice,” Sullivan says. “Standardize the processes to the point of being ridiculous.”
Once a system is established, management should track where delays occur, then work to reduce them. The reward is an efficient, profitable body shop.