While a body shop has substantial profit-making potential, dealers are increasingly finding themselves squeezed by insurance companies that pay for the majority of customer repairs, So says Kirk Felix, executive conference moderator at NCM Associates.
“The insurance companies continue to control all aspects of the repair business,” he says. “Dealers must be aware of their charges to the insurance companies to make sure they are billing for everything they can and collecting for it. ‘Totals’ are much more prevalent as insurance companies run from diminished-value claims and lawsuits. Entry-level vehicles are an automatic total if the air bags are popped.”
He says insurance companies continue to push for used parts and like-kind-quality which takes business away from a dealership's parts department.
He adds: “Direct repair program relationships (with insurers) are becoming harder to establish, so dealers must bend to the insurance companies to protect the ones they do have. Insurance companies continue to push for reduced cycle times and reduced dollars per claim. Paint and materials continue to escalate in price, without the insurance companies allowing additional margins.”