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Solving the Body Shop Riddle

A Maryland Toyota dealership's body shop becomes a profit generator, leveraging relationships with insurance companies and suppliers.

In an era when body shops have become a drag on dealership operations, the DarCars Automotive Group in Maryland has turned its collision shops into a significant profit-generating department.

In 2005, the group’s 10 collision shops brought in more than $33 million in body shop revenue, led by its Silver Spring Toyota store, which ranks 61st on this year’s Ward’s Dealer 500 and second in body shop revenue with nearly $14.7 million, repairing an average of 740 vehicles a month.

About 40% of that revenue goes right to the bottom line, says Patrick Power, the group’s body shop manager.

The group began focusing on its body shops 10 years ago, says Vice President Tamara Darvish, who believes in order to be successful, dealers must understand that part of the business.

She spent several months working in the body shop doing all of the different jobs and says, “Now when I manage it, my managers don’t look at me like I’m crazy.”

DarCars has put together a strong management, with one person responsible for the retail part of the business and another who handles the business from insurance companies. Both managers report to Power, who works closely with Darvish.

According to Darvish, having close relationships with insurance companies is critical.

“One in five people who buy a car will wreck it,” she says. “And the insurance companies have a lot of power of where they send that business. That’s why it is important for the dealer principal to be involved.”

Power or Darvish talk daily with the insurance companies. Meanwhile, most insurers have adjusters with their own offices onsite.

Top 25 by Body Shop Revenue
Dealership Revenue ($)
1 2 Fletcher Jones Motorcars 15,082,073
2 61 DarCars Toyota 14,692,966
3 1 Longo Toyota 12,812,000
4 467 Larry Miller Dodge 11,611,303
5 353 Voss Chevrolet, Inc. 11,073,852
6 108 Suburban Motors Co., Inc 9,344,680
7 415 Huffines Chevrolet Subaru 9,010,895
8 31 Al Serra Auto Plaza 7,892,048
9 221 Fletcher Jones Toyota 7,656,682
10 161 Larry H. Miller Chrysler Jeep Dodge 7,006,687
11 105 Mercedes-Benz of San Diego 6,783,000
12 82 Drew Ford, VW, Hyundai & Isuzu 6,506,471
13 56 American Service Center 6,473,661
14 200 355 Toyota 6,140,519
15 8 #1 Cochran 6,103,153
16 212 Thorobred Chevrolet, Inc. 6,018,526
17 72 Lexus Cerritos 5,925,949
18 67 Gwinnett Place Honda 5,760,605
19 184 Honda World 5,683,200
20 76 Van Chevrolet 5,521,686
21 346 Suburban Imports of Farmington Hills 5,434,809
22 373 Goodson Honda West 5,345,000
23 4 JM Lexus 5,320,103
24 12 House of Imports Inc. 5,303,616
25 139 Mercedez-Benz of Tysons Corner 5,278,000

Also critical is having the right processes. DarCars learned from Toyota Motor North America Inc. and even from one of its insurance companies, which demanded certain processes designed to manage customers better and repairing vehicles faster.

Vehicles are in DarCars’ body shops for an average of four days. The industry average is 14 days. “It’s all about beating the clock,” Darvish says.

Power says the group has become creative with its parts-cutting booths to reduce the time vehicles are in the shop. The company also is painting vehicles 24 hours a day to reduce down time. “We can fix a car in a day now,” Power says.

It has not always been easy, says Darvish, admitting getting technicians to change processes can be difficult. “When you talk to old-timers about new processes, they don’t always see it,” she says.

Everyone is on board now. All of the group’s lead estimators started as porters, and all of its painters have been with the company at least 10 years.

“We run our own apprentice program here,” Power says. “And because of our volume, we don’t have a lot of turnover.”

Another tricky relationship is the one with the parts departments. While many dealers lament getting their parts managers and body shop managers on the same page is nearly impossible, DarCars appears to have found the solution by making the relationship a win-win for both departments.

“I have a better relationship now than ever before with our parts managers,” Power says. Of course, it is easy when the body shop generates $600,000 in revenue a month for the parts department, as the Silver Spring store does.

“And the parts department only has to serve as a depot for us,” Power says. “The more cars you fix, the more parts you sell.”

Darvish says the group works closely with its parts suppliers, requiring deliveries two or three times a day. But perhaps the biggest challenge for collision shops is the receivables, and this is where many dealerships lose money, even if they are repairing a lot of cars, Darvish says.

“It is all about getting the paperwork correct up front,” she says. “You’ll never catch up if you start releasing cars before making sure the paperwork is right.”

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