Back in 1997, an article compiled some thoughts about the future from various players in the collision repair industry. A more recent reading of the article proved interesting; some of the predictions were startling accurate, while others, in hindsight, were partially if not completely - and often ironically - wrong.
Randy McPherson, for example, at that time was on a tear. Just a year earlier, McPherson had formed Collision Auto Repair of America (CARA), growing the Minnesota-based consolidator chain of shops to a $15 million company within 90 days of its formation.
"This isn't going to be an easy industry to consolidate," McPherson said in the 1997 article. "It's a very complicated, people-oriented, systems-oriented business. And autobody owners came up with a new definition for the word 'independent.' I believe that ultimately there will emerge three national players, with a half dozen strong regional players and at least one billion dollar player in this industry. But my sense is that for at least 10 years, consolidators won't account for any more than 30 percent of the business. You're still going to have 70 percent of the players out there that will be independent owner- operators.
"One of the struggles I've gone through the last couple years is who is my customer," McPherson said in the article. "We've come to the conclusion that ultimately our customer is the insurance company. Now they have insureds who are part of the process - we're not taking them for granted - but we really need to embrace (insurers) as our customer. That's a major change for our industry."
In the months following this statement, CARA continued to grow quickly; at its peak it had 26 locations in five states and $40 million in annual revenues. Mc-Pherson now admits his goal was to capitalize on the late-1990s Wall Street ap-petite for industry "roll-ups" or consolidators. But too many of the shops CARA acquired in the rush for growth were poor performers that the company never had the internal systems and structures to get turned around. With salaries for executives at its headquarters, and the cost of travel to get trainers to its added shops in Las Vegas, Denver, Wisconsin and Indiana, CARA soon was weighted down with overhead.
In June of 2000, just three years after the above quotes from McPherson and six months after posting a loss of $2 million in 1999, CARA locked the doors on its remaining 13 shops and filed Chapter 7 bankruptcy.
The role of recyclers
Back in 1997 prior to becoming part of LKQ Corporation, Herb Lieberman was the owner of Lakenor Auto Salvage in Sante Fe Springs, California, and the vice president of the Automotive Recyclers Association. Lieberman was certainly correct in at least some of his 1997 predictions for the industry.
"Recyclable parts will play a much greater part in collision repair in the future," he said. "Recyclers will form real partnerships with insurers who obtain the salvage vehicles that are so vitally needed to have an adequate supply of quality parts to furnish (the collision repair industry) at reasonable prices."
But some of his predictions haven't come to pass.
"I also believe that beginning in the year 2000 and beyond, recyclable non- deployed airbags will be used in the repair process," Lieberman said. "I think the percentage of repairable vehicles leaving shops, the victim of total loss settlements, will be reduced because we will work in partnership - all of our industries together - to ensure that those vehicles can be repaired safely and professionally at a reasonable cost. National titling legislation will be passed so that we will have uniform salvage titling in all 50 states, and that legislation will include a comprehensive definition of a non-repairable vehicle."
Despite these predictions, the debate over use of non-deployed airbags continues (no U.S. insurer is calling for their use), the percentage of vehicles declared total losses has climbed to 17 percent (up from just 8 percent in 1999), and no national titling legislation has even been proposed in recent years.
The "virtual company"
Though Progressive's "concierge" program may not have been exactly what he was envisioning, Roger Cadaret in 1997 predicted consumer interest in a "one-stop" approach to collision repair.
"If a customer gets his car damaged in an accident and they want it repaired, the last thing they want to do is talk to the glass shop, the repairer, the tow company, the insurer, the parts supplier, etc.," Cadaret said. "They want to go directly to an insurance representative or a shop, leave the car and forget about it, and know they are going to get their car back in the shortest time possible and get the best quality job possible. All those companies behind the scenes are going to have to learn to operate together, as if for this particular vehicle they are all a single cooperation."
At the time, Cadaret was the executive director of the Collision Industry Elec-tronic Commerce Association (CIECA), the organization created to help develop standards for the various electronic links being developed between insurers, shops and vendors. Cadaret left the organization in 2002, but his 1997 quote may have inspired the folks at Progres-sive Insurance, who are in the midst of a national roll-out of the "concierge" program in which the consumer drops off and picks up his or her car at a Progressive service center, not once setting foot in the body shop that repaired it.
The industry in other ways also has made some progress toward Cadaret's vision of a 'virtual company,' where repairer, insurer and vendor are electronically and seamlessly linked.
"What CIECA is doing is developing the infrastructure so you won't have to make that telephone call to somebody at that other company so that they can tell you what's in their computer," Cadaret said in 1997. "You will program your computer to call that other computer. That's what electronic commerce is all about."
Rental car consolidation
Brett Bittel in 1997 was the senior vice president for the Southern Group of Enterprise Rent-a-Car. He got it right when he predicted that shops would soon have fewer choices when it comes to a rental car provider.
"Whereas before if you didn't like one (rental car company), you went to another," Bittel said in the 1997 article. "If their donuts were better or they brought them out twice a week and we only came out once a week, sometimes we'd lose business that way. I don't think that's going to happen in the year 2000. My personal opinion is that in your local market you're going to be dealing with Enterprise, a company affiliated with Hertz, or whatever name(s) Republic will be using, be it Alamo, Snappy, or Republic Rent-A-Car. But I think you will be down to those three choices and maybe one or two more. These companies will be slugging it out and trying very hard to gain a majority of your business… I think you will have fewer choices, but they will be better ones."
Fewer shops?
Though he didn't necessarily say it would happen or when, Scott Biggs in 1996 painted what many found a startling vision of the future. Biggs, then the CEO of BodyShop Video Magazine and now the founder of the Assured Performance Network of independent shops, said that just 10,000 shops, each doing $2 million a year in sales, could capture the entire $20 billion collision repair market. He outlined a future of "industrial plants, located in remote industrial areas, and handling unimaginable volumes, operating 24 hours a day, 7 days a week."
There are indeed now mega-shops operating multiple shifts, although even most consolidators and multi-shop operators have found mid-sized facilities a more successful model. But although predictions of drastic declines in the number of shops have been circulating for at least 20 years, the reality has been far less dramatic. Most peg the current number of shops at just under 50,000, down from about 55,000 in the mid-1990s and about 60,000 15 years ago. At that rate, it would be well into the next century before the number of shops dwindles close to the 10,000 mark.
Biggs did get it right when he told shop owners in 1996, "I think most everyone has heard the saying, If you always do what you've always done, you'll always get what you've always got. I'm going to update that for the late 1990s: If you always do what you've always done, in the future you won't get squat. Be-cause someone who can do it cheaper, faster and better will do it instead."
Better, faster, cheaper
Like Biggs, Erick Bickett also foresaw victory for those who could offer "better, faster, cheaper."
"Everything else to me is a bunch of noise," Bickett said in 1997, when he was California shop owner and chairman of the Collision Industry Conference (CIC). "The bottom line at the end of the day is: If you want to survive and provide collision repairs to your customers - the insurance company and the consumer - those that are going to win are going to be those who can do it better, faster, cheaper."
That year, Bickett became the CEO of Fix Auto USA, a national network of independent shops modeled after a similar group in Canada. Biggs said he'd considered selling his business to a consolidator, but as an entrepreneur decided to stay in the game and find a way to compete with the bigger players.
"There's no question in my mind, as you look at the sort of frenzy that's been created from investment capital and consolidation, that there will be opportunists that will perhaps take advantage of the current situation and will not necessarily add value to help us get better, faster and cheaper," Bickett said in 1997, words that probably ring true to shop owners who have bought back their businesses from one of the three major consolidators that have failed in recent years. "But in the long run those who will win will be those who have figured out how to deliver a superior product at a better price and more efficiently to the customer.
"I think that as collision repair entrepreneurs we really deliver some value to our customers, more so than I think any large organization can," Bickett said in the 1997 article. "But we can't stick our heads in the sand. We really have to figure out better and different ways to deliver the products and services we do, to make them better, faster and cheaper."
Invent the future
Whether they got it right or got it wrong, it's hard to fault anyone daring enough to look into the future and share their vision for the collision repair industry. Hindsight is definitely easier than prediction. But looking back is also a good reminder that no one has a 100 percent lock on the future, nor should any prediction - dire or Utopian - be taken as the sole basis for key business decisions. Change tends to happen more steadily and slowly than in dramatic bursts.
"The best thing about the future," as Abraham Lincoln is quoted as saying, "is that it comes one day at a time."
More importantly, those who are most likely to succeed, will be those who take an active role in shaping the future. As visionary Alan Kay says, "The best way to predict the future is to invent it."
John Yoswick is a freelance writer in Portland, Oregon, who has been writing about the automotive industry since 1988.
John Yoswick