Back in 2013, investment banker Rex Green raised eyebrows at one of the first MSO Symposiums when he predicted that within a decade, the largest collision repair consolidators would have combined market share in the 30% to 40% range. At the time they had only about 5%.
But the Top 5 consolidators---Caliber Collision, Boyd Group/Gerber Collision, Crash Champions, Classic Collision and Joe Hudson’s Collision Centers---today have about 3,500 locations and estimated revenues of $13.2 billion, or just over 30% market share.
Green’s prescience a decade ago had attendees at the most recent MSO Symposium this past fall anxious to hear his presentation at the event, his first since he made his accurate prediction in 2013.
Green, now the managing director of automotive aftermarket investment banking at Jefferies LLC, said he believes the large MSOs will attain 50% market share within seven years---and more than double their combined current market share not long after that.
“I don’t know, 10 years from now, what the list of names [of] the top players are going to be,” he said. “But I do know that in 10 or 15 years, there’s going to be 20 or 15---or pick a number---players that if you want to service 70% of the collision industry, you’ll have just 15 or 20 phone calls to make. That’s a very different world than it is today.”
One thing that will impact smaller operators’ ability to compete, he said, is a change he’s seeing in a growing focus on scale.
“Over the last few months, I’ve seemed to have had more and more conversations with vendors [selling] into this industry who have been talking about remaking their product offering to just fit the large MSOs that are doing business differently than the smaller independents,” he said.
Looking further out, 20 to 30 years from now, Green foresees those influencing, if not dictating, vehicle service and repair---insurers, fleet operators, OEMs---to want even more consolidated “curated networks” of service providers.
“As you think about it, almost all automotive repair today is done in specialty locations: tires, general repair, collision, glass,” Green said. “What would be best would be if there was someone who could provide multiple of these services. What would a provider of comprehensive service in the future look like? National---and eventual international---scale and reach. Location density. Large locations not in high rent areas because you don’t need to be seen. A business-to-business service focus. Well-invested in service technology. And with a range of technicians, including the very highly-skilled. Now, who can think of a class of service provider that has all of these things? I can’t think of any other class of service provider that has all of these things except collision.”
Green said he’s among those who see this as among the best times ever to be in this industry, with nearly every shop filled to capacity.
“I don’t see that stopping,” he said. “Every time I ask somebody [when it will], they always say two years. That means they don’t know either.”
He recalled seeing a “preposterous” slide presented at an event in 2015 predicting an imminent and massive drop-off in claims because of autonomous vehicles. The decline could never happen as quickly as the chart indicated, Green said, if only because of how slowly the make-up of the vehicle population changes.
“What’s clear and what’s important is that ‘existential threat’ was an empty threat, but it did leave us this wonderful gift of ADAS, which is probably the best thing, in the last 10 years, that we’ve had,” he said. “And it’s going to carry this industry greatly both in profit and sales going forward.”
John Yoswick