Private equity continues to be highly committed to the collision repair industry. MLOs will continue to aggressively acquire and merge. Consolidation is active within all auto physical damage segments. There remains much opportunity for further consolidation and continued private equity investment.
Despite the growing market share of the larger platforms and segments we track and analyze, there is still a long tail of smaller independent repairer fragmentation in the market which will be the basis for the next wave of industry contraction and consolidation.
Multiple Location Operator (MLO) Consolidation
Within the broader automotive aftermarket landscape, private equity and institutional capital continue to invest in most of the satellite segments surrounding the collision repair industry such as parts, paint, body and equipment (PBE), tire outlets, carwashes, dealerships and technology.
Comparing the first six months of 2022 to the same period in 2021, we saw an unusually slow period for MLO collision repair acquisitions by most consolidators, with Crash Champions and Classic Collision being the exceptions. Both Crash Champions and Classic Collision will most likely advance in the ranking at year end 2022.
While Caliber and Gerber did acquire some MLOs during this time period, much of their expansion was through single-location acquisitions, brownfields and greenfields.
The most significant acquisition event of 2022 came in July, when Crash Champions announced its transaction with Service King with its new private equity partner Clearlake Capital.
There are a number of secular trends that exist today that will continue to have a material impact and influence on the collision repair industry and within the broader auto physical damage industry segments.
Insurtech claims processing operating models reinforce insurers’ preferred business economics, which frequently is at odds with the OEM repair model.
Vehicle damage estimation with photos evolving to vehicle telematics, relying on artificial intelligence coupled with insurer-driven rules with integration of supplier network connections.
U.S.-Canada trans-border market entrance as reflected by companies such as Collision Solutions Network, which merged in mid 2020 with 1Collision in the U.S with its continued onboarding of new members; Fix Auto with ProColor entering the U.S. in early 2021 with its expanding franchise network in 2021 and 2022; and Lithia Dealership Group entering Canada with the acquisition of Pflaff Automotive Dealer Group.
OEM certification programs’ continued evolution, importance and involvement in collision repair. Our five-year forecast to 2026 has the $20 million segment and the top three consolidators aggressively growing their businesses while maintaining their significant market share lead over the franchise networks and the $10 million to $19 million MLO segments. We expect that by 2026, the top three consolidators will grow from their 2021 market share of 18.4% to between 24% and 28%.
Our annual report, A 2021 Profile of the Evolving U.S. and Canada Collision Repair Marketplace, is now available. The report contains the complete results of our research and analysis for 2021, including over 90 charts and graphs throughout more than 130 pages with historical trends and a future view.
The report can be purchased by contacting Mary Jane Kurowski of The Romans Group LLC at maryjane@romans-group.com.
Source: The Romans Group LLC
Abby Andrews