...minus one," Ronak said. "The government basically wanted to kick body shops out of the core of San Francisco, so that any of the ones that were left there were not allowed to expand or their taxes went up and they just closed the doors because it was too expensive to do business there and keep the body shop going. All of the remaining shops raised their rates to $130 to $150 an hour for collision repair.”
Many shops that are over their breakeven sales can afford to say no, Ronak said.
“If I say no to taking on your business, I may make less money, but I'm still making money as I am still over breakeven," he said. "So now you know I don't really need your work, and I'll suffer the consequences. This typically happens in more mature markets with shops that have been around a long time and have all of their assets paid for. Mature businesses will tend to be little more militant on their labor rate than those that are highly leveraged and brand new and desperate for work and cash flow.”
After covering a wide range of topics, Ronak wanted to make one point crystal clear.
“One of my concerns is that shops sometimes use negotiated rates on surveys," Ronak said. "Nobody to this point has gone after shops or considered this potential model of price fixing that may be occurring within this hub and spoke arrangement. So, in order to insulate yourself from any Clayton Act consequence, shops should only complete surveys with your own impartial retail rate. A survey is used to compare data with the balance of the industry and determine a range of prices in a market.
"So, if I'm going to leave a message behind here, save yourself from any potential anti-trust complications and Clayton Act repercussions," he said. "Don't use a negotiated rate as your surveyed rate, and make certain to only use your retail rate.”
Ed Attanasio