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Rationalize all you want but… It’s Always About The Money.

To start with myself and the collision repair business I own, my decision has been to invest heavily now in equipment and training in order to be able to stay in the business and repair vehicles 5 years from now. This makes business life more complicated and less short term profitable, but it is about long term survival and profit. Many others have followed this model, but by no means the majority.

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Another group of collision shop owners, after taking an intelligent look at the technology that is coming at them have made the decision to make only maintenance investments and make as much money as they can for the 3 or 4 years remaining under the old model of the collision repair business.

A third group of repair industry people, much larger than it should be, barely has a clue that things have changed; they just keep ‘repairing’ cars like they did 5 years ago and 10 years ago.

Insurance companies market their products primarily on price. They will spend as little as they can on claims so that they can keep their rates as low as possible. The first one to raise rates in order to offer better claim service will lose short term business to competitors who have not raised rates. In legitimate defense of this business model, consumers buy on price and very few (none) of them read the policies they buy and in any case they don’t think about the claim side of the equation.

In further partial defense of the insurance industry the vehicle owner who is paying out of pocket for his own repair is very concerned about price. It is easier to sell him at $1,200 rather than $1,500 if the $1,200 repair looks the same on the surface.

Yesterday I wrote about the lack of regulation in the vehicle repair industry. In many jurisdictions there are no rules (although in many areas of America the hot potato of liability is tossed back and forth) and insurance companies will happily pay less rather than more for a repair. With this lack of regulation the repairer who chooses not to invest in equipment is in an excellent short term position. The cars are going out the door, the insurance company is not being asked to pay for sophisticated repairs, nobody has to think outside of yesterday’s box and the vehicle owner is once again now the wiser.

 

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