The second project involved researching bodyshops by phone. By phone? How could snow prevent making phone calls from a nice warm office? Well, the snow didn’t prevent making the calls; we made lots of call, but bodyshops were too busy to take part in the survey. For example, one bodyshop manager we contacted said they usually complete thirty jobs per month. The day prior to our call they had towed or estimated 29 damaged cars. In the end we made 460 calls to obtain 100 interviews, which is twice as many as usual and put the project two weeks behind.

Bodyshops have not represented the best of investments in recent years. So will 2010 prove to be better than average thanks to the appalling weather at the start and end of the year? It will be mid-2011 before we have a definitive answer to this question, and it also depends on what you mean by ‘better than average’.

Adjusted for inflation, the value of car body repair market has fallen by more than 15% in the last ten years. This is due to a real-terms fall in average repair cost and a fall in the number of repairs – both driven by a complex mix of market forces. On top of this, the recession hit bodyshops as businesses with closures and bankruptcies reach epidemic proportions in 2008/2009. This increase in closures was in addition to steadily declining numbers over the last decade.

The upside of large numbers of bodyshops going to the wall, even against the background of a dwindling market, is more business for the remainder. Indeed our projections suggest that the average turnover per bodyshop should increase by around 15% in real terms between the pre-recession year of 2007 and 2010.

But this will be thanks to the demise of competitors rather than any improvement in market conditions, prices for work or even the welcome boost of inclement weather. And whether this results in improved profits and return on investment, the real measure of 'better than average', remains to be seen.

Our survey interviewees were clearly pleased with the level of work coming through their doors, but worried in equal measure at the cost of the overtime required to meet insurance company delivery targets, which bodes ill for profitability.

On a positive note, bodyshops told us that a higher than normal proportion of cars had minor damage, below excess thresholds, and will therefore be lucrative retail work rather than insurance.

Written by Trend Tracker director Chris Oakham, this piece first appeared his column in the subscription monthly Auto Retail Bulletin in January 2011.(See auto-retail.co.uk for subscription details.)

Chris Oakham

Trend Tracker Limited

0870 421 4350

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