By Miguel Yelos San Martin, YSM Design
In a recent discussion I had with some car dealers, they raised the question whether to add a body shop to their dealership or not.
Miguel Yelos San Martin
The answer is quite simple; why not add a second income stream to your business that has a lot in common with your used car operation? These shops are not regulated by the manufacturers in terms of location and the buildings do not have to meet any OEM standards.
The cost for the building is similar to adding a repair shop. The only big difference is the paint booth, which can be expensive. But, you do not need to buy as many tools, so the costs balance out.
The buildings need to be functional and should be located on inexpensive land since the business, contrary to popular belief, is mostly generated by the insurance companies.
Indeed, 93 percent of the collision repair business is insurance-related, per Sam Freeman, vice president of development for CarStar, a nationwide chain of collision repair shops.
In some instances, adding a collision repair business might help your primary dealership business pay the rent.
A few years ago, we convinced a manufacturer to let us add a body shop to a dealership to help the dealership – which was selling a low-volume, low-margin brand – cover rent expenses. The dealership wouldn’t have made business sense without an additional source of income.
We recommended the body shop and it is doing very well. Both the dealership owner and the brand benefited. It was a decision entirely based on business considerations.
After all, the big public companies have been adding collision repair shops for quite some time. Some of them have a separate division that concentrates solely on this business and others, like AutoNation, are joining in a big way. In October, AutoNation announced it would add 18 collision centers to its current 70.
“Once comfortable with the collision business, it is very like a service manager in a dealership,” says Marc Cannon, AutoNation’s. senior vice president of corporate communications.
The need for body shops is unlikely to go away anytime soon. Unless autonomous cars fulfill their promise, there will always be accidents, especially in areas of extreme weather conditions and densely populated areas. And even if most vehicles eventually become autonomous, we are still years away from that.
The basic elements for successfully adding a body shop business are:
- Strong relationship with insurance companies that can certify your operation as “preferred”
- A building that can accommodate the amount of business that your area can generate
- The location will vary depending on your geography
- A strong team
If you have these elements you are ready to start.
Miguel Yelos San Martin is the founder and principal of YSM Design. Based in Atlanta, Ga., YSM Design is a full-service architectural design firm specializing in automotive retail and brand implementation. The firm has designed more than 400 dealerships for brands including BMW, Mercedes-Benz, Audi, Ford, and more. He can be reached at 1-404-249-4555 X6000 or miguel@ysmdesign.com.
