Auto Body Consolidation in 2023

November 10, 2022

Consolidation of collision centers could not have come at a better time for buyers and sellers. Baby boomers own a significant share of existing independent shops, and many do not have family successors, so consolidation is ripe for them. Conversely, there are many young people selling or considering selling at a higher rate. I think the last few years have brought stress and anxiety. The business just isn’t fun anymore in many owners’ minds, so I think anyone is ripe to sell.   

As of right now, COVID seems to be in our rearview mirror. However, there are many shops still recovering from COVID's financial impact — loss of work/workers, shutdowns, etc. — which is further fueling shop owners’ motivation to sell. Then you add in current events in the last few months.

Profitability was a challenge for all shops, including consolidators, in 2021. Price increases for paint and supplies plus pay increases have changed by the day, and insurer rate increases are not happening fast enough. Investors and buyers may also be uncertain owing to inflation concerns, financial market unease, and the uncertainty surrounding the Ukraine/Russia situation.  

If you asked me your question 60 days ago, I would have said we have 24 to 36 more months of heavy consolidation. I would have then predicted a significant slowdown, as consolidators will then have the footprint they’re seeking. As of right now, I think we’ll have that 24 to 36 months for sure; however, that window of opportunity could be put on hold if consolidator investors get spooked like they did when COVID hit in 2020. In 2020, most consolidators stopped buying completely

The bottom line is that it is happening now, later or at some point — consolidation is not going away. We need to be ready to adapt and make the most of the time, resources, and opportunities we have now. This is the best way to ensure that we are positioned to capitalize on consolidation when it does happen. We must remain agile and proactive.