Is Collision Repair Recession-Resistant?

by Chasidy Rae Sisk

It’s nearly impossible to turn on the news or even scroll through social media without hearing about rising costs, inflation and even the possibility of an economic recession.

Although these concepts are bound to terrify any small business owner, what may be a detrimental downturn for other industries actually opens up the door to many opportunities for collision repair shops, and while no industry is truly recession-proof, industry experts suggest that auto body shops may be a bit more resistant to economic uncertainty than other fields. So before letting those fears overwhelm you, check out some of their valuable insights.

“When interest rates rise and there are fears of a recession, I recognize how easy it is to become overwhelmed with fears, but I’m not afraid,” insists Mike Anderson (Collision Advice). “While it’s obviously bad in some ways, I believe it’s also good news for our industry because there are some pros. For example, a higher interest rate makes it harder to borrow money which means fewer people can open new shops. It increases the price of admission. While we need more good shop operators, creating a barrier of entry prevents just anyone from opening a shop and offers some protection to the people who are currently in the industry and actively investing in their businesses.”

Maylan Newton (Educational Seminars Institute) agrees that “the transportation industry has survived very well during every past recession. Even during the height of the pandemic, repair shops remained busy because people wanted to isolate themselves in their own mode of transportation. In the US, we are very transportation-dependent, and few places have a reasonably clean, rapid public transit system. The average vehicle age and miles driven has increased, and although the industry is changing, I don’t think it’s changing to the point that it won’t be needed. Sure, we will need to modify the way we do things and learn new technology, but there are plenty of cars on the highway that need our attention.”

Although COVID resulted in a larger remote workforce, the public still relies on their vehicles – to take the kids to soccer or dance practice, to travel to appointments and to attend social gatherings – and shops typically report a steady workflow.

“Our cars are integral to how we live our lifestyles. That plays a lot into the consistent need for repairs, and as the economy tightens, more people opt to repair their cars instead of buying new,” points out Rachel James (Torque Financial Group). “Looking back at the economic changes the industry has experienced over the years, the only real constant is change. The economy isn’t stagnant; there’s economic uncertainty every day. But shops are used to changing and adapting. If you get a run in your paint, the painter knows there are tools to fix it. Having a solid financial plan is a tool that every business needs, no matter the current economic situation.”

Rather than experiencing lulls, many shops are actually overwhelmed with the number of repairs needed, largely due to the ongoing workforce shortage. Economic instability in other industries may actually open up potential opportunities for repair facilities to attract more qualified talent, James suggests.

“With companies announcing closures of locations all across the country, the employment structure is weakening which means qualified professionals will be looking for new opportunities. This offers our industry a chance to attract customer service representatives and other skilled talent to repair and collision shops.”

While economic uncertainty is typically viewed negatively, it also offers some positive aspects, according to Rick White (180BIZ). “This is a chance to realign and correct the economy when prices spiral out of control. It also offers a chance to ‘discover who’s swimming naked,’ as Warren Buffet said. A lot of activity hides a lot of sins in sales. Poor performance at the front counter can still be profitable if I have enough people coming in, but when the tide goes out, those shortcuts are glaringly evident without the activity to hide them. Slowing down gives us a chance to step back, return to the basics and correct our actions.”

Rather than giving into pessimistic thoughts, Newton recommends that shop owners look on the bright side. “If it’s all doom and gloom, why are so many consolidators buying up shops?” he asks.

“Venture capitalists are making huge investments in MSOs and software companies, and they wouldn’t do that if they didn’t believe there was a return on investment. We’re a vital industry, so we should be going to work excited, with a good attitude. Be optimistic about the future! Yes, we’ll need to learn about electric vehicles and how to work on alternatively fueled cars, but we’ve been learning for over 100 years. We started as blacksmiths, and now we’re working on complex machines. Even when vehicles advance to the Jetson-age of flying saucers, they’ll still need us to fix them. It’s up to you if you’re going to be prepared for that future or if you’re going to give up now.”

“Shop owners need to keep their heads and maintain a positive mindset because how you show up in business has everything to do with how the business will go,” White agrees. “You may need to work harder, but recognizing there are still opportunities to take advantage of is better than believing it’s going to get slow. Thoughts dictate actions, so when you accept that negative change is coming, you stop working as hard; your negative thoughts allow you to spiral and reinforce that negativity. But positive thinking helps you work harder and make good things happen.

“When things go well, we unconsciously expect them to stay that way, and when they go sideways, we fear they’ll stay that way,” he continues. “But neither is true. In reality, there are seasons to business: We plant and grow in spring, nurture in summer, harvest in the fall and then recharge and reset every winter. And if you’re prepared for those cycles, it can be pretty amazing. Jim Rohn has a great lesson on thinking like an ant…never quit, focus on gathering all you can, think winter all summer and think summer all winter. Your economy lives in the six inches between your ears, and when you’re approaching the unknown, recognizing that you control your mindset and your mindset controls your outcomes can make all the difference in the world.”

Embracing a positive mindset may sound easier said than done, but identifying the opportunities that exist allows shops to take advantage of them and assume a more favorable outlook on the future. So, what are those opportunities, how can advancing technology work to shops’ benefit, and how can shops navigate increasing expenses? Find out in the second part of this feature, coming soon to the July edition of Hammer & Dolly. 

Want more? Check out the May 2023 issue of Hammer & Dolly!