With 2005 coming to a close, the Automotive Service Association is estimating a growth in the collision industry - from 34,681 shops in 2004 to 36,184 shops in 2005. ASA is also estimating a considerable growth in employees, from 225,907 in 2004 to 249,401 for 2005, based on internal ASA analysis. Those collision specialists are responsible for fixing the estimated 24 million vehicles involved in collisions in 2005.

ASA is estimating annual sales for the independent side of the collision industry to be a conservative $26 billion. This figure is based on the actual annual sales listed by the U.S. Bureau of Economics Analysis for 2002. These figures do not include the approximate 9,090 franchised dealerships with body shops generating an estimated $9 billion in 2004, according to the National Automobile Dealership Association.

Business Profile

The number of service bays and the size of the average facility are similar to 2004 figures of 19 bays and approximately 12,589 total square feet. Square footage averages include 1,525 of office space, 12,554 of shop space, and the remaining is used for parts and storage.

Bay distribution statistics show 3 percent of collision shops have one to four bays, 40 percent have five to 14 bays, 19 percent have 15 to 19 bays, 13 percent have 20 to 24 bays, and 6 percent have 25 to 29 bays. The final 19 percent have more than 30 bays.

Eighty-nine percent of independent collision repair businesses continue to be family-owned, time-invested businesses. The average years in operation for independent collision repair businesses is 32 years. One percent has been in operation five years or less; another 4 percent have been in operation five to nine years. Seventeen percent have been in operation 10 to 19 years; 27 percent have been in business 20 to 29 years; and 32 percent have been in operation 30 to 49 years. Thirteen percent of shops have been in business 50 to 59 years. Two percent have operated 60 to 69 years; and finally, 3 percent have operated for more than 70 years.

The majority of survey responses came from independently owned businesses (91 percent); 4 percent were franchises and 5 percent were from dealerships. There were no survey responses from consolidator shops.

Seven percent of the collision repair business market can be found in cities with populations of 10,000 or less. Thirteen percent came from businesses in cities with populations between 10,001 and 25,000. Sixteen percent are located in cities of 25,001 to 50,000 people. Twenty-six percent are in populations between 50,001 to 100,000. Larger cities with populations of more than 100,000 provided 38 percent of the responses.

Of the 66 percent of collision repair respondents that had a parts inventory on hand in 2004, the inventory averaged $14,933. Categorizing inventory amounts showed large variations, with 26 percent reporting up to $5,000 in parts and 26 percent saying they had $5,001 to $10,000 in parts. Eight percent had $10,001 to $15,000 in parts and, equally, 8 percent had $15,001 to $20,000 in parts. Another 14 percent said they had $20,001 to $30,000 in parts inventory and 11 percent had between $30,000 and $75,000. The final 7 percent had $90,000 or more in parts on hand in 2004.

Ninety-nine percent of repair facilities reported having Internet access. Internet access areas included the office (99 percent), service bays (13 percent), customer areas (10 percent), and other locations such as parts areas and break rooms (1 percent). With respondents being able to select more than one area, the results netted more than 100 percent.

Internet technology is evolving as service providers offer faster and more attractive plans. Shops with 28K access raised a fraction from 2 percent in 2004 to 3 percent in 2005. Shops with 56K declined from 17 percent in 2004 to 14 percent in 2005. ISDN usage is at 3 percent. DSL usage declined slightly from 62 percent in 2004 to 61 percent in 2005. Cable has inched a percent higher from last year to 18 percent in 2005.

The primary uses for the Internet include e-mail (88 percent) and accessing service and repair information (72 percent), which grew in usage, up from 64 percent in 2004. Also, picking up the pace, from 50 percent in 2004, is locating industry news (58 percent), performing product research (55 percent), transferring funds (54 percent), purchasing tools and equipment (48 percent). Other uses include Web-based technical training (33 percent), Web-based management training (23 percent), entertainment (22 percent), customer contact and retention (19 percent) and participating in chats and discussions (8 percent).

Collision repair facilities continue to be open at least five days a week. But survey results show a shift from a five-day workweek to 5.28 days with 22 percent of respondents adding Saturday (partial or full day) to their hours of operation.

Winter continues to lead in this year's survey as the busiest time of year, according to 40 percent of respondents. This was followed by more than a third (38 percent) citing all year around. The rest of the respondents picked summer (12 percent), spring (10 percent) or fall (8 percent) as their busiest season. Some respondents selected more than one season but not all year, so the percentages totaled were more than 100 percent.

Monday remains the busiest day of the week (70 percent). This was followed by 61 percent selecting Friday, and 25 percent opting for all week. Respondents were able to select all days that applied to their situation, bringing the total to above the 100-percentile marker.

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Owner Profile

ASA collision business owners possess many skills and extensive industry experience. The average owner of a collision repair facility is 50 years of age with 30 years of experience. The majority of owners (26 percent) are between 50 and 55, followed by 17 percent in the 45- to 50-age category, and - equally - 17 percent in the 60-and-above age bracket. Eleven percent of the population is 30 to 39. This year, no survey respondents reported from the under-25 age group.

Four percent of business owners have less than 10 years of experience; and 11 percent have 10 to 19 years of experience; 20 to 24 years (11 percent) and 25 to 29 years of experience (15 percent). The largest percentage (38 percent) have 30 to 40 years of experience. Seventeen percent have 40 to 50 years of industry experience; and the remaining percentile report 50 or more years of industry experience.

Education levels achieved by respondents include high school (43 percent); vocational and trade school training and two-year college program both yielded 20 percent); four-year college programs (15 percent); and graduate school (2 percent).

This year's survey asked about ASE certification to include the respondent's current status. Seventy-nine percent report ASE certification with 42 percent currently certified; 37 percent of collision shop owners have ASE certification that is no longer current; and 21 percent report no ASE certification.

Comparable to previous years, 84 percent of collision business owners are I-CAR trained.

Thirty-nine percent of respondents have attended an AMI-approved course within the past 12 months. Thirteen percent of collision shop owners have earned their Accredited Automotive Manager (AAM) designation.

In addition to the full-time role of owning and managing a collision business, 31 percent of business owners serve on a secondary or postsecondary educational advisory board. One in 10 shops have school-to-work students in their businesses.

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Staff Profile

According to survey results, 45 percent of collision businesses have two apprentice technicians. Forty percent of businesses have two entry-level technicians. A majority of collision businesses (88 percent) have four experienced technicians. Eighty percent have two office staff personnel, and 37 percent have an entry-level painter. Seventy-four percent have two experienced painters, and 68 percent have two estimators.

Approximately one-third (34 percent) of survey respondents report having a production manager. Sixteen percent of shops have an outside sales person who works full or part time. Fifty-seven percent of shops have a shop manager, and 36 percent have a parts manager.

Apprentice technicians earn an average of $20,834. Entry-level technicians earn an average of $33,299. Experienced technician salaries dropped a bit from $51,674 in 2004 to $49,828 for 2005. Entry-level painters earn an estimated $34,064. Experienced painters receive an average salary of $55,128. Estimators, whose task may also be fulfilled by the shop manager, earn an average annual salary of $46,078.

Office staffers and claims professionals average $31,898 annually. Parts managers earn $36,608, production managers earn $51,951 and shop managers earn $56,779. Flat rate continues to grow as the most common form of payment for experienced technicians. Forty-eight percent of technicians are compensated on a flat rate system. This is up from 41 percent in 2004. Twenty-one percent receive an hourly wage. Eighteen percent receive a percentage of the labor rate, and 14 percent receive hourly wages plus commission.

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Salaried technicians dropped 1 percent to even out at 10 percent, 7 percent of technicians are part of a team pay system and 4 percent receive salary plus commission. Allowing respondents to check all forms of payment that apply accounts for results greater than 100 percent.

Benefits and training are common elements of an employee's overall compensation package. Ninety-four percent of independent collision repair facilities offer employees a paid vacation. Major medical insurance edged closer in second place at 88 percent, closely followed by 87 percent of shops that offer paid holidays. Uniforms, which benefit both the technician and the shop's image, are provided by 78 percent of collision shops.

Retirement plans such as 401Ks or simple IRAs are offered by 56 percent and an annual bonus (45 percent) are additional benefits provided by the collision shop population.

Life insurance is provided to technicians by 47 percent of shops. Other benefits include dental insurance (44 percent), management training (38 percent), a cafeteria plan (25 percent), vision insurance (19 percent) and tool reimbursement (10 percent). Management and technician training, although listed as benefits, are essential elements in the survival and success of any business. Technician training is a two-way benefit offered by 65 percent of collision shops. Eight out of 10 businesses allow technicians to attend training during the workday. Of those, 48 percent compensate technicians who attend training during the workday.

Results show 84 percent of collision businesses fund the education of their technical staff. Thirteen percent are sharing the cost of training with their employees. A slight 2 percent require sole funding from their employees. The remaining 1 percent does not participate in training.

It is estimated that 17 percent (39,780,000) of the 234 million registered vehicles are involved in vehicle collisions annually. Of that amount, 17 percent (6,762,600) are totaled, and 28 percent (9,244,872) will disregard repair. That leaves approximately 24 million vehicles up for repairs, according to Collision Repair Industry Insight's Annual State of the Industry Report and internal analysis by ASA.

To perform these repairs, training is critical to the industry. Apprentice technicians received an average of 35 hours of training. This is slightly misleading in that some shops consider all hours spent as an apprentice as hours of training. Entry-level technicians (painter and frame) received 24 hours of training in the past 12 months. Experienced technicians attended 19 hours of training, and managers received 21 hours of training.

Owners reported that an average of $672 was spent per apprentice technician position. About $457 was spent per entry-level technician, $733 was spent on an experienced technician and $744 was spent on managers.

Respondents were asked to select all applicable training sources. Similar to years past, technicians garner a large portion of their training from paint companies (92 percent), I-CAR (85 percent) and jobbers (68 percent).

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Fifty percent of shops cited equipment manufacturers as a source for technician training. Trade magazines and in-house training programs both averaged 43 percent and another 41 percent cited trade show seminars as a means of technician training.

OEM training (30 percent) and association seminars (31 percent) are popular among the collision shop population. Remaining sources include Web-based training (26 percent), independent training providers (22 percent), technical schools (13 percent) and community colleges (5 percent).

ASE certification has real value for collision technicians. According to survey results, 82 percent of collision shops are ASE-certified facilities; 18 percent did not employ ASE-certified technicians. Slightly more common is paint company certification, with 95 percent of collision businesses relying on paint manufacturer-certified technicians.

Being I-CAR trained is also common with 95 percent of collision shops polled. Most shops have an average of six I-CAR-trained technicians. The need for qualified technicians continues to be heard throughout the industry, making technician retention as important as ever. According to survey results, 50 percent of facilities promoted an average of two technicians in 2004. Sixty-five percent of collision repair shops had an average of three technicians leave in 2004. Seventy-two percent of collision shops said they hired an average of three technicians in 2004.

Examining these industry stats, we see that nearly six out of 10 collision shops saw technicians come and go. When asked to select the employee type for which their business would have the most need in the upcoming year, 51 percent said experienced technicians. This is followed by experienced painters (28 percent), apprentice technicians (22 percent), estimators (20 percent) and entry-level technicians (19 percent). Other positions registered only a slight percentage. Note: The survey did allow "no employees needed" as a response option, which was chosen by 32 percent of respondents.

The main source of new hires comes from word-of-mouth referrals, up sharply from 58 percent in 2004 to 86 percent in 2005. Respondents choose to recruit employees by classified advertisements an average of 48 percent, other businesses (42 percent) and vocational technical schools (41 percent). Other sources of attracting technicians include apprenticeship programs, high school programs, school-to-work programs and the Internet.

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Sales

The 2005 survey results showed the average repair order in 2004 to be $1,740, with an average of 38 percent attributed to parts and 41 percent attributed to labor. The remaining 11 percent goes to incidentals such as tape and cleaners. This is a slight decrease from 2004 survey results of $1,846 in 2003.

With 38 percent of the value of a repair order being attributed to parts, respondents were asked the percentage of part types used in their businesses. Respondents said 67 percent of parts were OEM, 19 percent were aftermarket parts and 16 percent were recycled OEM.

By categorizing repair order amounts, we find 2 percent of respondents averaged $500 or less per repair order, 10 percent averaged $501 to $999 per repair order and 58 percent averaged $1,000 to $1,999. Twenty-eight percent had repair orders in the range of $2,000 to $2,999 and 3 percent billed an average of $3,000 and above per order.

This year, respondents have averaged 94 repair orders per month. Thirty percent of businesses completed up to 50 repair orders monthly. Another 31 percent completed 50 to 99 repair orders. Thirty-one percent completed 100 to 199 repair orders. Nine percent of larger facilities completed an average of 200 or more orders.

The 2005 survey also asked respondents to estimate the average number of estimates written per month. Results showed an average of 138 estimates written monthly - 20 percent wrote up to 50 estimates monthly, and 24 percent wrote 51 to 100. Another 37 percent wrote 101 to 200 estimates, 11 percent wrote 201 to 300, and 8 percent completed more than 300 estimates monthly. On average, the survey demonstrates that seven out of 10 estimates turn into a repair order.

The average cycle time rose slightly from five days to six. Forty-nine percent have a cycle time of one to four days. Thirty-eight percent of shops cited a cycle time of five to eight days. Ten percent fall into the nine- to 12-day category and 4 percent cite a 13-day or more cycle time. Written standard operating procedures continue to be used by 67 percent of the population.

Comparing 2005 survey results with 2004 showed shifts in gross annual sales that occurred from 2003 to 2004. Respondents were asked to estimate their gross annual sales for 2004. Those earning under $250,000 averaged 1 percent; 15 percent said $250,001 to $500,000; and 8 percent said $500,001 to $750,000, down from 13 percent in 2003.

The $750,001 to $1 million category showed a shift from 14 percent for 2003 annual sales to 15 percent for 2004 annual sales. The largest area continues to be from $1 million to $2 million, with 33 percent selecting this category of sales. This dropped off from 40 percent in last year's survey. The $2 million to $4 million category garnered 21 percent of the population. Five percent fell into the $4 million to $6 million category. The remaining percentile of sales are unknown.

The 2004 survey asked respondents if they expected 2005 annual sales to increase, decrease or remain the same. Last year's survey showed great optimism, with 75 percent projecting a sales increase, 20 percent holding for no change and only 5 percent bracing for a sales decrease.

That confidence decreased slightly for 2006 expectations. Seventy-one percent of businesses expect annual sales to increase; 10 percent expect sales to decrease; and 20 percent expect no change in annual sales.

The HYB? survey asked respondents if sales in 2005 increased, decreased or remained the same compared to 2004. For the 48 percent who said this year's sales have increased from 2004, several factors were cited as reasons for the increase. Of the 48 percent, 41 percent attribute the increase to improved customer service, followed by economic conditions (36 percent), and marketing and advertising (34 percent).

Other key areas cited as contributing to an increase in annual sales were improved management skills (28 percent), the addition of a new major account (24 percent), technician proficiency (22 percent), weather conditions (19 percent) and increased services provided (15 percent). Increased labor rates (8 percent), quality of parts and management software equally share 1 percent as contributors to annual sales growth.

Reasons for the 31 percent experiencing a 14 percent decrease in sales were also collected. Overwhelmingly, the economy was cited as the main reason for change by 89 percent. This was followed by weather conditions (39 percent) and labor rate losses (14 percent). Minor players in the reduction of sales included percent of parts profit (11 percent), up from 3 percent in 2004, followed by technician proficiency (7 percent), marketing/ advertising and management skills equally share 4 percent in sales decrease in 2005. Respondents were asked to check all that applied, creating amounts greater than 100 percent.

When comparing profits in 2004 to profits in 2005, 43 percent noted an increase. This relates to the 43 percent who also saw an increase in customers and the 40 percent with an increase in repair orders per month.

A decrease in profit (34 percent), customers (30 percent) and number of jobs (32 percent) for 2005 corresponds with the 32 percent citing a decrease in overall sales for 2005. The remaining percentages are held within the "no change or no difference" area from 2004 to 2005.

As in previous surveys, the 2005 survey asked respondents what they expect their annual sales to be in 2006. Seventy-one percent of collision businesses project an increase in annual sales for 2006, 20 percent anticipate no change and 9 percent expect them to decline.

Direct repair program (DRP) participation within the collision repair industry appears to advance in 2005. Ninety percent of businesses participated in an average of five DRP programs as compared to 89 percent in 2004. DRP participation categories include one to four programs (54 percent), five to nine (34 percent), 10 to 14 (8 percent) programs, 15 to 19 (2 percent), and participation in 20 or more programs (2 percent).

DRP participation accounts for 49 percent of business volume, up from 44 percent in 2004. DRP volume percentage categories include one to 20 (9 percent), 21 to 39 (26 percent), 40 to 59 (24 percent), 60 to 69 (17 percent) and 70 or more (24 percent).

Of the average 94 repair orders completed monthly, four resulted in comebacks. Collision shops continued to refine the type of parts used per repair order and attribute 3 out of 4 comebacks to defective parts.

Collision businesses are running comeback interference by rejecting defective parts in the beginning. According to survey results, 18 percent of recycled OEM parts used are rejected due to fit or quality. Thirty-six percent of recycled non-OEM parts are rejected due to fit or quality, and 4 percent of the OEM parts used are rejected due to fit or quality.

This year, the survey asked collision shops what type of warranty they provided to customers. Eighty-seven percent provided a parts and labor warranty, the remaining 12 percent provided a labor-only warranty and close to 1 percent offered a warranty on parts only.

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Customer Profile

As the number of vehicles owned, operated and driven by women continue to increase, the customer base of collision businesses reflected such. The customer base of independent collision repair facilities today is equally shared at 50 percent female and 50 percent male.

Establishing a relationship on the first visit is essential. According to survey results, 57 percent of the customer base represents repeat customers.

Sixty-two percent of businesses conducted some type of customer satisfaction survey.

The average customer base extends 27 miles from the location of a collision business.

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Marketing and Advertising

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Marketing and advertising are part of doing business for 96 percent of the independent collision repair population. There was a slight increase in the average amount of advertising dollars, from $19,162 in 2004 to $19,289 in 2005. The survey shows the largest percentage of spending in the $10,000 to $15,000 range (28 percent), followed by $1,000 to $4,999 (20 percent), $5,000 to $9,999 (19 percent), $25,001 to $49,999 (17 percent), and equal in average spent on advertising are $1 to $999, $50,000 to $74,999 and beyond $75,000 (4 percent each).

Collision repair businesses use several forms of advertising. Word-of-mouth came in first (88 percent), followed by Yellow Pages (74 percent), community involvement (63 percent) signage (58 percent), and Web sites (43 percent).

Survey results show 56 percent of collision shops currently have a Web site. Radio and newspaper advertising were neck and neck in popularity, with radio (33 percent) edging out newspapers (32 percent) by one point.

Additional advertising methods are church bulletins (23 percent), specialty advertising (18 percent) neighborhood shoppers (14 percent), direct mail (11 percent), cable television (9 percent) and broadcast television (5 percent).

An element of community involvement is providing customer "know-how" programs to citizens. Currently, 17 percent of collision business owners participate in such programs.

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Industry Issues Impacting an Individual's Business

This year's HYB? survey asked respondents to indicate which issues currently impact their own business. With each business applying its own needs and experiences, the responses reflect the impact of the issues on the respondent, not the industry as a whole.

From a list of 19 issues, the top five issues cited by respondents as having an impact on their individual business were payment for necessary parts (41 percent); estimate filing procedures (38 percent); paint point of sale (35 percent); cycle time (33 percent) and technician retention (24 percent).

Issues Impacting Industry

Issues selected to have impact on the industry are consolidation of collision repair businesses (19 percent), technician training in Spanish (14 percent), aluminum repair training (12 percent), consumer image of automotive service (12 percent) and technician training (11 percent).

Issues Impacting Individual and Industry

According to respondents, individual business and industry are both affected by new technology (86 percent) and aftermarket parts quality (84 percent). The effects of airbag deployment on estimates, increased customer insurance premiums and recycled parts quality all share equally (75 percent) in impact on both industry and individual businesses.

Conclusion

This year's report explores the overall success and business practices of ASA member businesses. Through the annual "How's Your Business?" survey, ASA provides a thorough analysis of the independent collision and mechanical industries. Members may use this information as a comparison benchmark and as a platform for developing future business plans. For those participants in this year's survey, we offer our sincerest gratitude. And we look forward to the participation of future contributors to the 2006 "How's Your Business?" survey.

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'How's Your Business?" is written by Karin White, ASA's research and project specialist. She can be reached at (800) 272-7467, ext. 252, or by e-mail at karinw@asashop.org.

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