According to CCC, collision center margins have shrunk since 2018. This is largely due to the shift in sales mix from labor (with the highest gross %) to parts and sublet (with the lowest gross %). As individual components, labor gross % is down and parts and sublet gross % are slightly increased. However, the trade-off of labor for lower grossing parts and sublet means fewer margin dollars to fund operating costs. Newer vehicles with new technology require new approaches to diagnosing, documenting, and processing repairs. This change in sales mix also reflects a change in needed technician skills–less metal-bending, and more parts replacement. Plus, there is a new need for hi-tech skills in ADAS diagnosis, electronic repair, and calibration. Early diagnosis of ADAS issues, complete disassembly of all damaged parts, and training damage writers in the use of “estimate scrubbers” are critical to a collision center’s profitability. In this month’s IMPACT Collision Solutions, we will explore how collision centers can respond to these industry changes and preserve profitability.
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