clock menu more-arrow no yes

Filed under:

Dealers closing body shops

Stung by equipment, staffing and environmental issues, car dealerships are closing their body shops.

Only 40 percent of the more than 21,000 new car dealers have a collision repair shop, down from 70 percent in 1974.

"It's a business that you either have to be in it seriously or be out of it," says Paul Taylor, economist for the National Automobile Dealers Association.

For consumers, the pullback in dealer collision repair shops could mean problems in getting wrecked specialty cars repaired, especially the new gas-electric hybrid vehicles.

While the sheet metal on the hybrids is equivalent to that on similar gasoline-powered cars, the hybrids have unique transmission and motor components that require advanced training to repair.

Consumers also might have to travel farther to get repair work done when dealers either close their body shops or, if they remain in the business, often build a separate facility in a space big enough to handle a large volume of wrecked cars, including ones from brands other than their own.

Helping drive dealerships from the collision repair business:Cost of equipment. Fixing damaged sheet metal has become increasingly complicated. Repair businesses have to spend at least $1 million for the basic computer-programmed equipment needed to fix today's cars, according to Dave Dunn, owner of Masters School of Autobody Management.

One example: In the past, most cars were built with a body placed over a frame that holds the engine, interior and other mechanical parts.

Today, most cars are one total unit called unibody. That means precision welds of sheet metal are needed to maintain the integrity of the car body.

Difficulty finding and retaining painters and other body repair staff with the necessary skills. Body repair and auto painting is a skilled trade that today requires computer knowledge to operate the machinery. But employees with computer skills often can find less demanding work in other businesses, dealers say.

Adding to the problem, insurance companies pay a lower hourly rate for body work.

Labor for mechanical repairs typically costs about $60 an hour, while labor for body work is typically $35 to $40 an hour.

Environmental requirements. Governmental regulations dealing with spray painting vehicles have gotten stricter.

That, in turn, has required new, more costly equipment to capture the chemicals released when a vehicle is painted.

Bud Lawrence, owner of Bobby Jones Ford in Augusta, Ga., says he decided to close the dealership's body shop two months ago.

"We were at a point where we needed to spend about $1.2 million to upgrade the paint booths and frame machines and move to another building," Lawrence says.

"We couldn't see getting that money back. It had become a money-losing service we provided to our customers."

Rather than getting out of the business completely, some dealers are pooling their resources.

Four dealers near St. Petersburg, Fla., for instance, invested in a 25,000-square-foot collision shop that will handle customers for all the dealerships. The facility will include a rental car lot for customers.

Unlike the dealerships, independent body shops are better able to deal with the expenses and regulations because they focus solely on collision repair work and are not sidetracked with new and used car sales.

They also do a big enough volume to compensate for the low profit margins on body repair work.

That, Dunn says, is the problem for the dealers.

"Because of the low profit margins, dealers need to do a high volume of business to make money," he says.