Car dealerships have had body shops for decades, but recently the appeal for dealership body shop business has gained a second wind, due in part because of subtle differences between car dealerships and traditional collision repair centers. Not long ago, your standard vehicle was a simple steel body and a chassis. A few short years later, we have “computers on wheels” surrounded by shrouds of aluminum. Sophisticated cars and trucks have a wider array of repair challenges, which can create some advantages for dealerships with body shops. Dealerships can utilize a combination of technology, experience, exposure, and customer base to create a profitable body shop that benefits their dealership as much as it does their customers.
Starting with exposure, dealerships can piggyback marketing off the corresponding brands they sell. The simple advantage of being associated with a specific brand can give dealerships the first crack at landing collision repair clients. In an era of brand recognition and loyalty, a specialized dealer can be the first to pop up in a simple Google search or word-of-mouth. Nearly all dealerships are required to operate a service department to handle warranty repairs, and often they address needs like tires, brakes, and alignments. This can create the impression that the local dealer is a one-stop shop for both brand-specific parts and general maintenance. Over the course of your maintenance visits, the dealership can inventory your activity and reach out to you to let you know what maintenance you should have coming up. By creating a relationship with the customer and the vehicle, dealerships can enjoy excellent top-of-mind awareness.
Modern car technology may even alert your dealership when your vehicle has been in a collision. To a customer in need of collision repair, it might not even be a matter of repair quality or cost; it can be the simple fact a dealership knows when to ask for your business. There are other technological specialties that can come into play when dealing with collision repair. Newer makes and models need to have specific sensors reset, and body shops do not always have the equipment that is necessary to bring a car back to OEM standards. Dealerships may already have some of the proprietary tools required to reset computers in their service department, so the overall cost and activities associated with a dealership body shop can be significantly reduced.
Dealerships may also have an increased knowledge on newer vehicles and the specifics of advanced electronics such as radar, lidar and camera-based vision systems. Vehicles are also getting more aluminum, cast parts, ultra-high-strength steel, magnesium, and similar materials than before. These components require different autobody techniques and tools than traditional steel vehicles. This is especially important on brand new vehicles. Dealerships have immediate access to proprietary information on new vehicles that might be required for diagnosis and repair. Some of this information is not available to small shops for up to one year from the release of the vehicle.
Dealerships also gain new/used car foot traffic when they offer body repair services. When people come onto the lot for oil changes, warranty repairs, or collision repair services, they have exposure to all their vehicles for sale. Dealerships know there is a correlation between foot traffic and car sales. The more customers on your lot mean more new cars sold. A body shop may provide an opportunity to evaluate a trade-in or introduce the customer to a brand-new car. This is especially true when the customer’s vehicle has been deemed a total loss.
Economically, fixed shop costs are split amongst dealership departments. Typically, personnel expenses are also fixed whereas some collision repair shops are under greater pressure to return repairs more quickly. Repairs at dealerships will (likely) all be certified and are typically backed with longer warranties. Dealerships have a streamlined connection with OEM parts distribution. This means on repairs that require replacement, a dealership may receive the part faster than competing collision repair shops.
Why don’t all dealerships operate body shops? If a body shop is mismanaged it can leach the profits out of the primary business of selling cars and become a financial hindrance. Running a body shop is very different than managing a car lot. The profits generated from a body shop rely on personnel, materials, time, and the quality of the finished product. It does not take much to lose money on a job. Everything needs to operate in harmony for profits to remain consistent. Assuming someone spends too long on a repair, orders the wrong materials, does not match the paint properly, or if the customer is not satisfied, the dealership can lose money and the potential for another car sale.
Dealerships also understand risk (and most body shop managers understand it, too!). Businesses know all too well that a negative Google review can tarnish your business, even if it is undeserving. If you get too many bad reviews, your reputation can be up in smoke before you have the opportunity to assess customer concerns and adjust.
Finally, in nearly all markets, there are solid, independently owned body shops serving satisfied customers. Often, shops may have a relationship with a dealership or dealerships for their mutual benefit. Taking a damaged vehicle to a dealership body shop may be the right decision. Ultimately, the customer must choose the best qualified facility for them and their vehicle.
Credit/Photos: by Tyler Schuck, Industrial Finishes