Fixed Ops Journal - October 2021 - F12

FIXED OPS JOURNAL
How to score collision revenue without body shops
T
he three Mercedes-Benz dealerships
under the Pennsylvania-based
Park Avenue Cars umbrella
generate annual collision repair revenue
well north of $1 million. But none of them
has body shops or collision repair equipment.
How does the company, owned by Michael
Sloane, accomplish this fi nancial feat? It
struck innovative contractual deals with nine
independent neighboring body shops that do
the actual repair work, says Mike Hardin, collision
director for Mercedes-Benz of Fort
Washington and Mercedes-Benz of West
Chester in Pennsylvania and Mercedes-Benz
of Atlantic City in New Jersey.
Th e relationship is mutually benefi cial. Th e
body shops pay the dealerships a percentage of
the insurance payments they receive for doing
repairs. In exchange, the body shops receive a
steady, high-volume fl ow of collision work.
No expensive start up costs
Th e body shop technicians must be certifi ed
by a third-party auditor to fi x Mercedes-Benz
vehicles . Th e shops also are contractually obligated
to use genuine Mercedes-Benz parts,
which they buy wholesale from the dealerships.
Th at provides another lucrative revenue
stream, Hardin says.
" Th e shops benefi t because they don't have
to do any of the tedious clerical work, like ordering
parts or keeping customers updated
SHOPS
continued from Page 11
It also creates complete invoices for insurance
claims, which ensures payment for all
labor and materials, a commonly overlooked
detail that depresses profi tability.
Martin uses data from the system to determine
the amount of materials technicians are
using vs. the work they're performing. Th is exposes
materials waste and even theft problems,
he says.
" Our materials costs decreased by half after
using the system for 60 days, " he says.
Th e company pays a monthly fee to use the
system, but Martin says it pays for itself just by
ensuring everyone is charged for all materials
used.
Martin also uses Carbeat production-management
software from AkzoNobel to monitor
how long each step in the repair process takes,
from customer check-ins to the initial repair
teardown to the actual repairs. It can even
PAGE 12 OCTOBER 2021
A " blueprint process " helps Zinn techs such
as Gregg McPherson turn more labor hours.
track the time it takes for parts to arrive and
how long it takes insurance companies to approve
repair plans.
Th e end result? Actionable insights for imSales
tool, too
Providing compassionate and comprehensive
customer service also is critical. Martin
points out that customers involved in collisions
are at a low point in their vehicle-ownership
cycle. As such, phone receptionists are
trained to be empathetic.
" Our average repair is $5,000, " he says. " So a
mishandled customer call could be a $5,000
mistake. "
Furthermore, about 60 percent of people in
a collision switch to another car brand, Martin
says.
" So if they like how they're treated, it gives
them a reason to switch, " he notes. " If a customer
didn't buy their car from us, our goal is
to get them to buy their next car from us. Providing
great service and quality repairs is our
way of conquesting customers. " 
on the status of their repairs, " Hardin notes.
" Th ey just have to fi x the cars to our standards.
" In turn, we handle all the customer-facing
duties - holding the customers' hands and
providing red-carpet concierge service. "
Moreover, the body shops don't
have to spend money on advertising
because the dealerships funnel plenty
of work to them. One shop even
built a second facility that's devoted
just to repairing Mercedes-Benz vehicles,
he added .
Th e arrangement also benefi ts the
auto group in other ways . For example,
the dealerships don't have to invest
in expensive capital improvements
such as body shop facilities
and repair equipment.
Furthermore, fi nding enough qualifi ed mechanics
to fi ll such a facility would be " a staff -
ing nightmare, " Hardin says . " Th e body shop
business is tough because insurance companies
dictate the payment rates, " he explains.
" Th ey're like HMOs for cars. Finding
people that want to get into the fi eld
is tough because they can make more
money as a fl at-rate mechanic. "
Hardin: Profi t
is guaranteed.
" Every shop has to have a frame machine
mandated by Mercedes-Benz that costs about
$200,000, " he says. " About three-fourths of
them also have more than one spray booth. "
To handle the kind of volume those nine
shops do, which is about 300 to 350 repair orders
a month, Park Avenue would have to
build a body shop with about a dozen frame
machines and at least a dozen spray booths,
Hardin says.
" Th e facility probably would have to be bigger
than our entire dealership, " he says. " And
better yet, we'll never outgrow a building. Instead,
we'll add another body shop. "
Client advocate
Sloane came up with the partnership
concept about a decade ago, and
Mercedes-Benz readily bought into
it, Hardin says.
" Th e power of the program is that
we're the advocate for the client, " he
says. " We have their best interests at heart because
we know there's a good shot their car
eventually will get traded in to us ... so it's in
our interest to get it fi xed with genuine Mercedes-Benz
parts at a Mercedes-Benz-certifi
ed body shop. Clients love that. "
As for dealerships that don't do body work,
Hardin says they're missing the revenue boat.
" It's such a profi table business, " he points
out. " We're guaranteed a profi t with every
transaction - it's a no-lose situation.
" Without this arrangement, we'd be telling
300 to 350 customers a month to go somewhere
else to get their cars fi xed. "
- Ken Wysocky
proving processes, he says.
" You can't manage what you don't know, "
Martin notes. " Th e devil is in the details. "
Fixed Ops Journal - October 2021

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