Massachusetts Shops Speak Up: NEAR’s 2022 Survey Results
by Chasidy Rae Sisk
The collision repair industry is filled with changes, challenges and triumphs, yet each shop owner runs his or her own business, leaving many feeling as though they’re on an island all by themselves. It’s easy to feel like you’re “the only one” when you don’t know what’s going on with your peers. But for the second year, the New England Automotive Report Industry Survey provided an opportunity for shops to make their voices heard and reinforce the fact that we’re all in this together.
How many referrals and programs do other shops participate in? How are they educating their customers about the complexity of modern vehicles? Is anybody actually ready to repair electric vehicles?! The answers to these questions and many more fill the following pages, so keep reading to check out the results of the 2022 New England Automotive Report Industry Survey. Thank you to all the shops who participated in this survey. We hope that you find this information enlightening and useful.
How long have you been in business?
1-5 years: 5%
6-10 years: 0%
More than 10 years: 95%
Are you on a referral or program?
If you selected “yes” to being on a referral, how many referrals are you on?
More than 10: 0%
If you selected “yes” to being on a program, how many programs are you on?
More than 10: 0%
In last year’s survey, 52 percent of shops responded that they did not participate in any referrals or programs, and given the pressures that insurers place in these situations, it’s no wonder that this number decreased by 12 percent in 2022; however, those that DID participate chose to participate in more referrals and programs than previously reported.
How many employees do you have, including yourself?
More than 20: 10%
What is the age of your oldest employee?
Over 50: 93%
What is the age of your youngest employee?
Over 35: 19%
Where do you look to hire new employees?
Word of mouth/referrals: 27%
Local vocational schools: 29%
Not searching: 17%
Since last year’s survey, fewer shops are seeking help through word of mouth and referrals (down from 39 percent). Although online searches have decreased by five percent, Indeed remains a common source for employee searches, and one shop owner recommended “targeted social media campaigns” as a viable solution. There’s been an increase in hiring through local vocational schools due to students’ “willingness to learn and ability to be detail-oriented.” In 2021, shops searching “everywhere” tied with shops “not searching” at nine percent, and both of those numbers have risen significantly; however, the “not searching” shop owners were the most vocal in giving their explanations.
“I don’t look because most new employees have bad work practices,” one owner wrote, while another claimed, “There aren’t any [new employees to hire]. The aptitude and skill level required to work on modern vehicles properly is very hard to find – almost nonexistent. We need to stop thinking we are ‘body men,’ ‘beautifiers’ or ‘auto esthetic experts’ and realize our jobs are more mechanical than mechanics. It’s a paradigm issue. Our trade schools are terribly flawed. Children are being taught a trade that matches five percent of the skill set needed. Until someone realizes things have changed at all levels (even shop ownership), nothing will change!”
What is the annual salary of your lowest-level employee?
Less than $25,000: 7%
$55,001 or more: 12%
What is the annual salary of your highest-level employee?
Less than $70,000: 39%
$100,000 or more: 29%
Everywhere you look, prices are on the rise. With one of the highest costs of living in recorded history, shop owners around the Commonwealth are doing their best to help employees survive. Although the amount that shops pay their highest-level employees remained fairly stagnant compared to last year, the highest reported pay was $175,000 while one shop owner indicated that they would pay a highly qualified technician “whatever they want.” On the other side of the equation, 27 percent of shops’ lowest-paid employees earned more than $45,000 in 2022, compared to just 16 percent earning as much in 2021.
Are you familiar with AASP/MA’s legislative agenda for the current session?
Do you feel that your customers care about the issues facing the collision repair industry?
Fewer survey respondents expressed the belief that consumers care about the industry’s problems:
“Customers act like they care, but at the end of the day, they think we are complainers. They believe it’s part of an act. They don’t understand the estimating. They just see high dollars that look and sound like enough, though it’s not. Too many shop owners are uneducated in business principles, so they don’t understand how they make money; they just keep taking on jobs at a loss and think, ‘Do more, do more, do more.’ That may have worked years ago, but not today. MARGINS matter!”
“They’ll care only if the issue impacts them directly.”
“They won’t care until they start paying for those costs out-of-pocket.”
Other surveyed shop owners expressed faith that customers DO care and insisted that it’s just a matter of educating them.
“They care if we educate them about the possible problems that can arise by failing to adhere to manufacturer recommended procedures.”
“I inform my customers of the situations that we are dealing with relating to the repair of vehicles.”
As an industry, how do you think we can better educate customers?
About half of the surveyed shops agreed that the responsibility for educating customers falls on the shop on a case-by-case basis:
“Just informing customers how little insurance companies are reimbursing them. Some sort of signage in the office showing how much more other industries are charging is an effective tool for us,” suggested one respondent.
Another encourages customers to get involved, “Educate them about suppressed labor reimbursement rates…Customers need to complain to insurance companies, legislators and the Department of Insurance regarding how insurers are taking advantage of customers and body shops in the state of Massachusetts.”
Others suggested that even more can be done, such as the creation of “video content that can be used across social media platforms,” “ads to the consumer about OEM safety” and “better commercials than the insurance industry.”
Several indicated that it all starts with the industry. “Educate ourselves first,” and “Educate our members (and our potential new members) so they can educate their customers” were proposals received.
What do you think is the most pressing issue affecting shops today?
Not surprisingly, nearly 61 percent of survey respondents indicated that the suppression of the labor rate in Massachusetts has the largest impact on their businesses currently, especially while trying to attract and compensate qualified talent. The workforce shortage ranked as the second most mentioned concern with 18 percent of shops citing its negative influence. Vehicle complexity, shops’ failure to research OEM procedures, liability and insurer interference also negatively impact shops.
One survey participant provided an all-encompassing response: “Everything! This industry needs a paradigm shift. Nothing is right. Who said! Think about that? Who said?! Who said we need to use a flawed flat rate system? Who said we need to ‘do more’ production to make money? Who said we need to work for insurers? The answer is the insurance industry! But the insurance industry isn’t running our businesses. Think about one thing – if you were to start from scratch what would our billing look like? Would we repair so many cars at a net loss just because ‘it’s the system’? I understand what I am typing is a little progressive, but take a step back and ask yourself: Do any other trades do jobs at net losses? Do any other trades work on an average with no control over that average? Who in the world would ever come up with this system? Until we change the business, we will never ever change the business. We cannot fix our industry’s challenges until people change their paradigm.”
Are you currently certified/recognized by an OEM to perform collision repairs?
No, but I’m working toward it: 30%
No, and I do not plan to become certified/recognized: 30%
If you answered that you ARE certified/recognized by one or more OEMs, please list them below.
Certified shops mentioned over a dozen manufacturers for which they’ve received the necessary training, tools and equipment to achieve their certification. The most prevalent OEM certifications referenced by survey participants included Honda/Acura, Subaru and Ford.
If you answered that you ARE certified/recognized by one or more OEMs, what is your incentive to continue with the program?
OEM certification can offer many benefits for shops. Survey participants indicated that the main incentives for maintaining their status with these programs include access to the OEM repair information that allows them to ensure they’re making safe and proper repairs, improved access to parts needed for those repairs and leverage that can be used when billing insurers. The image it presents to consumers is another important incentive for these shops.
“We want the recognition and the training that will set us apart and confirm to our customers that we are the right choice to repair their vehicle,” one shop owner commented.
Unfortunately, others are starting to doubt the value of OEM certification.
“Questioning that myself. Little backup with insurers,” a respondent indicated, and a non-certified shop owner added, “This could be a great system, but until the entire industry wakes up and starts running their businesses independently, none of it matters. It’s just another plaque on the wall (other than the equipment requirements ), and we all know it.”
How do you feel OEM certification programs will impact your business?
My business will be affected in a POSITIVE way: 57%
My business will be affected in a NEGATIVE way: 6%
My business will not be affected: 37%
More than half of survey participants indicated that their businesses will be impacted positively by OEM certification. Those who do not believe their businesses will be affected offered comments:
“I had planned on getting certified in all the OEMs around my area but changed my direction after I realized the actual OEMs and dealers do not care about correct repairs.”
“At this time, for our business, I do not think the return outweighs the investment on becoming certified. In most cases, we would not be paid a higher rate, and we already have more work than we know what to do with. We have an excellent customer base.”
How would you rate your current state of business?
Survey respondents rated their current state of business at an average of 6.3. While seven percent of responses indicated business is at its worst (a score of one), 10 percent of respondents gave a “best” score of 10.
Over the past year, have your sales increased, decreased or stayed the same?
Stayed the same: 3%
This question elicited one of the largest variances compared to last year. While the number of shops reporting a decrease in sales remained fairly consistent compared to the 11 percent reported in 2021, many shops reported an increase in sales (87 versus 54 percent) in 2022, while the number of shops that did not change significantly dropped from 35 to three percent. So, why did so many shops see an increase in sales? Several typical responses follow.
“People drive like a bunch of nuts.”
“We stopped repairing cars for $40 an hour! Instead, we balance-bill the customer, and we are NOT on any referral programs, so we now have the opportunity to get paid for ALL of the work that we do.”
“Shortages of shops to do the work.”
“Charging a labor rate co-pay and adapting better lean practices.”
“Largest crew we’ve ever had and increased cost of repairs, plus we started doing ADAS calibrations in-house and balance-billing customers for labor rate differences.”
In your experience, which insurer do you find the most difficult to deal with, and why?
Shop owners identified 10 insurers in response to this question, but the most commonly mentioned carriers were Allstate (28 percent) and Travelers (14 percent). Many shops blame the appraisers’ lack of knowledge and refusal to negotiate for their difficulties.
“Failure to negotiate is the biggest issue. Their appraisers and supervisors are unwilling to concede on any items– parts usage, repair vs. replace, P&M – all of it. As a result, we no longer accept Allstate claims at our shop,” a respondent shared.
Another vented about Travelers: “The appraiser is a complete d!c#. Their parts policy is horrible; they refuse to pay for PPI on parts if you don’t attempt to use their vendor from 10 states away, plus they still haven’t raised their labor rate. Meanwhile, the higher ups don’t give a flying F about any of our concerns.”
Additional insurers who were identified as creating difficulties for shops include Vermont Mutual, GEICO, Hanover, Mapfre, Progressive, State Farm, Liberty Mutual and Arbella; however, nearly 10 percent of survey participants make no differentiation between insurers.
“Let’s list the couple that are okay to deal with; it will be a shorter list,” one repairer quipped, identifying those “okay” insurers as Amica and Arbella.
“They are all dictators and do pretty much what they want to do and pay for,” another repairer agreed. “They don’t care about your business survival or if you are eating in a dumpster. All they care about is profit, when the vehicle repairs will be done and how to get out of paying for it at your shop’s expense.”
What is the current labor rate you are being reimbursed by insurers?
Less than $40: 7%
$80 or more: 7%
The majority of shops reported a range that included multiple categories listed above, acknowledging that they are reimbursed at higher rates by certain insurers on specific vehicles/repairs, yet 90 percent admitted to receiving less than $50 at least some of the time. What’s the other 10 percent’s secret? A couple spilled:
“The vehicle owners pay us; they chase the rabbit (the insurer).”
“I now deal business to business and set our rate based on that, so we collect a much higher rate than the $43 that insurance companies will pay.”
What do you think your labor rate should be?
Less than $60: 10%
$100 or more: 10%
A year of educating shops has made a huge impact in how Commonwealth repairers view their worth. Nearly a quarter of last year’s respondents believed their labor rate should be less than $60, while just 42 percent felt a fairer value could be found in the $60-$79 range. The 2022 survey responses demonstrate a positive shift in beliefs, thanks to AASP/MA’s efforts.
How do you promote your business to current and potential customers?
Word of mouth/referral/reputation: 44%
Internet (social media/website/Google/Yelp): 23%
Local advertising (cable/radio/community involvement): 21%
Similar to responses about attracting new employees, shops in the Commonwealth use a variety of methods for promoting their businesses to current and potential customers. Over half of shops utilize multiple forms of marketing, yet the most common form indicated by survey participants is the good old-fashioned referral.
“Word of mouth is still king.”
Others believe community involvement is most effective.
“We give back to local organizations like little league, our local church, sponsorships at golf tournaments, etc. Other than that, we do no real advertising.”
How do you feel social media and digital platforms like Yelp have impacted your business?
A positive impact: 55%
A negative impact: 3%
A mix of both: 10%
No impact: 31%
Although 31 percent of survey respondents do not see social media and online reviews as impactful, most see these resources as useful tools.
“People use reviews as a trust-but-verify system. They check online after being referred.”
“Social media is just another way to get your brand out there and give your current and potential customers a taste of who you are and what you do.”
“Most people these days use them to help make decisions. We have had good luck with business exposure by using them.”
Approximately how much do you spend on parts annually?
$1-$100,000 per year: 13%
$101,000-$500,000 per year: 47%
$500,001-$1 million per year: 20%
Over $1 million per year: 20%
What is the most important factor in determining who you purchase parts and supplies from?
Vendors that support AASP/MA and/or the industry: 33%
Word of mouth: 13%
Directed by insurance company: 3%
Relationship with vendor: 80%
Responses to this survey indicated a universal truth: People want to do business with other people. Customer service is the number one reason that shops use a specific vendor, yet the emphasis on quality increased in 2022 from 38 percent in 2021, reflecting the importance of safe and proper repairs.
Where do you look first when purchasing parts and services for your shop?
New England Automotive Report: 13%
Word of mouth: 37%
Previously established relationships: 30%
Do you feel that your shop is prepared to repair electric vehicles (EVs)? Why or why not?
Yes, we are prepared: 37%
No, we are not: 63%
The EV-evolution is on the horizon, but nearly two-thirds of Commonwealth shops do not feel prepared, though many realize that it’s a necessary next step in advancing their businesses.
“Not yet, but we will get the necessary training,” one said, and another offered, “We are ready to take the necessary steps to be able to safely work on the vehicles.”
A third indicated, “We are getting there. Lots of training to be done and some equipment investments to be made.”
Have you and/or your employees undergone any training in the past year?
With technology advancements coming at astronomical speed, many surveyed shops took advantage of the lower workload over the past year to attend training. While 59 percent included I-CAR training in their agenda, others obtained welding certifications and trained with OEMs, paint companies and 20 groups.
As a shop owner, do you feel that MSOs (Caliber, ABRA, Crash Champions, etc.) are:
A threat: 17%
An opportunity: 23%
With technology changing more rapidly than ever before, where do you see this industry 10 years from now?
It’s no secret that auto body shops are constantly contending with rapidly changing technology, which will play a vital role in shaping the collision repair industry in the future. Survey respondents shared some of their thoughts on what the industry will look like in 2032.
“Those with mechanical aptitude will survive, and those without will not be here.”
“Less repair shops and less employees. Industry age is a factor with very little new people wanting to be in this industry based on compensation rates.”
“We will all need ADAS capability to survive. And EV specific tools like battery removal tools and storage will be a must.”
“Opportunities are available for the facilities who can keep up with the changes, keep recruiting and training new technicians.”
“More shops will specialize in certain vehicle lines and will decline to work on some other vehicles.”
Vehicles are evolving quickly…and auto body shops must keep pace if they want to stay in business. Fortunately, shop owners in Massachusetts seem to understand there’s strength in numbers and power in sharing their thoughts. We hope this year’s results help empower you to make the changes necessary in your individual shops to become stronger and forge ahead.
Want more? Check out the February 2023 issue of New England Automotive Report: