NJA 2022 Industry Survey Results – The New Normal: What the Industry Looks Like Now
by Jacquelyn Bauman
The world is starting to settle back into a sense of normalcy after a tumultuous couple of years, but what does the “new normal” look like for repair shops in the Garden State? Are the challenges they’re facing the same as they were last year…or the year before? Are they still being impacted by the consequences of a global pandemic? New Jersey Automotive has set out to help answer some of these questions and assist New Jersey repair shop owners in figuring out just what their industry looks like after a couple of years of “unprecedented circumstances.”
Are your fellow shop owners feeling the weight of steering on their bottom line? What is their current labor rate? Have they been able to hire any new technicians in the last year? All of this and more can be found in the following pages with the results of the NJA 2022 Industry Survey. We would once again like to thank the shop owners who took the time to respond to this survey, and we hope that you find these results valuable.
What describes your primary business?
Collision Repair: 64%
Collision & Mechanical Repair: 32%
Mechanical Repair: 4%
Collision shops: Are you a DRP?
If you selected “Yes” to being a DRP, how many programs are you on?
More than 10: 13%
In last year’s survey, zero percent of shops answered that they were on more than 10 DRP programs – this year, we saw that number jump to 13 percent. With steering’s impact on repair shops, it’s no wonder an increased number of shops would be inclined to “play the game” and enter into more direct repair programs than ever before.
How many employees do you have, including yourself?
More than 20: 41%
It appears that shops around the state are growing. Last year, shops with only 1-5 employees (including themselves) made up 41 percent of survey respondents, and only 13 percent of survey respondents said they had more than 20 employees. This year, we see the majority of survey takers now have over 20 employees at their shops!
What is the age of your oldest employee?
Over 50: 86%
What is the age of your youngest employee?
Over 35: 0%
Getting new life blood into the industry has been a struggle for New Jersey repairers for quite some time. In 2020, 18 percent of survey respondents indicated that their youngest employee was over the age of 35, and in 2021, that number jumped up to 30 percent; however, it seems that trend is starting to change, as the youngest technician at 100 percent of shops who responded to this year’s survey is between 18 and 35.
How many employees have you hired in the last year?
5 or more: 32%
After years of struggling to find new technicians to join their teams, shop owners around the Garden State are now starting to see hiring on the rise. Last year, 43 percent of survey respondents had hired no new employees. This year, 32 percent of shop owners who took our survey have hired more than five employees in the past 12 months. What did the recruitment of these employees look like? And after so many years of not being able to find anyone who wanted to work in the field, what kind of quality can be found in these new hires?
What has been your biggest challenge in attracting and retaining employees?
It should not come as any surprise to readers of New Jersey Automotive that 36 percent of responses to this question noted low pay rates due to labor rate suppression as a reason why attracting and retaining new employees has been difficult.
“Aside from the shortage of talented techs in our area, labor rates are being held down by the insurers, which makes it hard to compensate properly,” said one Frenchtown shop owner.
Even if compensation wasn’t an issue, it seems that despite recent hiring trends, shop owners are still struggling with a limited or less-than-stellar labor pool.
“Finding the techs or trainees is the hardest part,” explained one North Jersey shop owner. “We’re trying to slowly groom car washers into body/paint men. We provide proper compensation, benefits and fringe benefits like BBQs, bonuses, gas cards, new equipment/tools, etc. We’re trying everything to keep everyone happy so that they stay with us.”
“The applicant pool for our industry is so small, we’re just recirculating the chaff from other shops,” lamented a Rockaway repairer. “We have no issues retaining but finding experienced people with a proper work ethic – that’s the challenge.”
What is the annual salary of your lowest-level employee?
Less than $25,000: 0%
More than $65,000: 0%
What is the annual salary of your highest-level employee?
Less than $70,000: 9%
More than $150,000: 23%
Everywhere you look, from the gas pumps to the grocery store and beyond, prices are on the rise. With one of the highest costs of living in recorded history, shop owners around the state are doing their best to help employees survive. For the past two years, shops paying their highest earning employees less than $70,000 was 41 percent – this year we saw an 87 percent decrease in that number with only nine percent of shop owners indicating that this was the case. Shops paying their highest earning employee more than $120,000 annually was less than 15 percent in 2021 and has tripled, increasing to 45 percent.
What do you think is the most pressing issue affecting shops today?
The automotive repair industry is one of the most challenging fields to be a part of. Between the struggle to get paid properly for the work, the rapid advancement of technology on cars and the difficulty in keeping up with training – not to mention the miniscule number of new workers in the field and more – New Jersey shop owners are always grappling with something. But which of their challenges do they find to be the biggest thorn in their side? According to an overwhelming majority of shop owners who responded to this year’s survey, insurers are the biggest obstacle in their way on a daily basis.
“Insurance company lies, suppression and discrimination are crippling us,” bemoaned one Central Jersey shop owner. “Their denials and delays are simply cutting us off at the knees. How are we supposed to do our work this way?”
“For us, it’s the lack of education and transparency regarding the rules and regulations of insurance companies and auto repairers,” another survey respondent from North Jersey explained. “The rights and responsibilities of each party related to our interactions are murky, and that makes things hard for us,” one shop owner from North Jersey explained. “We increased our starting offer and now pay 100 percent health insurance.”
Are you currently certified/recognized by an OEM to perform collision repairs?
No, but I’m working towards it: 11%
No, and I do not plan to become certified/recognized: 28%
Last year, only 27 percent of survey takers were certified/recognized. Between 2020-2021, we saw a 46 percent increase in those not planning on being certified at all and a 27 percent decrease in those currently working towards certification. We are now seeing double the shops as last year who have become certified/recognized. As there was a 66 percent decrease in those working toward certification/recognition, it appears those who were working toward these accomplishments last year have finished their programs.
If you answered that you are certified/recognized by one or more OEMs, please list them.
This year’s survey saw a record number of manufacturers mentioned with over 35 of them finding their way onto the list. Similar to the past two years, top performers were Honda/Acura, Nissan/Infiniti, Hyundai/Kia, Subaru and GM. In a newer trend, 37 percent of the manufacturers mentioned were luxury car brands.
How do you feel OEM certification programs will impact your business?
My business will be affected in a
positive way: 67%
My business will be affected in a
negative way: 5%
My business will not be affected: 28%
Although we saw a 32 percent decrease from last year in those not expecting to be affected at all by OEM certification programs, shops across the state still feel overwhelmingly that they will be impacted by certifications in a positive way.
“We get a lot of referrals from the dealerships that know we’re certified,” one North Jersey shop owner celebrated. “There are a good number of customers who prefer to use a certified shop, so we try to be on as many programs as possible.”
“OEM certifications are going to be necessary for shops to survive in the future,” predicted one Northern NJ repairer. “That’s why we’re currently working on a few major OEM certification programs.”
However, not all New Jersey shop owners feel the same promise about OEM certification programs in the future.
“It currently only adds incremental volume to our workload,” explained one survey respondent from Southern Jersey. “And other shops becoming certified are watering down the value of a certification. Just look at Tesla.”
How would you rate your current state of business?
Last year’s survey revealed that respondents found their current state of business to be a 6.1 on average. This year, that number has increased slightly to 6.7; however, 61 percent of survey takers rated their current state of business at a seven or higher – a 22 percent increase from last year.
How has steering affected your business?
It’s one of the first things you learn when you open your own shop – if you’re going to stay in business, you’re going to have to find a way to deal with steering. Whether your shop has been open for one year or 50, it’s likely that your bottom line has been affected more than once by this insurer interference.
“Insurers put doubts into a customer’s head before they even make it to your door,” one North Jersey repairer lamented. “And what happens if they do make it to you? You see it all the time – someone gets referred to you by a friend or family member, and then their insurance company pushes them elsewhere. State Farm is now even refusing to send out adjusters to us! They tell their customers that they’re in an ‘estimate assist area’ only and that they don’t have any adjusters available. Then, they tell the customer that we won’t work with the insurer and that the customer will have to move the car to get it fixed.”
“We hear it every day,” one Central Jersey shop owner concurred. “They say, ‘We can’t guarantee their work,’ and ‘You may be responsible for out of pocket expenses if you go there.’”
Another repairer from Middlesex County agreed.
“For every one customer we know about being steered away, there are 15 others we never know about,” he explained. “Insurers are stepping over the line and poisoning the customers’ minds by lying to them. They never give them their full options; they only give them select choices that they want them to pick from.”
Still, despite all of the challenges that steering provides, some New Jersey shop owners are finding a silver lining.
“With parts and business delays, I have seen more claims from insurance companies than ever before,” noted a North Jersey survey respondent. “That’s even for the insurers for whom we’re not part of a DRP. Their providers just can’t keep up.”
Do you feel the increase in photo estimating has helped the repair process?
They say a picture is worth a thousand words. For shop owners today, we know that somehow that still simply isn’t enough. Even though photo estimating hasn’t been around for very long, it has had a huge impact on the automotive repair industry – one which, according to 76 percent of survey respondents, has been overwhelmingly negative.
“As the repair facility, it starts the process of the claim faster but adds additional administrative work and slows down the actual repair process,” expressed one Essex County-based shop owner. “As the customer, it gives them a false sense of security when their vehicle may not be safe to drive due to hidden structural damage.”
“Lack of education of the processes leaves shops thinking they have to send pictures,” a fellow repairer explained. “This leads to 10 times the uncompensated admin work on the shop’s end. Multiple emails, picture saves, file creations, phone calls to negotiate a photo claim, more pictures, delayed repairs, exhausted rentals, pissed off customers, uneducated insurance agents writing estimates claiming he can’t see the damage… and so on. It should be used accordingly to help expedite repairs, not as the standard.”
Another shop owner from Rockaway agreed with his North Jersey neighbor.
“It can help in situations that warrant it,” he noted. “However, it definitely does hurt when it’s used in situations that don’t. I do feel like it speeds the process along when it works as it should.”
Has the increase in photo estimating caused delays in your shop’s repair process?
In 2020, 67 percent of survey respondents thought photo estimating was helping expedite the repair process, likely as the pandemic was already causing
other delays, and it provided a stop gap for one part of the process to keep moving forward. That very quickly took a turn in 2021 with 73 percent of respondents saying it was harming the repair process – a trend which we continue to see in this year’s iteration of the survey.
“Photo estimating delays the whole repair process because, in most cases, the parts selected for the repairs they write for actually need additional pieces, so the cars come into the shop and you immediately have to get a supplement prior to getting started,” reveals one exasperated shop owner. “Then you have to go through six supplements just trying to get the uneducated individual the insurance company hired to look at the photos and understand how the estimating program works and how to repair a car. Cycle time has increased due to the amount of admin time shops have to spend educating the insurance companies and arguing with people who don’t understand the repair process.”
“Someone who was a bank teller three months ago is now an estimator,” joked one Central Jersey repairer. “They have little to no experience and are writing estimates…it’s a joke.”
Even though photo estimating causes its own delays, even trying to avoid it completely doesn’t seem to solve the problem.
“We do not allow photo estimates for supplements,” explained one North Jersey survey respondent. “Yet, since COVID, fewer adjusters are on the road, and that does lead to longer repair times.”
“The time to process claims in general has lengthened,” another Morris County shop owner pointed out. “As too has photo estimating. But how long it takes an insurance company to process their claim is none of my concern.”
Do you typically perform scans before and/or after a repair job?
If you answered “yes,” do you typically perform scans:
On every job: 78%
On most jobs: 17%
On some jobs: 5%
When a repair requires calibrations, what is the average number of calibrations you perform per vehicle?
Cars are more technologically advanced these days than ever before. With vehicles looking more like computers, how many calibrations on average do Garden State shop owners perform per repair?
“The repairs always dictate you need to perform a calibration,” explained a Central Jersey repairer. “Any time you replace a headlamp or some sort of crash avoidance equipment, you can bet there will be some kind of programming needed.”
“It depends on the job,” one North Jersey shop owner stated. “Could be none required to several.”
One thing is for certain, the future of automotive repair will see shop owners dealing with more and more internal programming as the years go on.
If you answered “yes,” do you typically:
Scan in-house using a third-party scanner: 50%
Hire a third-party vendor to perform scans: 22%
Scan in-house using an OEM scanner: 28%
Do you experience difficulty in getting properly compensated for scans?
Do you feel that your shop is prepared to repair EVs?
Why or why not?
Yes, we are prepared: 56%
No, we are not prepared: 44%
With gas prices the way that they are, it’s no wonder that we’re seeing more and more electric vehicles on the road than ever before. If an electric vehicle rolls into one of your bays, will you be prepared to repair it? Nearly half of all survey respondents who participated this year do not feel ready to take on this new challenge.
“We have to invest a lot of money and time into equipment and training before we can let one into our shop,” a Howell-based shop owner admitted.
As one survey taker from Northwest New Jersey expounded, training and equipment aren’t the only barriers to getting involved in these repairs.
“The training and requirements are not a problem,” he pointed out. “The bigger issue will be in the space requirements. As electric vehicles increase in number, larger areas dedicated for safe storage of damaged EV vehicles, EV equipment and batteries will be our challenge.”
Yet, some shop owners in the state just don’t feel like this challenge is yet worth their time, money and energy.
“There’s just not enough volume to justify the cost of training, tools and certification,” a Nutley shop owner confessed. He was not alone in his sentiment.
“I have no interest in repairing Teslas and Rivians,” one of his North Jersey neighbors agreed. “We will gladly send them to someone else who is qualified for the repairs.”
In your experience, which insurer do you find most difficult to deal with and why?
While nearly every insurance company you can name ended up on this year’s list of difficult insurers, for a record sixth year in a row, the most problematic insurance companies to Garden State shop owners were State Farm (or as one survey respondent referred to them – “Snake Farm”), Allstate and Progressive.
“At the moment, State Farm is probably at the top,” one North Jersey repairer revealed. “Although they’re followed very closely by a pack of others! The removal of the Appraisal Clause from their contracts leaves the insured with no good avenue for claim dispute, and their egregious behavior leaves customers with significant out-of-pocket expenses.”
“State Farm is the worst,” agreed one of his neighboring shop owners. “They refuse to send anyone out and claim that there are no adjusters in this area. Customers can expect a minimum of four weeks on their repair with any State Farm claim. They take over a week to respond to a supplement. If they call you to discuss it, they usually never know what they’re talking about and aren’t familiar with how the estimating software is supposed to be used to properly account for the repairs. Whenever you provide them with documentation, they still send the supplement through without making the corrections, and then you have to go through it all over again with someone else. I’ve had their customers on a three-way phone call with them, trying to settle claims, and the representative would be mocking the client and screaming at them, telling them to be quiet and being rude to them…only to hang up and never be heard from again. No State Farm claim is to leave our shop without payment in full.”
“State Farm, Allstate and Progressive do not negotiate in good faith,” said a Central Jersey repairer. “They want to divide us and the customer in order to save some money. Adjusters are all motivated by low severity.”
What is your current labor rate?
More than $90: 11%
What do you think your labor rate should be?
Less than $90: 13%
More than $120: 40%
How do you educate your current and potential customers?
Even though there is more information than ever at our fingertips, it seems that the consumer has never been less informed. The responsibility to reliably educate customers, therefore, unfortunately falls on the shoulders of automotive repairers. So, what do New Jersey shop owners find is the best way to go about it?
“Any time we write an estimate or field a phone call, we are open and transparent with them,” reported one North Jersey repairer. “We have no companies that we’re contractually obligated to bend over for or watch what we say about, so we can be honest with the customer. We tell every State Farm customer what they’re in for prior to them leaving the vehicle with us, and we let them know we’re going to fight for them. Unfortunately for the customer, State Farm proves us right every time. But it shows them that we weren’t kidding, and from that point onward, they won’t go anywhere else.”
“It takes hours of coaching,” a shop owner from South Jersey agreed. “We have a detailed discussion on the claim/repair process during the initial inspection to give them a clear perspective from start to finish. We explain the entire process up front on what could or could not happen and everyone’s individual responsibility. It’s worth it though. Quality and service make them come back.”
Approximately how much do you spend on parts annually?
$1-$100,000 per year: 6%
$101,000-$500,000 per year: 33%
$500,001-$1 million per year: 22%
Over $1 million per year: 39%
Where do you look first when purchasing parts and services for your shop?
New Jersey Automotive: 42%
Word of mouth: 11%
Existing relationships: 26%
Shop owners: Do you feel that MSOs (Caliber, ABRA, Crash Champions, etc.) are:
A threat: 33%
An opportunity: 39%
In 2021, only 14 percent of survey respondents saw MSOs as an opportunity, a number which has increased in 2022 to 39 percent. We also saw a 19 percent decrease in those who see MSOs as a threat! Why the change of heart?
Even though many of the individuals who took the survey noted that MSOs are more loyal to the insurance companies than their customers, some New Jersey shop owners are hopeful that their combined voice may be able to be leveraged for higher labor rates.
If you could change anything about this industry, what would it be?
Imagine you found a genie who could grant you three wishes to change your industry – what would you ask for? For New Jersey shop owners who took our survey, the answers truly came in all across the map.
“I would eliminate direct repair,” a survey respondent from Millstone stated. “I would also have them pass legislation to allow legal action against insurers.”
He was not alone in his desire for insurance companies to behave differently than they do. In fact, 23 percent of survey takers mentioned insurers and DRPs in the changes they wish they could see in the industry.
“I just want the insurance companies to reimburse the customers,” a Washington shop owner agreed. “They act like they’re doing the repair themselves. It’s ridiculous.”
However, our survey respondents didn’t limit their ideal changes to just the impact of insurance companies on the industry.
“There should be more camaraderie among the shops,” expressed one Livingston shop owner. “It’s an all-you-can-eat buffet out there, but everyone wants to act like they have the better mouse trap, and they can’t talk about it. We need a lawyer to explain what we can and cannot talk about, because I think it’s ‘BS’ we’re not allowed to use insurance company names or specifics in our meetings.”
“I wish there was more education for shops,” noted one Edison repairer. “It’s a business. A lot of us need to learn how to run it like one.”
One thing is for certain: Unless we find that genie, we as an industry will need to work together for anything to change.
One thing the results of the 2022 New Jersey Automotive survey have shown us is – like the old saying goes – the more things change, the more they stay the same. As we level out from the pandemic and see some of its effects in our rearview mirror, many new challenges lay on the road ahead. We hope that these results helped you feel less alone in your struggles and allowed you to find new insights on how to handle the challenges currently at your door.
Want more? Check out the December 2022 issue of New Jersey Automotive!