Riding the Waves: Staying Strong Through a Collision Industry Downturn

by Chasidy Rae Sisk

Operating a collision repair facility is similar to a marriage in many ways; both require commitment, communication and resilience, especially when times get tough.

As we learned from local and national industry experts, in order to survive and ultimately thrive, shops now must get creative, adjusting strategies and riding the unpredictable waves of economic uncertainty to stay afloat and emerge successfully.

After several years of nurturing a heavier workload than normal, the market began shifting downward last year.

“Not since the pandemic year of 2020 have so many US shops reported six-month sales and net profit being below the same period a year earlier,” CRASH Network reported in April, citing its recent “Collision Industry Business Perspectives” survey. “Nearly half (46 percent) said their sales and net profit in the second half [of] 2024 were down from what they were in the second half of 2023. It’s the fourth survey in a row where that percentage has risen (from a low of just seven percent who said six-month sales were down in 2022) and is almost as high as when 53 percent of shops reported sales down in the second half of 2020.”

Although the CRASH Network survey indicated 39 percent of shops had seen no change in sales and net profit over a six-month period, only 15 percent reported an increase in the second half of 2024 compared to the same period in 2023. “It hasn’t been since 2020 when [so] few shops were seeing an uptick.”

According to Focus Advisors’ “2024 Year in Review: Some Excel on a Bumpy Road,” some operators reported “their trailing 12-month sales were down as much as 20 to 30 percent.”

Texas repairers indicate similar experiences, though the severity of the slowdown varies by shop. “Our body shop business is down 30 percent, close to COVID levels, but not quite that bad just yet,” shares Greg Luther (Helfman Collision; Houston). 

“We are definitely down this year compared to last year,” says Eric McKenzie (Park Place Dealerships; Dallas/Fort Worth). “Our best year after COVID was 2023. This year’s numbers are similar to 2019, which was our best year before COVID.”

For Burl Richards (White Sands Collision Center; Lindale), “The workload has decreased pretty significantly over the last year and a half and is currently less than it was pre-COVID.”

During an ABAT webinar earlier this year, Mike Anderson (Collision Advice) offered a nationwide perspective. “It’s not a new normal. It’s the old normal. I’ve been to 32 states this year, and I can tell you that with the exception of Indiana and Nebraska, the next appointment for most shops is either tomorrow or as soon as one hour from now. Smaller shops doing about $200,000 in sales may be booked out about a week. Larger shops doing $400,000 to $500,000, their next appointment is tomorrow. Is this the new normal? No. We just went back to the way things were before COVID; we merely forgot what it was like.”

In a marriage, when a relationship gets rocky, outside intervention may be necessary, and many shops looked forward to the country’s administrative change as exactly the change the industry needs, due to President Donald Trump’s promises to “end inflation and make America affordable again,” yet a year into his second (though non-consecutive) term, costs continue to rise. As of September, inflation is up around three percent, an increase that can be partially attributed to tariffs which affect a plethora of products, including automotive parts. Combined with the industry’s ongoing challenges related to advancing technology, these higher prices have also contributed to a spike in repair costs, allowing insurers to justify raising premium costs, with projections of a seven percent increase by the end of 2025; in turn, consumers are more hesitant to file claims after minor collisions. 

With so many interrelated components married together to create a perfect storm of circumstance, it’s difficult to pinpoint a single factor to blame. 

“Claims volume is down, total losses are up, and vehicle owners are broke,” Luther laments. “People are choosing to survive rather than get their vehicles fixed. We went through the same thing in 2008-2009.” Although he acknowledges that tariffs are likely a factor, he believes, “Tariffs have given many businesses an excuse to raise prices and blame those increases on trade policy. In reality, I’m not sure how much direct impact tariffs have had on our specific operations. From what I can tell, much of the tariff activity so far has been more about political posturing and threats between countries rather than widespread implementation that directly affects our industry.

“I believe the challenges currently facing the collision industry and small businesses stem largely from inflationary pressures that began under the previous administration. These were driven by extensive COVID-19 stimulus programs and the widespread fraud and abuse that followed – both inside and outside of government,” he continues, optimistically suggesting that things will turn around soon. “The Trump administration is now taking a strategic approach aimed at exposing that corruption and stabilizing the economy in the long run. By allowing short-term market corrections and focusing on rooting out fraud, the administration may be setting the stage for lower interest rates and greater accountability within government systems. While this approach can create temporary strain for small businesses, it could ultimately lead to a more transparent and sustainable economic environment.”

Acknowledging the aforementioned factors, McKenzie suggests, “What’s also affecting our high line vehicles is the overseas salvage values being so high that it’s causing insurers to total out late model vehicles as low as 20-30 percent of the vehicle values. Also, the lack of lease vehicles since COVID has really affected our business.” He does not see tariffs as problematic “since parts price increases get passed on to insurance companies,” and he also remains positive about the industry’s future. “The sooner the economy improves, the sooner our business will also.”

Richards agrees that tariffs have not presented challenges, instead attributing the majority of the industry’s workload concerns to “higher premiums which make people more reluctant to file a claim due to the risk of further increases, fewer repairs caused by more total losses based upon insurance companies lowering the threshold on when they determine a total loss and less severe wrecks due to ADAS features in modern vehicles.”

Regardless of what is causing the decreased workload, the problem remains the same, so what can shops do to tackle these issues? Well, it goes back to treating the business like a marriage. Maintaining any relationship requires commitment and clear communication but also flexibility and innovation, so successful shops are evaluating how they can do things differently. McKenzie’s shop has taken a different approach to “the way we submit supplements and how we communicate about fake totals to our guests. We’ve started submitting skinnier first supplements with only the essential items to complete body repairs so that the vehicles won’t be totaled prematurely.”

Helfman Collision has also transformed some practices, maintaining their commitment to doing the right thing for their customers. “We’ve adjusted our approach by capturing keys up front and stepping back from the practice of insisting that insurers complete a full supplement before repairs begin,” Luther explains. “With many carriers now totaling vehicles at 50 percent or less of their value, preparing full and comprehensive repair plans is no longer in our best interest – or the customer’s. 

“Most of our customers want their vehicles repaired rather than totaled, since they often can’t afford the financial impact of a total loss,” he elaborates. “We’ve found that a segmented supplementation process – handling supplements in stages as repairs progress – has proven to be a more effective strategy for both our business and vehicle owners. It keeps repairs moving forward efficiently while still allowing for accurate cost adjustments along the way.”

Richards agrees that a shop’s most important relationship is with its customers. “It is more important than ever to please the customer, not only with the repairs, but by becoming head and shoulders better than the competition in customer satisfaction on many levels, not just quality and customer service.” One way his shop has accomplished that is by investing in loaner cars to better support clients. Efforts like these go a long way toward building trust and customer loyalty, a vital component toward a successful “marriage” with one’s business.

While Richards’ focus for the past 27 years has been on performing safe and proper repairs with investments in OEM certification and specialized equipment over the past decade, he acknowledges, “While this is still my main focus, it isn’t enough anymore.” He has been exploring different business strategies like expanding his offerings to service more fleet accounts as well as investing in marketing. “We hired an in-house sales and marketing professional to promote the shop to local vehicle owners and businesses.”

Anderson supports the idea that marketing is key to surviving the market downturn. “In the past, shops only spent one percent or even less on marketing. The shops I see that are still doing well and maintaining profitability are spending four to six percent — and making sure they use their marketing efforts to inform customers of who they are before they wreck their vehicles.” And once those marketing efforts convince customers to walk through the shop’s doors, it’s imperative to actually sell one’s services. “When shops were busy a year or two ago, many of them lost the ability to be salespeople and instead became order-takers. When I first started in the industry, we’d try to upsell all the time by offering to fix door dings and anything else we saw. If we want to increase our sales, we must get back into the habit of being salespeople.”

Shops must also remember that challenges are inevitable; success comes from investing in the business, maintaining patience while navigating the ups and downs and always and finding support when it’s needed. ABAT shares the same vision of a better industry for all Texas shops and is planning ways to help shops address these challenges as we all move into the new year (see Richards’ message on page 4). 

And many retain faith in a positive future. “Since mid-2024, it’s been clear that 2025 would present challenges and that many people and businesses would experience some economic strain; however, I believe that by the spring of 2026, we’ll begin to see an upward trend,” Luther optimistically predicts. “Regardless of personal opinions about Trump, I don’t believe he will allow the economy to remain in a downturn heading into the 2026 midterm elections. Whether the recovery is driven by genuine improvement or political motivation, I expect we’ll see noticeable economic momentum before the elections, allowing his administration to highlight progress and stability heading into that critical period.”

Want more? Check out the December 2025 issue of Texas Automotive!