Collision Repair Sector Crisis!

The collision repair sector appears to be in a crisis, factors are many and varied but the ultimate cause is highly constrained profitability.  The downward trend is continuing, and the following have contributed already this year


  • Gemini Group: A corporate scale operation currently moving into NZ, buying up independent collision repair facilities to create a dominant chain to replicate the Australian model with the objective of securing the lion’s share of big-brand insurance repair contracts.
  • Fix Auto: Another giant overseas group, based on a franchise model.
  • Vero SMART Repairs: We’re told that customers are being aggressively directed to Vero-owned SMART collision repair facilities in Albany, Penrose & Christchurch regardless of distance or customer convenience – could this be the end of customer choice? Independent repairers also advise that their repair quote submissions to Vero’s assessing portal PNET are being intercepted so suitable cases can be re-directed to a Vero SMART shop.  This results in substantial wasted/unpaid time for these independents. The lost business is significant and appears to be affecting all small – medium scale profitable work, leaving only the most technically difficult or marginally profitable jobs for the traditional trade.  Is this fair & ethical, and the kiwi-way – we think not.
  • We’re told that the giant insurer IAG now accounts for over 60% of vehicle policies in NZ. Collision repairers are now complaining that it can take weeks to get damage repairs assessed. Mass IAG redundancies were rumoured last year at the time it was announced that some claims functions would be out-sourced to India. Could these two issues be related? We’re advised that claim/assessing delays have further deteriorated this year and, understandably, customer frustrations are increasing.  At the same time it has been noted that the NZI/ Lumley/AMI parent company IAG recently announced a 30% increase in profit.
  • The Collision Repair Assoc (CRA) publication PanelTalk recently highlighted several premium repair facilities that are ready to “pull the pin” on a number of insurance company contracts. More are simply exiting an industry that barely returns even a meagre profit, and has become unsustainable.
  • The labour shortage crisis. The collision repair sector has not been able to generate a sufficient financial surplus (profit) to offer competitive wages to the highly qualified senior staff it relies on.  As a result, tradesmen & women are deserting the industry for more lucrative careers. Attracting and funding trainees and apprentices presents the same challenge.  Fortunately, thanks to the efforts of the CRA the trade has finally be accepted for the Immediate Skills Shortage list which is making overseas recruitment easier.  It’s a helpful band-aid for now but does not address the driving forces, and does not serve potential kiwi job seekers well in the long term.


The CRA trade magazine PanelTalk covered the issues more comprehensively this month including the Editorial which we report in full.


PanelTalk reports that collision repair industry is in “an interesting space” at the moment. In the last month two operators that are putting the finishing touches on fantastic new multi- million dollar repair facilities, but most are struggling.  The Editor is a highly respected veteran of the industry and goes on to state that:


“I have spoken to several really good repairers, running good operations, who are ready to pull the pin on their contracts with a particular insurer. Now the interesting thing is, it is not the same insurer that’s causing them grief”.


“I have also spoken to a couple of really good people with great businesses, who are either selling up or closing the doors citing health issues created by the difficulties (ie stresses) in running a successful collision repair facility today. In fact when I went to see one, a very staunch proud man in his late thirties, he broke down in frustration at what seems to him like an endless black hole created by a lack of profitability”.


“In the past I have been guilty of ignoring all discussion around mental health issues, but over the last several years I’ve witnessed genuine issues too often not to reassess my thinking. The constant outside interference in a collision repair facility’s business is reaching such a stage that our industry is at real risk of developing a reputation as a driver of unsustainable stress levels. So many associated business people preach sustainability in their promotional material but only pay lip service to it in the real world”.


“It is time for an honest round table discussion between repairers and insurers to rethink the way things have been heading over the last several years because in the current environment the cost of repairs is often being driven up by misguided insurance company thinking. There is too much interference by insurers in what is the most cost effective correct way for a vehicle to be repaired. It is this misguided thinking that creates so much negative pressure on repairers’ profitability while at the same time it is driving up the costs to the insurers”.


“This type of thing is at the heart of the problem for repairers. They are fed up with the delays to their process, while they debate the repair methodology to be used, instead of being able to take the manufacturer’s specifications (if a structural part is to be replaced) or simply repair the panel safely – an operation that speeds up the repair process and lowers the cost”.


“If my conversations are anything to go by, perhaps there is now a groundswell to create some much-needed change, to the benefit of all parties. The 2018 CRA conference is just around the corner and I strongly recommend repairs attend, not only to learn more, but to interact with many different repairers from across the country. It is by this interaction that people realise that they are not alone, the same problems are faced by the wider trade, and it is always beneficial to see how others handle the situation”.


We at Crash Management have certainly seen more good quality collision repair facilities close the doors over the last two years, than in the past two decades – 2018 will be interesting, we’ll keep you posted.


See more at:

Is This The End For The New Zealand Collision Repair Industry?


3 Responses

  1. John
    | Reply

    I saw the Crash Mangement newsletter to brokers last week that included the link to this ‘article’. You paint a very negative picture of the insurance sector unfortunately and seem to draw the conclusion that insurance companies are at fault for controlling service provider charges and/or making decisions for policy holders. You only have to look back 20 years to see the rampant overcharging, the panel & paint trade was out of control so some thing had to happen. The criticism about Vero is also unfair and unjustified, they’re entitled to run their business as they see fit. Scaremongering about NZI is also a low blow and you quote the opinions of some people that should keep it to themselves. If you don’t have some thing positive to say don’t say it. This kind of ‘information’ doesn’t help any body.

    • Crash Management
      | Reply

      We’ll have to agree to disagree John. We’re simply putting the facts (ie the factual truth) into the public domain, readers are welcome to accept and/or agree at their own discretion. Thanks for your comments, and your interest in Crash Management.

  2. Justin
    | Reply

    Good points Crash and your right about the panel & paint trade being taken over by the suits. Another good article at
    today if you haven’t seen it yet here you go.

    AMA will sell the collision repair business to Blackstone via a de-merger for $508 million, 10.7 times projected earnings, valuing the collision repair businesses of AMA at 86 cents-per-share. AMA’s remaining automotive components, vehicle accessories and procurement operations to remain on the ASX as a separate company.

    The buyout completes a remarkable rise by AMA’s executive chairman Ray Malone, who built the company into the biggest player in the industry, with 113 panel beating workshops around Australia. Just eight years ago, AMA had a market capitalisation of $20 million. Mr Malone was the original founder of the Mr Gloss car repair business in the Melbourne suburb of Moorabbin early in his business career and has been in the collision repair industry for 30 years.

    Mr Malone said: “The two transactions were the best way of ‘funding two growing but distinct businesses’. This separation will ensure that neither business has its prospects limited by the competing demands of the other business.” Shareholder approval is required with the deal undertaken through a scheme of arrangement.
    Blackstone made an indicative buyout proposal of $530 million in late January for AMA, and had been conducting extensive due diligence inside the business over the past few weeks. AMA runs several collision repair brands including Mr Gloss, BMB Prestige Collision Repairs, Shipstone Accident Repair Specialists and Rapid Repair Centre.

    AMA Group Vehicle Panel Repair CEO, Andrew Hopkins, who will continue as CEO of the Panel Business post-acquisition said: “Over the past two years, we have rapidly grown our vehicle panel repair operations to over 100 sites and in the process fundamentally changed the way the industry engages with its primary customers, the automotive insurance companies, to the ultimate benefit of their customers, the insurance policyholders. Taking the business private will increase our senior management team’s focus and allow us to further improve our cost competitiveness and in the process, strengthen our insurer customer relationships. Throughout the transaction diligence period we have been very impressed by Blackstone’s level of understanding of our business and their willingness to embrace our plans for growing and improving the operations. We are excited about them partnering with us for the next stage of our development.”

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