We have been researching, tracking, analyzing and interpreting data and trends involving the collision repair industry and multiple-location operators, MLOs or MSOs, since the first round of industry consolidation began during the late 1990s through about 2003. This first-round consolidation period saw MSO platform transactions with companies like ABRA, M2, CARA, Car Quarters (Sterling) and Caliber. This consolidation effort eventually lost its momentum for several reasons including:
- An overly-aggressive growth model based on acquisitions that were not properly integrated and a business model that could not be sustained,
- Insurers’ less-than-enthusiastic adoption of the MSO model with its promised, but under-developed, operational and performance benefits,
- Inadequate multi-location information, operations and management systems for an expanding and growing enterprise.
In our annual white paper, A Profile of the Evolving Collision Repair Marketplace, we identify and track the $20 million or larger MSOs within the U.S. along with multiple-location network operators, also known as MLNs. These MLNs include four franchise and branded network organizations, CARSTAR, which strategically and operationally positions itself as an MSO; Maaco; ABRA (MSO and franchise); and FIX Auto (franchise and branded network). The following charts show the growth that these larger MSOs and MLNs have experienced, along with their segment market share, from 2006 to 2011.
The number of MSO companies generating repair revenue ≥ $20 million annually from 2006 to 2011 grew from 57 to 65, representing approximately $4 billion in annual revenue in 2011. The market share for these organizations relative to all collision repair industry revenue processed during that time grew from 9.1 percent to 13.4 percent. We estimate that 2012 revenue processed by the $20 million or larger MSO s/MLOs will be about $4.4 billion or approximately 15 percent of total annual collision repair industry revenue.
The second wave of collision repair industry consolidation started in 2010 and has picked up momentum in the last two years. Since 2010, we have seen the evolution of two primary MSO expansion strategies begin to reshape the collision repair industry. One strategy, focusing expansion within existing and/or contiguous markets, is being driven by regional MLOs/MSOs such as CollisionMax, Seidners and Car Care Collision Centers. Another strategy utilized by national MSO consolidators such as Boyd/Gerber, ABRA and Caliber, is centering expansion within existing markets coupled with leap-frogging to new markets using platform acquisitions to gain entry. With both strategies, single-location “tuck ins” are utilized, in the form of single-location or smaller multiple location acquisitions, Brownfields and Greenfields, to fill in market gaps. Unlike the larger, national MSOs, there have been few regional MLOs/MSOs venturing into new markets. These expansion strategies will continue to influence the direction of consolidation and right-sizing within the collision repair industry, and will result in increased MLO market share in the U.S.
The chart below represents four primary MSO franchise and branded network organizations: CARSTAR, Maaco, ABRA (franchise) and FIX Auto. These organizations have historically been viewed as franchise businesses. Some companies, such as CARSTAR, have positioned and branded their capabilities and value proposition as those of an MSO with geographic scale, a broad range of national, multi-regional and local market capabilities, centralized services, managed KPIs for enterprise performance for owner/operators who actively manage their collision repair businesses. When combined with the ≥$20.0M MSOs and the franchise and branded networks, MLNs/MSOs represent about 18 percent of the annual repair revenue processed. As with independent and dealer MSOs, we expect this share to continue to grow throughout 2013.