This article was co-authored by Joe Rodriguez.
As auto part distribution companies consolidate, the effects resonate throughout the industry, including the collision repair segment. Mid-to-large-size distributors are buying smaller companies or competitive distributors to expand their presence where they did not previously have business operations. While these acquisitions are seen as growth opportunities, it lessens the choice of distributors for auto body shops.
According to the Auto Care Association, an organization dedicated to the auto care industry, the industry directly employs 2.5 million people in the manufacturing, wholesaling, retailing, and installation of automotive care auto care market parts and accessories. Industry sales in 2014 totaled $328 billion, a 3.5-percent increase over the previous year. The 500,000 businesses in the auto care industry are comprised of both small and large manufacturers, distributors, repair shops, marketers, and retailers.
Auto part distributors sell “allied products” – all the consumables used in vehicle collision repair - along with paints and coatings. Distributor organizations can range from as few as three-to-five locations up to “mega-size” operations with hundreds of locations.
It is extremely difficult in the current business climate for “start-up” distributors to find a niche in the market, and many smaller distributorships find themselves pushed out of the market by the larger companies. Over the past ten years, most of the growth in the distributor market has been through mergers and acquisitions.
Making the best choice
So, how can a collision repair shop owner maximize the benefits of the distributor relationship in this environment? A shop should select a distributor that offers the best, OEM-recommended products from manufacturers and suppliers. Service is another important aspect that should not be overlooked. Be wary of a distributor that is just interested in “selling products.” Look for a distributor that is interested in forming a partnership with you, providing service, training and business advice.
Especially beneficial to auto repair shops are distributors who are associated with the I-CAR Industry Training Alliance. I-CAR (the Inter-Industry Conference on Auto Collision Repair) is an international not-for-profit organization dedicated to providing the information, knowledge and skills required to perform complete, safe and quality repairs. Many manufacturers offer programs through the I-CAR Training Alliance that allow attendees to earn credit hours towards certificate designation. Check with your distributor for details.
“One-stop” shopping is another ideal objective to consider. The distributor you choose should be able to provide all of the products you will need for effective, cost-efficient vehicle repair. These products can include seam sealers, adhesives, coatings, abrasives, tapes, plastic sheeting, compounds and polishes, refinish paints, application equipment, and in some cases, replacement parts and body panels.
Of course, competitive pricing is always a consideration when buying products from a distributor. Be cautious of a distributor who sells products at the “most inexpensive” price. Are they selling at minimal prices while offering less or no service? There are some distributors that have scaled back on service levels because they are “locked-in” by low-margin contracts with product suppliers. For the repair shop, just getting the cheapest product price might not bring the best level of service with the deal.
Business partners
One distributorship that acknowledges the benefits of a working a partnership with collision repair shops is API Autobody Products, headquartered in Butler, Pennsylvania. The company has been in business for nearly 50 years and has over 20 locations in Pennsylvania and Ohio. API offers its customers automotive refinishing products, fleet and commercial finishes, industrial coatings, and equipment.
“As a distributor, we feel it is necessary to have as much knowledge about a collision repair shop as they do about their own business,” said Ian Palermo, purchasing agent for API Autobody Products. “We need to be a lot more than a company that just invoices and sells products.” Palermo believes that both the distributor and the shop owner should have a clear vision of what is expected from the distributor/shop owner relationship.
“Our business is more of a consultative-type of venture,” Palermo said. “We have to understand the corporate and work structure in a shop so that we can help them choose the best products.” API Autobody also offers training and consultation programs to augment the supplies they sell.
Of particular benefit to API Autobody’s customers is API’s performance tracking tool. With this tool, a shop can enter all the numbers and parameters of its products and repairs to show the profitability of repairs and the performance of workers. It helps shop owners gauge where they are making or losing money in repairs or labor, and where they might be missing opportunities for added income.
“A shop should not have to worry about obtaining inventory,” noted Palermo. “All the products and supplies should be readily available on their shelves. They should not have to wait for back orders or for an order to arrive; everything should be delivered in a timely manner.”
From Palermo’s viewpoint, the cost to repair a vehicle should be the absolute last problem for a shop owner. A shop owner should partner with a distributor who knows what products the shop owners need and have the products in stock for quick delivery. As Palermo said, “Shop owners have so much else to worry about, such as labor and management. Product availability should not be another concern.”
Business success
Sometimes a collision repair shop outgrows its distributor and needs to look elsewhere for a company that can provide the products and upgraded services to meet a growing business. A forward-thinking distributor should be keeping up with the latest advances in collision repair products and imparting that knowledge to the shop owner. Larger distributors can often offer continued education training, hands-on in-shop demonstrations, certification classes, streamlined purchasing options, and a number of other cost-saving features that would be a competitive disadvantage for smaller distributors.
Similar sentiments are voiced by Ronald D. Piscione, vice-president of Rick’s Auto Body in Warwick, Rhode Island. The company is a third-generation, family-owned auto collision repair and insurance collision center founded over 50-years ago. Piscione agrees that the “new generation” of distributorships is essentially working under a different business model.
“Years ago, the distributor theory was to just sell, sell, sell and make more money,” said Piscione. “The new generation of distributors realizes that the distributor/body-shop connection is more of a business partnership. If a body shop is successful and experiences business growth, the distributor business will grow also.”
Piscione’s distributor also offers a cost-tracking system for body shops, and he highly recommends working with a distributor that can provide this service. “Our distributor prepares a chart for us detailing how much product usage we are experiencing,” Piscione said. “This step helps us to understand if there is product waste on the shop floor or if we are not using a product properly.”
When Piscione and the distributor review the product-usage chart, he compares it to having a “third-party observer” on his shop floor. Cost tracking can help a body shop to streamline its production approach and workflow, eliminating waste in products usage and labor time.
“Years ago, distributors did not care about product waste,” commented Piscione. “They just let shops buy more and more products, because it meant more sales. Now, distributors understand that if a shop can be more successful by managing costs, then the distributor will succeed, too.”
Additionally, Piscione likes the tips he gets from his distributor on how to better manage his shop. Since a distributor works with many body shops, it is in touch with the latest trends in body-shop organization and production flow. Piscione mentioned an especially useful tip he got about shop organization. His distributor mentioned how some shops have storage cabinets dedicated to each employee, allowing the employee to organize the products they use for vehicle repair.
A good distributor will also offer training programs, either from product suppliers, their own programs or in conjunction with organizations such as I-CAR. These are valuable “extras” that go beyond just product “selling-and-buying.” Piscione recommends seeking out a distributor that offers a “full-service” package to augment product purchases.
“The cost of an average repair – materials, paint, etc. – should not be more than 10 percent or less of your costs,” noted Piscione. “Most of the costs in a shop should be payroll, taxes and parts.” He suggests keeping product costs down as much as possible, since they are more controllable compared to other costs. Working in a partnership with your distributor is an excellent way to control costs and manage a successful business.
Best business practices
Alan Campi, general manager of the paint, body and equipment division of Carolinas Auto Supply House, Charlotte, North Carolina, understands the importance of the partnership between a distributor and a body shop, but he also believes in the benefits of a good working relationship with product suppliers. The family-owned company has been in business for more than 100 years, and offers a full range of parts, collision-repair products, and accessories.
“In order to provide the best services to our customers, we look for strong support from our suppliers in areas such as sales and training,” said Campi. “Product demos and samples are especially helpful for getting products into the end-users hands.” The company also offers training either in the body shop or at local technical colleges, along with I-CAR certification training through certain vendors.
Campi also suggests that body shop owners develop an ordering plan with their distributor to guarantee a well-stocked shop. “Many body shops make the mistake of relying on ‘last-minute’ ordering, and then are frustrated when their distributor cannot deliver a product,” Campi said. “Shops should understand that not all products can be available all the time on a moment’s notice.”
Having a product ordering system makes better business sense, and allows the distributor to anticipate and understand a body shop’s product requirements. Working together, a distributor can help a body shop keep necessary products in-stock, and eliminate the hassle of “last-minute” ordering.
Keeping up with government regulations is another area where cooperation between a distributor and a body shop can be beneficial. “There is a constant flow of product regulations arriving from OSHA and the EPA,” Campi noted. “Distributors must sell products that meet these regulations, and we have to keep and maintain technical and safety data sheets.”
All of this information has to be made available with the product sale, and each product number has its own trail of regulation papers. “We have to make sure that this information is disseminated to the body shops,” commented Campi. “And the body shops must also keep all these regulations and papers on file in their shops. It is particularly important to keep safety data sheets updated and easy-to-reach in case of a shop emergency.”
Business solutions
Keeping up-to-date with other changes in the vehicle industry is also crucial for a body shop, and here again, a distributor can be helpful. Tony Greene, body shop manager at Tindol Ford Subaru ROUSH, Gastonia, North Carolina., also relies on a strong partnership with his distributor. Tindol has been in business for over 40 years and offers complete auto body repair restoration.
“Good service from a distributor is absolutely crucial to running a successful body shop,” said Greene. “But technical representation is even more important to me. If I have a problem or a question about how to do a repair or how to use a product, having a distributor who knows the answers can make the difference in the outcome of a repair.”
Greene finds a knowledgeable distributor to be even more helpful when it comes to understanding the complexities of the different substrates used in vehicle design. “There are many more substrates that have to be repaired and newer ones that are coming into the market, such as magnesium and aluminum,” Greene noted. “I need to work with a distributor who can give us ‘a hand’ and help us out with repair techniques and recommend the right products.”
It’s a partnership
Consolidation in the distributor industry has made it more difficult for the smaller, independent distributors to offer competitive prices. However, consolidation has also lessened the distributorship choices available to a body shop. It is therefore even more important to choose a distributorship that offers good product availability, along with other services such as product- and cost-tracking, and training programs. Developing a true working partnership between a distributor and a body shop offers success advantages for both.
