Economy

No crash in sight for smash repairs industry

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Panel beating is far from a dying art, with the industry enjoying long steady growth with no perceptible falling off in the future. By ROBERT BRYANT

By Robert Bryant

Smash repair industry trend

Panel beating is far from a dying art, with the industry enjoying long steady growth with no perceptible falling off in the future.

The smash repairs industry may be all about turning crashes into cash, but it has achieved remarkably slow, steady growth in recent years – and looks set to do so into the future.

One of the least concentrated industries in Australia, the largest player in the smash repairs sector, Adtrans Group, commands just 1% of the total market.

There has been some recent consolidation at the very small end of the sector however, leading to a reduction in the number of business and number of people employed in smash repairs.

Employment levels have declined steadily over the current period, directly due to a declining number of establishments following the rationalisation of repair shops at the lower end of the market.

Smash repairs businesses have achieved average revenue growth of just over 2.5% over the past four years. High fuel prices caused a growth stutter in 2004, knocking average revenue growth down to 1.9%. Since then smash repairs businesses have achieved moderate growth, with revenue up 3.5% in 2005, 2.2% in 2006 and 2.5% in 2007.

KEY STATISTICS 2007

Statistic

Value

 

Industry Revenue

*$4895.6

million

Revenue Growth (2006 to 2007)

*2.5%

 

Number of Enterprises

*5207

 

Employment

*31,084

 

 

* IBISWorld estimate

 

GEOGRAPHIC SPREAD 2008

Share of establishments by state and territory

Industry outlook

IBISWorld forecasts that the smash repairs industry will grow at an average annual rate of 2.8% over the next five years.

Following a 3.1% lift in revenue this year, slower economic times are likely to see revenue growth grow at a more sedate pace, ranging between 2.6% and 2.8%, between 2009 and 2012.

A rebound in the economy and growing population should see stronger motoring activity in both the passenger and freight segments from 2012, fuelling stronger 3% growth in 2013 and providing the basis for improved performance in the years ahead.

INDUSTRY SEGMENTATION

Products and service segmentation

RECENT INDUSTRY PERFORMANCE

Revenue  $ million

Growth %

2003

4431.2

N/A

2004

4515.3

1.9

2005

4673.3

3.5

2006

4776.2

2.2

2007

4895.6

2.5

 

Key performance factors

IBISWorld has identified the following factors as being essential for the success of smash repairs businesses in the years ahead:

  • Adopt new technology quickly to maximise internal efficiencies.
  • Locate in close proximity to higher vehicle density locations to achieve superior business volumes.
  • Because smash repairers are constantly dealing with the larger insurance companies, operators that master the business skills of costing, quoting, negotiation and general management will prosper.
  • Strong cashflow management skills are very crucial.
  • The constant flow of new technology being incorporated into new vehicles means businesses must train staff on a regular basis.

INDUSTRY OUTLOOK

Revenue  $ million

Growth %

2008

5047.4

3.1

2009

5188.7

2.8

2010

5323.6

2.6

2011

5467.3

2.7

2012

5620.4

2.8

2013

5789.0

3.0

IBISWorld supplies business information databases, including industry reports, company reports and business indicator reports. www.ibisworld.com.au

 

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