Economy

No crash in sight for smash repairs industry

April 30, 2008

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

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

ABOUT THE AUTHOR

SmartCompany

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