How COVID-19 (Coronavirus) is Impacting the Auto Body Repair Industry
Updated: Feb 10, 2021
Unless you have been living under a rock, you have heard about the pandemic that is sweeping the globe: COVID-19 also known as the Corona Virus. The first cases were reported in December 2019 and in a matter of months over 2.8 million people world-wide have been infected (although the actual number is believed to be significantly higher) (Taylor, 2020).
By mid-April 2020, at least 42 States have implemented some form of stay-at-home orders (Mervosh, 2020). Many businesses were forced to close their doors unless they were labeled an essential business. Essential businesses that remained opened were asked to follow social distancing guidelines to prevent the spread. Auto Body Repair shops have been listed as an essential service in the State of Colorado (and many other states) which allowed many auto body repair and paint shops to remain open (Critical Businesses, 2020). Although these businesses were allowed to remain open, they faced many changes that forced business owners, employees, and customers to adapt to many changes as a result of the Coronavirus.
INTERACTING WITH CUSTOMERS
Unfortunately, many people lost jobs during the pandemic as many businesses closed their doors. The unemployment rate continued to rise as over 26.5 million jobs have been lost in the U.S. (Lambert, 2020). With many consumers losing a significant part of their income, and fewer businesses open, consumer activity has decreased. Many people have decided to stay home to protect themselves, their families, and their community.
Essential businesses were forced to adapt to the pivot in consumer priorities and expectations. Most consumers want to be able to shop from home and have services provided with minimal effort from the comfort and (more importantly) safety of their home. For auto body shops, this requires shops to be able to offer the entire repair process without asking customers to leave their home.
Many shops have added the option to get an online estimate or have a shop employee complete the estimate at the customer’s home. While most shops ask customers to sign customer agreements, shops are making use of programs that accept e-signatures to accomplish document signing without breaking social distancing guidelines. To accept payments, more shops are utilizing online payments and electronic transfers with services such as QuickBooks, Square, or other merchant service providers. (Mailing paper checks are still an option!) Many shop owners have also extended white glove services including free vehicle pick-up and drop-off, and rental car delivery to make it easier (and safer) for customers to have their vehicle repaired.
Providing these additional services come with added costs to shop owners and have made it difficult for shops to remain competitive if they cannot provide contact-free options to customers.
AUTO BODY REPAIR MARKET
With an increase in layoffs and business closures, most people are staying home. With fewer places to go, less money to spend and stay-at-home orders in place on most states, fewer people are driving. Fewer drivers mean less accidents, which is great! But it also means that shops need to be more competitive to get the few customers left, into their shop. The market has been greatly impacted. While the actual numbers required to provide thorough analysis are not yet available, shops are feeling the decrease in demand. Auto Insurance providers have taken notice and have provided credits or refunds to many customers. “More than 82% of auto insurance companies like State Farm, Geico and Liberty Mutual are offering policyholders refunds and credits to save money, totaling more than $6.5 billion over the next two months, according to the Consumer Federation of America (Goodwin, 2020).”
While people are staying home more, they are increasing use of technology including social media and the internet. This has shifted the way body shops (and many other businesses) are marketing to customers. Digital marketing is booming (not like we ever doubted it) and it has become more relevant during this pandemic. Again, a shops ability to adapt to the changes forced on by COVID-19 will make or break its ability to come out of this pandemic breathing (no pun intended).
With the decrease in sales for many body shops across the U.S., owners are forced to reduce employee hours. The CARES Act was approved to provide assistance to small businesses including a total of $349 billion in loans (which may be forgiven ) to small businesses through the Payroll Protection Program (PPP) and additional funds (including a $10,000 grant for each business approved) through the Economic Injury Disaster Loan (EIDL) Program. Recently, additional funds have been approved.
Unfortunately, it has been difficult for small business owners to apply or be approved for these programs as they have been utilized by a very large number of businesses. Without the ability to pay employees, shops are forced to layoff or furlough employees, which also decreases productivity.
PARTS & SUPPLIES
Staffing for many vendors or suppliers has also been decreased and in many cases, their hours have changed. While many shops are normally offered next day shipping, some suppliers are limiting deliveries which increases the time it takes to receive parts and complete repairs. If a shop needs to replace a part, they have to wait until that part is in their shop before they can paint and install that part.
Shop owners and employees are also having difficulty finding necessary supplies. The most relatable examples include the shortness of gloves and facemasks. The World Health Organization, the Center for Disease Control and many healthcare professionals are urging people to wear a facemask when going out. Many companies are providing gloves and masks to employees to decrease the spread of COVID-19. This is causing a shortness of these supplies which are required protective gear in an auto body shop. With a shortage of parts and supplies, body shops are having difficulty completing repairs on time according to industry standards.
The spread of the coronavirus has shifted the way shops are doing business, at least for now. To remain competitive in a market with a decrease in demand, it is important for shop owners to consider how the pandemic is affecting different areas of business and how is has shifted the priorities and preferences of consumers.
Critical businesses. (n.d.). Retrieved April 28, 2020, from https://covid19.colorado.gov/critical-businesses
Goodwin, J. (2020, April 17). Coronavirus auto insurance refunds: Here's what you need to know. Retrieved from https://www.usatoday.com/story/money/cars/2020/04/16/coronavirus-relief-how-get-your-car-insurance-refunds/2990448001/
Lambert, L. (2020, April 23). Real unemployment rate soars past 20%-and the U.S. has now lost 26.5 million jobs. Retrieved from https://fortune.com/2020/04/23/us-unemployment-rate-numbers-claims-this-week-total-job-losses-april-23-2020-benefits-claims/
Mervosh, S., Lu, D., & Swales, V. (2020, March 24). See Which States and Cities Have Told Residents to Stay at Home. Retrieved from https://www.nytimes.com/interactive/2020/us/coronavirus-stay-at-home-order.html
Taylor, D. B. (2020, February 13). A Timeline of the Coronavirus Pandemic. Retrieved April 28, 2020, from https://www.nytimes.com/article/coronavirus-timeline.html