U.S. Collision Repair Shops Adapt to Auto Insurance Claims Declines in 2024

The U.S. collision repair industry is experiencing a varied trend in claims counts, with an estimated 3% to 5% decline in auto insurance claims during the third quarter, indicating some stabilization following larger drops in the first half of the year. Some shops report no slowdown, maintaining steady sales, while others face notable declines, leading to operational adjustments such as layoffs and shifts in service offerings. For example, Probst Collision in Illinois sees no decline, leveraging longstanding community presence to sustain business stability. Several shops have reduced staffing to manage decreased revenue, as detailed by Accurate Auto Body in California, which cut eight positions due to a 17% drop in sales compared to the previous year. This business has pursued new revenue streams, including repairs on vehicles damaged during transit, reflecting a strategic adaptation to changing market demands. Additionally, a shift toward increased customer-pay work is noted, with more clients authorizing comprehensive repairs that meet quality and safety standards. Similar strategies appear elsewhere. USA Collision in Arizona improved results by acquiring new fleet accounts and increasing advertising spend, including digital marketing and website revitalization. Despite a 12% sales dip from the previous year, the company believes it is outperforming industry averages. Conversely, Stemper Auto Body in South Dakota faced double-digit sales declines and rising fixed costs, prompting them to expand into heavy equipment and fiberglass repairs to diversify services and mitigate financial pressure. Furthermore, businesses are adapting by securing direct repair program (DRP) contracts with insurers and state work, as seen with Adam’s Auto Body Shop in Illinois, which increased technician productivity by shifting compensation to commission-based pay. This transition has helped offset decreased volume with improved profitability. Wyatt’s Paint & Body in California reports steady gross sales despite shifts within parts and labor revenues. Younger businesses like Guardian Collision in Florida focus on OEM certifications and marketing to establish a competitive position and foster growth. Industry competition remains intense, with multiple new shops opening in concentrated areas. Auto Body Expressions in California noted a 15% sales decrease partly due to nearby new shops backed by insurers providing quick DRP access. However, performance metrics eventually restore claim volumes for established providers. Overall, shops across the U.S. are employing diverse strategies including workforce adjustments, marketing investments, service diversification, and enhanced insurer partnerships to navigate fluctuations in claims frequency and maintain operational viability. Challenges include staffing optimization amid rising operating costs and balancing quality repair standards with competitive pressures. Cyber, economic, and regulatory factors influencing payer/provider relationships and channel strategies remain critical considerations as collision centers aim to adapt in a shifting automotive insurance landscape. This evolving environment highlights the importance for repair shops to innovate business models, pursue certifications, and engage in strategic partnerships with carriers to stabilize revenue streams and capture new market opportunities amid fluctuating insurance claims trends. Shops prioritizing quality repairs, OEM compliance, and customer satisfaction appear better positioned to sustain market share despite claims volume volatility. Enhanced digital marketing and targeted advertising also support customer acquisition and brand differentiation. The role of DRPs continues to be significant for channel access and workload management, prompting ongoing efforts to secure and maintain these contracts. Collision repair centers' responses to claims declines underscore resilience and adaptability, reflecting a sector-wide shift towards multi-service capabilities, comprehensive repair authorizations, and optimized labor deployment. This trend indicates an industry grappling with macroeconomic and operational variables, demanding strategic agility and regulatory compliance oversight. Industry leaders emphasize the importance of balancing cost control with workforce retention to maintain high-quality standards under pressure. Investments in certifications and marketing expertise are viewed as key components of business sustainability. The mixed impact of new competitors and insurer program dynamics illustrates ongoing challenges in market positioning and revenue stability for collision repair shops across diverse U.S. regions.