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Average New-Vehicle Price Sets New Record ��
location in Oregon this year, said he sees too many shops operate based on fear.
“Fear is an emotion, and good business decisions aren’t based on emotion,” Reichen said. “We’ve al-
Oregon shop owner Ron Reichen said he sees too many shops making business decisions based on fear
ways believed that calculated risk is important. But the first part of that is ‘calculated.’ Do your research. Do your homework. Is it a good fit for you?
“I think the insurance carriers have leveraged fear: ‘We’re going to shut you off and you’re not going to have any of our work.’ That’s a fallacy,” Reichen said. “Even if you’re a DRP model, you’re building relationships with that client base. Those clients are still going to come back to you. They may change insurance carriers two or three or four times in their driving history. So [the insurer] doesn’t own that customer, but you do. Even if you are a DRP model, work at owning that customer. Then you can wean yourself off of [DRPs] and not make decisions out of fear.
“Would you [be happy with] 20% less work if you made 20% more on the remaining 80%? Of course. That’s a calculated risk,” he added.
Andy Tylka was operating a six-location MSO in Indiana until recently, when two MSOs in other markets chose to sell their businesses to Tylka rather than to a national MSO. That expanded his company to 15 shops in 2.5 years. He acknowledged his choice to stay with a DRP model is, as it is for many shops, based to a degree on fear.
“Because, obviously, growth results in loans,” Tylka said. “So if I’m not having customers come into my shops, I’m not paying these loans, and I’m responsible for 185 families.”
He said collision repairers should recognize the current backlog the industry enjoys “won’t last forever.” All that said, he acknowledged he’s using this time to make some changes.
“Those with the DRP model should be re-evaluating what relationships they do want to keep and which ones they don’t, even if they stay with a DRP model,” Tylka said. “That’s pretty much what we did.”
Schulenburg said SCRS works to highlight collision repairers, like some of those on the panel, who have the confidence to operate in a model of their choosing, such as without DRPs.
“I think there are a lot of businesses that I speak to that don’t realize there are businesses that operate that way,” Schulenberg said. “It’s not a matter of saying one model over another. But there are businesses that operate successfully in ways that may feel foreign, but it’s their degree of confidence that drives the success.”
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New-vehicle prices continue to set records, with the average transaction price expected to reach a May record of $44,832— a 15.7% increase from a year ago and the third-highest level on record despite rising interest rates, according to J.D. Power.
Average interest rates for new vehicle loans have risen. The average interest rate for loans in May is expected to increase 62 basis points from a year ago to 4.92%.
However, elevated used-vehicle values continue to help affordability for new-vehicle buyers who have a vehicle to trade in. The average trade-in equity for May is trending towards a record of $9,922, a 59.4% increase from a year ago.
Due to the lack of inventory, discounts from manufacturers continue to be sparse. For May, the average incentive spend per vehicle is $965, a decrease of 64.6% from a year ago.
Source: J.D. Power
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