The Caliber Dilemma: NJ Shops Shoot Back

NJ Shops Shoot Back

With more than 1,100 locations across the US, Caliber Collision is a business on the move. Although its chief competitors in the consolidator market – Gerber and Service King – have yet to make their presence known in the Garden State, there were 26 Caliber locations in New Jersey as of June 2021. (New York had 27 locations, while there were still no signs of the company in either Massachusetts or Connecticut.)

Although Caliber’s presence in the Northeast is still small when compared to its more established markets (including 250-plus facilities in California, for example), the fact that the company is even here to begin with warrants attention – and perhaps some trepidation – from DRP shops and independent facilities alike.

Throughout its history, Caliber has been clear about its interest in growing relationships with insurance companies. Back in the late ’90s, it brought in Bill Lawrence – who made his name building DRPs for Allstate – as its senior vice president/ chief operating officer. The company has carried on this tradition under the leadership of its current executive chairman, Steve Grimshaw.

“Insurance companies are pushing more and more volume to large operations like Caliber, because they can offer betterquality service overall,” Tim Patterson, a member of Caliber’s Board of Directors, said in a 2017 story in D Magazine. “They have the IT infrastructure and can provide faster turnaround times for repairs. That’s a big deal, because of the rental-car expense [to the insurance carrier]. Large operations also have higher customer satisfaction ratings, making for a win-win-win all around.”

With the dust finally settling on COVID-19 and more drivers hitting the roads, New Jersey shops that include DRPs in their business model are beginning to feel the effects of having a Caliber location nearby. One AASP/NJ member shop owner tells New Jersey Automotive that he lost a good 30 percent of his combined DRP work to Caliber in May and June alone.

“It really feels like they’re out to squeeze the shops in a market that are doing well,” he says. “Insurance companies don’t think like body shops; they think like one big calculator.”

Faced with such a deep decline in volume, he is looking to his various high-end OEM certifications as a way to push back against the trend and maintain his standing in his market.

“How are you going to compete? You need to make yourself special. When we got a sense that Caliber was really coming into this area, we buckled down and put ourselves through extensive training, building modifications and a complete upgrade in equipment to get certified. I would imagine it helps my Direct Repair relationships because I’m certified for numerous vehicles.”

Fortunately, this AASP/NJ member has been able to weather the 30 percent reduction in work thanks to “trimming the fat” and downsizing his crew at the height of the pandemic.

“I did a lot of things based on the numbers I saw during COVID-19, and I haven’t reinstated the previous size of my staff. I realized it wasn’t necessary. Half of what I expect to lose this year with the loss of DRP work had previously been given away in overtime anyway. I like the small backlog I have now. It was too deep before; I was letting people down. We were having problems with our cycle time because we weren’t getting the cars out fast enough. Anybody who gets inundated with work gets in trouble eventually; you can’t keep up the pace.”

NJ Shops Shoot Back

Naturally, the local growth of an insurer-friendly organization as huge as Caliber means that carriers have a fancy new toy to play with at the consumers’ expense. One industry insider is quick to voice concerns that insurers’ steering practices will only increase as the consolidator continues to move through the state.

“Shops don’t seem to know how to fight it, but they need to stand up to insurers and say, ‘Listen, the customer’s already chosen to have the work done here. They’ve signed a contract with me, and these are our rates and what we charge for. You are obligated to make all efforts to reach an agreed price.’”

With Caliber now very much a part of the state’s auto body industry, the strong possibility exists that more facilities will be tempted to get out of the business and sell to the big kid on the block. At least in regard to the shops who spoke to us for this article, nobody’s ready to budge just yet.

“They called me a few months ago, and I wasn’t interested,” one AASP/NJ member admits. “Would I entertain it at some point? Of course, but they’d have to walk in here with a lot of money and keep the people I have here in place. I still love my business; I built it organically. People come to me because they’re familiar with us, and we stand behind our work.”

Of course, standing behind your work may not be enough. With an industry giant now competing for work in one of the most congested markets in the country, it may be time for many shops to consider diversifying their services. One member tells us he’s been considering adding a mechanical service area to his business for some time now, while another is giving serious thought to branching out into refurbishing and selling cars. No matter how the AASP/NJ community responds to Caliber’s growing grip on the market, many within it are not about to give up their work volume without a fight.

“Anybody who uses Caliber as an excuse for why they’re not busy and are hurting is lying,” one AASP/NJ member says. “There’s something they’re not doing in their business that’s causing that problem. I don’t believe the stories that Caliber is going to be so outrageously better than other shops. We’re in charge of our own quality and the services we provide, so I’m not threatened by them at all. Their name isn’t as big as Walmart, Amazon or big-box stores. They’re a big-box body shop, but people in New Jersey aren’t that familiar with them.”

“Caliber is Home Depot. See any local hardware stores around?” one south Jersey shop owner says. “Caliber is iTunes. See any record stores around? Like everything else, you get what you pay for – only this time, you may pay for it with your life. All because the insurance companies want to save a buck. God forbid they pay us what we’re worth. And when we complain, their lobbyists go running to the legislators and cry that we’re trying to make them raise their rates. Ironically, Caliber is just another, much larger bullet in the insurance company arsenal.”

“I don’t predict any Calibers going out of business,” another member adds. “They’re a very well-oiled machine when it comes to positioning. They have a better mousetrap, but I’m not frustrated or resentful at all. Are they going to hurt me? Possibly, but it’s up to me to do what I can to make myself better. I’m not going to be anybody’s victim.”

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