Key Takeaways
- • The Romans Group released the 18th edition of its annual white paper, "A 2023 Profile of the Evolving U.S. and Canadian Collision Repair Marketplace," a 90-plus page report with more than 70 charts and graphs.
- • The U.S. collision repair total addressable market (TAM) reached an all-time high of $50 billion in 2023, up from $44.8 billion in 2022, while the Canadian TAM was C$4.5 billion in 2023, up from C$3.95 billion in 2022.
- • Private-equity-funded mid-size consolidators accelerated single and multiple-location acquisitions through 2023, and the top three consolidators are forecast to grow their share from over 24% in 2023 to as much as 37% by 2028.
- • Independent single-location and smaller multiple-location operators face increasing difficulty competing as capital concentrates in larger MLOs and consolidators.
- • The report notes the share of dealers operating collision repair facilities continued to decline even as dealership body shop sales rose in 2023 and the first half of 2024.
Summary
The Romans Group has announced that its annual white paper, "A 2023 Profile of the Evolving U.S. and Canadian Collision Repair Marketplace," is now available. The report presents the complete results of the firm's research and analysis of the U.S. and Canadian collision repair markets for 2023, including more than 70 charts and graphs across more than 90 pages, with historical trends and a forward view.
According to the report, growth in both markets reflects the industry's continued normalization after the COVID-19 period. The U.S. total addressable market reached an all-time high of $50 billion in 2023, up from $44.8 billion in 2022, while the Canadian TAM was C$4.5 billion in 2023, up from C$3.95 billion in 2022. The Romans Group describes the sector's long-term proposition as proven economics and growth supported by insurance-driven demand, which it says creates cash flow stability and profitability for many of the best operators.
Private equity remains a central force in the market. The report states that a more aggressive group of mid-size private-equity-funded consolidators accelerated single and multiple-location acquisitions and geographic expansion in 2023, and that private equity's strategy now targets both larger and smaller independent multiple-location operators (MLOs). Aggressive consolidators including VIVE, Open Road, CollisionRight and Quality Collision Group are building regional and super-regional platforms to compete with legacy consolidators such as Caliber, Boyd/Gerber, Crash Champions, Classic Collision and Joe Hudson. The Romans Group expects the top three consolidators to grow their combined share from over 24% in 2023 to as much as 37% by 2028, with the greater-than-$20 million segment continuing to outgrow the franchise networks and the $10 million to $19 million MLO segments.
The report also flags risks for consolidators, including the ability to integrate acquisitions efficiently, balance insurer DRP and OEM certification requirements, and leverage supplier relationships. It notes that some high-performing regional MLOs are opting out of certain insurer DRP programs due to constraints relative to OEM-recommended repair standards. Average repair costs continue to rise because of greater repair complexity, labor inflation, higher parts costs, diagnostic scans and calibrations, and costlier materials such as aluminum and carbon fiber.
On the Canadian side, the report references the federal Electric Vehicle Availability Standard, which Steven Guilbeault, Canada's environment and climate change minister, announced in early 2024 would phase out new internal combustion vehicle sales and require 100% zero-emission vehicle sales by 2035. Canada had 10,666 public charging stations with about 26,000 individual chargers at year-end 2023, which Natural Resources Canada analysis indicates is a fraction of the infrastructure needed for an all-electric fleet. The report also notes that Quebec became the first Canadian province in late 2023 to pass a consumer right-to-repair law covering the automotive industry.
According to the report, growth in both markets reflects the industry's continued normalization after the COVID-19 period. The U.S. total addressable market reached an all-time high of $50 billion in 2023, up from $44.8 billion in 2022, while the Canadian TAM was C$4.5 billion in 2023, up from C$3.95 billion in 2022. The Romans Group describes the sector's long-term proposition as proven economics and growth supported by insurance-driven demand, which it says creates cash flow stability and profitability for many of the best operators.
Private equity remains a central force in the market. The report states that a more aggressive group of mid-size private-equity-funded consolidators accelerated single and multiple-location acquisitions and geographic expansion in 2023, and that private equity's strategy now targets both larger and smaller independent multiple-location operators (MLOs). Aggressive consolidators including VIVE, Open Road, CollisionRight and Quality Collision Group are building regional and super-regional platforms to compete with legacy consolidators such as Caliber, Boyd/Gerber, Crash Champions, Classic Collision and Joe Hudson. The Romans Group expects the top three consolidators to grow their combined share from over 24% in 2023 to as much as 37% by 2028, with the greater-than-$20 million segment continuing to outgrow the franchise networks and the $10 million to $19 million MLO segments.
The report also flags risks for consolidators, including the ability to integrate acquisitions efficiently, balance insurer DRP and OEM certification requirements, and leverage supplier relationships. It notes that some high-performing regional MLOs are opting out of certain insurer DRP programs due to constraints relative to OEM-recommended repair standards. Average repair costs continue to rise because of greater repair complexity, labor inflation, higher parts costs, diagnostic scans and calibrations, and costlier materials such as aluminum and carbon fiber.
On the Canadian side, the report references the federal Electric Vehicle Availability Standard, which Steven Guilbeault, Canada's environment and climate change minister, announced in early 2024 would phase out new internal combustion vehicle sales and require 100% zero-emission vehicle sales by 2035. Canada had 10,666 public charging stations with about 26,000 individual chargers at year-end 2023, which Natural Resources Canada analysis indicates is a fraction of the infrastructure needed for an all-electric fleet. The report also notes that Quebec became the first Canadian province in late 2023 to pass a consumer right-to-repair law covering the automotive industry.
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