While more repairers report higher sales, the average increase was lower. More collision repair operators believe pandemic impact on sales getting worse than better.
A larger percentage of collision repair facility operators responding to the most recent Collision Repair Business Conditions survey covering January reported that sales were up, but the amount of increase was less than reported in December. The shop-size weighted sales comparison to last year declined for the month as the effect of January’s relative strength last year, before the pandemic began, impacts the year-on-year comparisons.
Respondents had expressed optimism that the year-on-year January sales would improve compared to December, but the increase in state travel restrictions coupled with fewer commuters on the road during the winter season appears to be impacting the typical winter increase in business.
The percentage of repairers who indicated their sales were lower in January compared to last year, at 69.7% was up over 1.6 percentage points from the 68.1% who reported lower sales in December. The January result was also up from 67.1% in November who reported lower sales but down from 73.7% who reported they were down in October. The percentage of respondents reporting lower sales on a year-on-year basis in September and August results had been down 11 percentage points from 75.6% in July and down from 73.2% in June who reported lower sales. The June and July results, however, were significantly below the 92.3% of respondents overall who reported sales were lower in May.
Respondents reporting higher sales in January increased to 12.1%, up over 3 percentage points from 8.7% in December, but down from 17.8% in November. The January result was up from 10.5% in October and down from 19.1% of respondents in September. The January result is the fifth lowest result since the major decline in April following the imposition of stay-at-home orders beginning in March.
The January result remains below the 23.6% of respondents who reported higher sales in March.
Those reporting sales were the same in January compared to 2020 totaled18.2% of respondents, down from 23.2% in December but up from the 15.1% in November, 15.8% of respondents in October and from 15.9% in September.
Overall, on a shop size-weighted basis, respondents reported that sales declined 16.7% in January, a further decline of 2.2 percentage points from the 13.5% decline in December compared to 2019. The final result was 8.3 percentage points below the January projection included in last month’s report based upon reports in by mid-month. By comparison, the December result was down 8.8 percentage points from a projected 4.7% decline. The November projection has been 1.6 percentage points higher than the final result.
In October the early month projection was 5.9 percentage points higher than the final result. The September projection was just 1.4 percentage points higher than the actual result and the August projection was 2.1 percentage points higher.
The final January result is an improvement from the 38.4% decline in sales reported by respondents in May compared to the previous year that represents the low point for the industry since the pandemic response started in March.
The average decline in sales in January was 28% a further decline from 26.4% in December, and from the 26.3% average decline in November, the 27.9% average decline in October, and the average decline in September was 26.7%. The January result was better than the average 29.8% decline in August, a 30.8% average decline in July and the 31% average decline in June. The average decline reported in May was 41.9% and there was a 47% decline in April. The median overall decline in January was 30%, up from 25.0% in both the November and October results and from 22.5% in September. The January result was even with the 30% median decline in June through August but down from 40% for May and from 50% for April.
Those collision repair facilities that reported higher sales in January reported an average increase of 8%, down from 15.8% in December, from 10.5% in November and from 15.4% in October. The result is down from the 19.1% in September and below 20.1% in August, 17.7% in July and 16% in June.
The return of winter weather in many markets influenced work levels for repair facilities that reported higher sales in January compared to last year.
The traditional increase in collision repair volume associated with winter weather snow and ice events is being muted this year by the large number of office workers that remain working from home all or part of the week.
As CollisionWeek previously reported, through the week ending February 1, 38.6% of U.S. households reported at least one adult working from home for all or part of the week. A few metropolitan areas were over 50% working from home with the Washington D.C. metropolitan area at 58.2% and Boston at 54.6%.
On days with severe weather predicted, many commuters who have returned to the office can take advantage of the increased ability to work virtually by taking a snow day and staying off the roads.
February Sales Projection
For the seventh month in a row in our research we asked respondents to give us a projection of if they believe their sales would be up or down and by how much for the current month compared to the previous year.
Overall, on a shop-size weighted basis, respondents to the survey conducted February 3-17 for the first time had a decidedly negative view of sales for the month, projecting a decline of 31.6% compared to February 2020, nearly double the reported January decline.
Comments from respondents who projected larger declines cited that the comparison to February 2020, the last month prior to the start of the pandemic in the U.S., was unfavorable and concerns over winter storms in much of the country impacting both repair facility open days and traffic volume.
Prior to February, respondents consistently had a more positive view projecting current month sales compared to last year over the decline reported for the month that had just been completed.
Two-thirds of collision repairers, at 66.7% continued to report lower earnings in January compared to the previous year. This is an improvement compared to 71.0% in December, but a deterioration from 65.3% in November. January was down from 68.4% of respondents in October that reported declines, but up from 64.5% in September and 60.4% in August. The result is a slight improvement from 71.4% who reported declines in July. Fully 67.3% reported lower earnings in June and the record was 77.9% that reported lower earnings in May compared to the previous year. In our quarterly Business Conditions studies that began in 2001, the previous record was 62.5% of repairers overall reporting lower sales in the third quarter of 2009 versus 2008 in the midst of the Great Recession.
Given the concerns about sales and earnings, the employment picture was just slightly better for the month. A smaller percentage of respondents, at 13.7% reported a decrease in the number of employees at their location, down from 20.3% in December and 24.7% in November, 22.7% in October and 28.6% of respondents reporting a decrease in the number of employees in September. The result had been at its lowest point in October since May when business began to recover from the pandemic shutdowns in March and April, so the January result indicates continued progress at recovery.
Those collision repairers that reported an increase in employees, however, decreased to just 0.2% a record low, from 5.8% in December and from 9.6% in November. January’s result is also down from 6.7% in October and 7.9% in September but up from 5.4% in August. In our previous studies, 51.8% of respondents had reported they had laid off employees in March and April.
Several respondents indicated that having cut staff during the pandemic, they increased staff as they traditionally would in preparation for winter, but paused increasing due to the lack of work.
The January result is a net negative 13.5% of respondents indicating higher employment, when shops reporting declines are subtracted from those reporting increases. This is an improvement from the net negative 14.5 in December, the net negative 15.1% in November, the net negative 16% in October, the net negative result of 20.7% in September, the 19.6% net negative result in August and the net negative 21.8% in July.
Looking at unfilled positions, 39.5% of respondents reported having positions that they have been unable to fill for more than one month, up from 36.2% in December and from 37.0% in November, 34.2% in October and from 39.7% in September The January result is above the historical average of 26.1 percent recorded since we began including this question in 2001. The result is down from the fourth quarter of 2019, prior to the impact of the pandemic, when 49.5% of respondents overall indicated they had positions they were not able to fill for more than one month.
Asked if they planned to hire additional technicians in February, 18.9% said yes, down almost seven points from the 25.8% that said yes in January. The February result is also down from 23.2% that said yes in December and from the 20.0% that said yes in November. The February result is also down from the 25% that said yes in October but flat with the 18.9% who planned to hire technicians in September.
Those repair facilities that indicated they planned to layoff technicians totaled 5.6% in February, down from 6.1% in January. Those indicating planning layoffs were just 1.5% in December, down from 5.3% in November, 3.3% in October, and 5.6% in September. Those respondents that said they had no plans to hire or layoff technicians in February totaled 78.6%, up from 68.2% of respondents in January
Collision repairer optimism continued to improve in February but has softened since August as the pandemic drags on.
Asked if business would be better in six months, nearly a half of respondents at 47.9%, said yes, up from 30.4% in January, 17.4% in December and from the 44.7% in November who said yes. The February result, however, was down from 50.1% of respondents who said yes in our October survey. The February result is up from 45.7% in our September study, down from 55.1% in our August study and down from 53.6% in July and the record 64.1% of respondents that said conditions would be better in our June study. The previous record was 47.6% who expected better conditions in our third quarter study in 2003.
Those respondents that said business would be the same in six months declined to 35.4% of respondents, down from 50.7% in January. The February result is down from 40.8% in November, 41.8% in October, 39.1% in September, 35.9% in August, but up from 28.6% in July and from 26.9% that said conditions would be the same in six months in June.
The percent of respondents who said business would be worse in six months decreased for the second month in a row to 16.7% of respondents, down from 18.8% in January and down from the record 53.6% of respondents in December. The result however is up from 14.5% in November, from 8.1% from October, and 15.2% in our September study. The February result is above the average of 14.1% since 2001. The previous record was 35.4% in the first quarter of 2008 in the early stages of the Great Recession.
Those with a negative view of business continued to cite economic and tax policy changes in Washington, D.C. that may slow the recovery from the pandemic driven recession. Concerns that the expanding coronavirus case counts themselves would not be under control in the near term continued to be the next largest factor.
The February result is a net positive 31.3% when those who believe it will be worse are subtracted from those who believe it will be better in six months. The February result continues the dramatic improvements that began in January’s study with a net positive 11.6%.
The December result, as businesses shut down again due to government mandates as the virus surge increased, was a net negative 36.2%, a massive change from the net positive 30.2% in November and the net positive 41% in October and a net positive 30.4% in September.
The declining optimism about business conditions continues to weigh on collision repairers’ views on the opportunity to expand in our most recent study compared last month. Asked if the next three months would be a good time to expand, just 16.7% said yes, up slightly from 15.9% in January that had been the lowest level since June. The February result is also down from 20.1% that said yes in December, from 17.3% in November, 32.3% who said yes in October, 19.6% in September, and from 24.4% who said yes in our August study, 32.1% in July and the 16.9% of respondents who said yes in June. The February result is below the average of 22.1% in our quarterly surveys conducted since 2001.
The February result is a net negative 66.7% a slight improvement from a net negative 68.1% in January, but up from from the net negative 59.8% in December, the net negative 65.3% in November and the net negative 35.5% in October.
Asked if respondents believed the pandemic’s impact on their sales was getting better, the same or worse, just 21.4% indicated it was getting better. Nearly half at 47.6% said the effect was the same and 31.0% said the effect was worse.
Article by: CollisionWeek