Only Time Will Tell: Is Consolidation Coming to New England?
Published in New England Automotive Report – Thomas Greco Publishing
Consolidation is nothing new in the collision repair industry; it first caught repairers’ attention in the late 1990s and early 2000s when Caliber, Gerber and Service King entered the market in California and Texas, purchasing independent shops and converting them to their brands.
But since 2013, “big” has gotten even bigger, spreading all across the country, as increasing technology and the rising cost of doing business make the idea of selling the keys to the shop for a pretty penny more palatable to mom-and-pop operations pursued by the deep-pocketed consolidators and multi-shop operations (MSOs) interested in expanding their footprint.
Over the years, the major players in the market have changed, of course, but they continue to grow – in 2023 alone, consolidators added over 550 locations! – yet, one market that has remained virtually untouched by consolidators is New England. In fact, of the “Big Five” (Caliber Collision, Classic Collision, Crash Champions, Gerber Collision and Joe Hudson’s), only two have ventured into New England at all; Caliber has invested in four Connecticut shops, and Crash Champions has two shops in Connecticut and three in New Hampshire.
Therefore, it’s no surprise that, while auto body professionals around the country express concerns about how major consolidators are assuming too much control and destroying competition within the industry, New Englanders remain nonplussed. Over 60 percent of respondents to the last two New England Automotive Report Industry Surveys reported that MSOs are irrelevant. They indicated that the names are unfamiliar to local vehicle owners and that they aren’t worried about losing clientele to MSOs that may enter the market. Many suggested that consolidators’ expansion efforts prevent them from providing the quality that Massachusetts vehicle owners expect, and one respondent even suggested, “A porterhouse at Applebees will never compare to Del Friscos.”
But one growing consolidator doesn’t seem to be afraid to tackle the New England market, and contrary to what many believe about MSOs, VIVE Collision actually seems to have standards!
VIVE Collision CEO Vartan Jerian spent years growing family-owned H&V Collision to seven locations in New York before selling to Caliber Collision in 2018. He continued his collision career as regional vice president at Caliber until February 2021, leading the consolidator’s expansion into New York before he and two private equity investors founded VIVE Collision with “a vision to disrupt the collision repair industry by forming an organization built on people, process and passion,” according to the company’s website, which professes its mission as “to provide the highest quality, people-first collision repair experience that prioritizes honesty, transparency and reliability for every one of our customers.”
VIVE’s first year of operations included the purchase of a four-shop MSO in Maine, a three-shop MSO in Rhode Island and two independent New York facilities as well as an investment in Acme Automotive (Northampton, MA), which was owned by Don Mucino at the time.
What does the consolidation process look like? Mucino graciously answered some questions about his experience shortly after returning from a trip to Costa Rica, noting, “Now that I don’t have the stress of the day-to-day challenges involved in running a shop, I can do these things.”
Mucino was initially approached in 2018 by a couple of people searching for “high-end, quality shops, but they were just laying the groundwork then. I wasn’t interested because I had a lot of expenses, like putting my kids through college, but when the pandemic hit, I got really sick and shortly after recovering, I received another call from those guys from VIVE. I was pretty active in AASP/MA and read all the industry magazines, so I understood the consolidation concept, even though it hadn’t come to New England yet because we’re such a unique area, especially in regard to our relationship with the insurance industry. I saw the situation in a whole new light; I knew I couldn’t keep working at that same pace, or I’d end up dying in my shop.
“When they offered to buy my business in 2021, it seemed like the best avenue; I was ready to run, and they had cash, which makes a lot of things feel easier,” Mucino added. “I started talking to the leaders at VIVE Collision to learn what their platform would be and get some information down on paper. Jartan is a good guy – he was a shop owner who turned that key every day and interacted with his employees before he sold to a consolidator. He was one of us and seemed to really know what he was doing. I believed in VIVE and what they were trying to do, so I signed on the dotted line and became their first Massachusetts shop.”
Because consolidators are funded by capital venturists, there’s a long list of due diligence requirements that needed to be met, and although it was “definitely challenging, you get through it,” according to Mucino who indicated that, after 35 years in the collision repair industry, the most difficult part of the transition was “letting go of the business to someone you don’t really know all that well. I worried about how they’d treat my employees, who were phenomenal, and my customers. Fortunately, I believe they treat them well, and that’s incredibly important.”
Although he was given the choice of continuing with the company, Mucino opted against it. “I care deeply about the business and my local community, but I needed to flip the switch. It was time to go, so that’s what I did.”
And he has no regrets. “I’m happy I sold to VIVE. They filled an important need for my family and me, and I hope the company continues to do well. I’m not ready to retire yet, so I’m planning to pursue opportunities in other areas; I could never go back into such a heavily regulated industry with such slim profit margins,” Mucino disclosed. “It’s a very difficult industry, and in Massachusetts, shops are so suppressed and controlled by the insurance industry that it makes it even harder. Consolidation makes it a little more palatable because they can buy in bulk, commanding deep discounts from suppliers and manufacturers since they’re purchasing products and materials for 40 shops instead of just one.”
Although Acme Automotive was I-CAR Gold certified and obtained OEM certifications through Assured Performance, Mucino wasn’t seeing the return on investment as an independent shop. “Even if you perform at a high level, you just get an ‘atta boy.’ There’s no real incentive to do better, and it’s incredibly expensive to purchase all the equipment and develop the relationships needed to acquire OEM certifications.”
Consolidators aren’t typically known for high-quality repairs in line with OEM requirements, and that’s one of the things that makes VIVE Collision stand out from other consolidators. “They’re walking into great shops that they can easily convert into OEM-certified shops; Acme Automotive now has at least one certification. Because VIVE has other certified shops, their foot is already in the door. They just need to buy some additional OEM-required equipment, complete OEM training and participate in the audit process. Then they should be able to command a higher labor rate. Once a shop has that OEM certification, they are on a different playing field…it’s the only way to survive and be very profitable.”
Since 2021, VIVE Collision has continued to invest in New England shops, and their footprint now includes three Connecticut facilities, nine shops in Maine, one in New Hampshire, four in Rhode Island and a total of five locations in Massachusetts, in addition to shops in Pennsylvania, New Jersey and New York. And they’re showing no signs of slowing down or stopping. Given their successes, who knows what the future may hold for consolidation in the Northeast market? Only time will tell.
