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‘Hundreds of firms’ face bodyshop cull

When the chief executive of the largest UK bodyshop group tells you he believes more than 1,000 companies will fail over the next few years, you sit up and take notice. Michael Wilmshurst, the boss of Nationwide Accident Repair Centres, points out that some 200 bodyshops went out of business last year and he can see no reason why that rate should slow down.

“The industry has a lot of emotion but a lack of commercialism and there is a backlog of sites that will reach their end soon,” he says. “Some of this is down to demographics – the age of owners – but there are hundreds of sites that will require huge investment to meet forthcoming legislation and I don’t see much appetite for that.”

Wilmshurst speculates the UK could sustain about 3,500 body-shops (Sewells estimates there are currently 4,799), but does not put the blame on insurers for the industry’s problems.

“There is a lot of criticism of insurers by bodyshops, but they are only doing their job and that’s to manage the supply chain,” he says. “A lot of the problem is to do with cash flow and profits – some people get confused between the two. We are clinically clear about what we make on each account.”

And those profits are not simply down to selecting the contracts with the highest labour rates.

“It’s not really about labour rates, it’s about how the contract is applied. For instance opinion times – it can make a lot of difference to the income if engineers aren’t always reducing the times,” adds Wilmshurst.

Accusations that Nationwide can, because of its sheer size (60 sites and counting), dictate terms of the insurers are dismissed.

Wilmshurst says the group enjoys good relationships with the insurers, which includes discussions and negotiations at the early stage of contract agreements, but that ultimately the insurer controls the deal. “We would pull out of an account if it did not make commercial sense and we do not deal with accident management companies because their rates are not attractive,” he says.

One year ago Wilmshurst – newly installed as chief executive following the management buyout by venture capitalists Guinness Peat and JO Hambro – outlined his plans to AM. Among his objectives was to improve the effectiveness of Nationwide’s relationships with its insurer work providers. Key to this was demonstrating the consistency of every Nationwide bodyshop: each had to conform to the same standards. Without that, the group could not hope to agree national contracts centrally.

“There is now a move in the market towards the benefits of national negotiated deals to help both parties reduce costs and higher proportion of our business is negotiated centrally than ever before rather than on a site-by-site basis,” says Wilmshurst. “Our current preference is for one national rate which we absorb into the volumes. Rate per site adds complexity to the relationship and would need monitoring all the time and we want less day-to-day contact with our work providers.”

Nationwide also enjoys self-approval on estimates with some of its partners, although remains open to audit at any time. It carried out its own audits, measuring each bodyshop on its ability to produce accurate estimates, and repair as stated to high quality and right service levels.

Despite the rigid head office controls, each bodyshop manager has the flexibility to develop their own processes to achieve the standards. “It’s centralised individualism,” says Wilmshurst. “We do not have a big prescriptive rule book.”

Over the past 12 months Nationwide has been piloting a mobile aircon servicing operation, which will be fully launched later this year. Other initiatives are being assessed – including opportunities to work with car manufacturers on a national approved basis – while the wholly-owned accident management company Network Services is also growing. Wilmshurst is searching for a managing director to develop the business further with new insurer and fleet clients. And there’s expansion of the bodyshop network. Wilmshurst expects to purchase seven or eight sites over the next 12 months.

He adds: “There are lots of opportunities for expansion, but first we need to expand the management team so we can fully control growth. We won’t repeat the errors of the past by expanding too quickly for our financial or management structure.”

Unlike some of his peers Wilmshurst does not believe in self-publicity, refusing all requests for photos. “This business is about more than one person and I do not want to be the face of Nationwide,” he says. There’s no doubt though that his business acumen and strong willed, but affable, approach are the reasons why Nationwide is now on a solid financial footing.

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