New Boyd CEO faces initial bumpy road in ‘unique’ collision repair market

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This article was published 04/12/2024 (652 days ago), so information in it may no longer be current.

Boyd Group Service Inc. will have a new CEO next spring — and he’s probably hoping market conditions have improved by then.

Following a corporate succession planning process, chief executive Tim O’Day will step down in May after the company’s annual general meeting. He will be replaced by Brian Kaner, currently the collision repair centre company’s president and chief operating officer.

Kaner has been with Boyd since 2022. Before that he was CEO and president of Pep Boys & Icahn Automotive Services, where he oversaw 1,000 company-owned and nearly 800 franchise locations in the United States automotive mechanical repair and tire business.

Like O’Day, Kaner is based in Chicago.

The company operates its non-franchised centres in Canada under the Boyd and Assured Automotive banners and in the U.S. as Gerber Collision & Glass.

Kaner will be involved in preparing the company’s next long-term growth goals likely to be released early in the new year. The company has said it expects to double in size by then end of 2025 (compared to 2020); O’Day said it is on track to achieve that goal.

Kaner will take over amidst a softening in the collision repair market, which industry officials believe is temporary.

The current market challenges are the result of a number of factors, including a 10 per cent drop in insurance claims volumes over the past few quarters.

O’Day said such a drop is unusual and something the market has not experienced since the Great Recession in 2008-09. It has resulted in declining same-store sales growths and declining bottom-line profitability.

For starters, last winter was one of the mildest on record in North America, which meant fewer collisions to repair as a result of snowy weather.

“What is unique about what we have seen over the last three to four quarters has not been driven by just the poor winter weather,” O’Day said in an interview with the Free Press. “There are a number of factors.”

There is also a consumer confidence issue that may be causing people not to file claims maybe they would have previously, he added.

“Another factor is that U.S. car insurance premiums have gone way up … by about 16 per cent,” O’Day said. “That has caused people to be reluctant to file claims, in part because they fear filing a claim may drive the rates up further.”

A third issue that has compounded the insurance issue is used car availability has greatly improved from the high prices and scarcity of inventory during the COVID-19 pandemic.

“The drop in used car prices has resulted in more vehicles not being repaired,” he said. “We went from low levels of vehicles being declared ‘not repairable’ to levels consistent with 2019 and much higher than 2021.”

Zachary Evershed, an analyst with National Bank of Canada Financial Markets, said in a client report in September, despite all the factors the industry has been hit with, issues affecting long-term same-store sales “are not structurally impaired.”

O’Day said the company’s acquisition pipeline remains strong, despite the fact the number of acquisitions in the last quarter was slightly off.

He said that has to do with the fact the locations targeted also likely had reduced sales because of the same factors affecting Boyd’s operations.

Boyd sets its offering price based partly on the last 12 months sales.

“Absolutely we are going to continue to grow and we expect to continue to add stores and grow same store sales,” O’Day said. “Sellers may view current market conditions as temporary — and we wouldn’t necessarily disagree — and decide that they would rather wait.”

martin.cash@freepress.mb.ca