As the years go by, David Byers expects more people to notice CARSTAR Auto Body Repair Experts.
It doesn’t matter if you are driving in the Kansas City area where there are 14 CARSTARs or in Seattle or in New York, CARSTAR, with its distinctive name design on the facing of its building, will be prominent.
The company, started by Lirel Holt 26 years ago, was built on a training and education platform to help auto body repair shops get better at what they do, said Byers, who became chief executive officer of CARSTAR in 2011.
CARSTAR now has 430 shops across the United States and Canada and wants to keep growing. It is even entertaining the possibility of expanding into foreign markets.
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“Canada is very similar to the U.S market in terms of the structure of how they operate,” Byers said. “We have to modify our model a bit as we go into other markets around the world. That is always one of the things we are looking at is whether to expand perhaps to Europe or countries like Australia.”
The brainstorming and decision-making process to expand the brand name of CARSTAR is done right here in Kansas City in its corporate office in Leawood..
“Most people don’t know that,” Byers said.. “It is interesting. Every time I tell them they say, ‘I didn’t know you were based here. I didn’t know you were the largest collision repair network in the world.’ We get that quite frequently.
“I think when you think about this industry, there haven’t historically been any big national brands. You don’t think of a Home Depot when you think of our industry. You think of Joe-Bob auto body shop.
“That’s why I think this is interesting and why people are surprised, because as all this consolidation happens, people will start having an awareness of the CARSTAR brand and CARSTAR begins to become synonymous with auto body repair.”
The way CARSTAR brings in locally owned auto body shops into its fold is what intrigued Byers and brought him into the company. In some of his previous jobs, he worked as a chief operating officer for H&R Block, chief executive officer for a Mutual Fund Store based in Overland Park and chief commercial officer for Sirva, a Chicago based global supplier of relocation and moving services operating under the Allied and North American Van Lines brands.
The thing he likes about CARSTAR is it is a conversion franchise.
“Those are interesting to me because a conversion franchise is different from a traditional franchise where you already are running their business,” Byers said. “In this case, they are running their auto body repair shop and they are simply signing up for the franchise.
“No. 2, there is a tremendous amount of private equity money in this industry right now. There is a tremendous amount of consolidation right now, which is fascinating to me.”
Byers compares the auto repair body shop business to what hardware store industry was 30 to 40 years ago when there were locally owned, mom and pop-type hardware stores throughout a city.
“And that’s where you bought your hardware,” Byers said. “Today, there is Lowe’s, Home Depot, Ace and True Value. And those are really the four big brands left in the hardware space.
“We think the same thing is going to happen to this industry. In a number of years from now, you will be left with a small handful of national collision repair brands. It is fascinating for us to be part of that process.”
Currently, Byers figures there are 33,000 independently owned auto repair shops throughout the country. In the 1980s and ’90s, you were likely to go to one of these shops to have a car repaired after an accident.
Over the next decade, Byers contends these independently owned shops will have to make a decision on what direction to go.
“Are they going to go it alone? Are they going to sell to one of the big consolidators? Or are they going to join a network like CARSTAR?” Byers said.
“That is what is fascinating to me in the industry with all the consolidation. Seeing big national brands being created in this market space where you haven’t had national brands exist before.”
Byers said the CARSTAR model works because they bring in the independently owned auto repair shop and those places still maintain the same customer-friendly service that has made the shop successful.
“The big difference is most of our competitors in the industry are company owned stores,” Byers said. “They own all their stores and they have corporate employees. The advantage to an owner-operated network is you are almost always going to get better customer service because they are going to care more about their customers because they own the business.
“It is their store and their profits. They are paying us a monthly royalty fee like any other franchise would pay a royalty fee.”
In exchange for that royalty fee, the auto repair shop is getting exposure to national insurance carriers. In addition, Byers said, they are getting discounts and rebates from all the major suppliers they would purchase from.
They are also getting training and education programs. They are getting operating procedures for their stores. They are getting advice on operational and financial performance and improvement.
Those are some of the reasons independently owned auto repair shops have joined CARSTAR over the years.
The CARSTAR model is working well. It finished 2014 with record North American revenue of $712 million, up nearly 10 percent from $649 million in 2013. The revenue for the first half of 2015 is $386.2 million, which puts it on track to outpace its performance in 2014.
“To me, why I am so passionate about this business is because our owners are so passionate about their business and the industry and that goes back to owner-operators are always going to care more,” Byers said.