Boyd Group Services investors were told Wednesday that the number of total loss vehicles coming into its shops hasn’t come down yet because used car prices haven’t increased enough.

“As we’ve said on previous calls, we’re looking for the lines of collision claims and liability claims to start to come closer together again,” said Brian Kaner, Boyd’s president and COO. “We continue to see liability claims that are in a down-2% range, which is fairly reasonable considering the loss ratios but the collision claims have not yet come back to the levels that they had been historically.”

CEO Tim O’Day will retire in May and Kaner will take the helm. Kaner joined Boyd in October 2022 as COO of collision operations.

O’Day reported to investors during the company’s Q4 2024 earnings call that Boyd “consistently posted market share gains in a challenging environment characterized by low claims volumes driven by significant insurance premium inflation and overall economic uncertainty,” plus mild winter weather.

“In spite of these factors in which industry sources reported a year-over-year decrease in repairable claims of 9% for all losses and 7.9% excluding comprehensive claims, Boyd posted year-over-year, same-store sales declines of only 1.8% demonstrating Boyd’s ability to gain market share in this very challenging environment,” he said.

When asked how impending additional tariffs could affect the company, Kaner said as list prices of parts go up, Boyd will see additional same-store sales.

“The inflationary environment will create same-store sales,” he said. “We work on discounts off of list [prices] to drive our gross margin in our business from a parts perspective. The other side of the inflationary, or the tariff environment, what it could do is push new car prices higher, which increases demand for used cars and in turn pushes used car prices up as well, which then pushes total losses down… To us, the tariff environment is neutral to positive from an average ticket and a work perspective.

“The question is what does it do to this whole notion of consumer uncertainty and economic uncertainty? And if we’re thrust into a hyperinflationary environment, does that put further pressure on people’s desires to file insurance claims? …People are looking at the premium increases they have and making decisions to now switch [carriers]. Our hope is that as they make those decisions to switch, they put themselves back in a position where they’re reducing the deductibles that they’ve increased to mitigate the premium increases; they’re putting collision coverage back in place where they may have dropped collision coverage when the premium increases hit.”

Jeff Murray, Boyd’s executive vice president and CFO, agreed, saying that the biggest impact to consider is on the consumer. However, he noted that 90% of Boyd’s business is in the U.S.

“Essentially all of our businesses operate in domestic markets and so the U.S. inputs and outputs are U.S.-based,” he said. “The same thing in Canada — they’re Canadian-based, and so we don’t have a lot of cross-border activity. We’re a service business and a big portion of our input is actually labor, which wouldn’t be subject to tariffs.”

Last month, Abey K. Abraham, Ducker Carlisle principal, told Repairer Driven News tariffs on steel and aluminum imports could increase auto part costs, thus increasing the costs of new vehicles and, ultimately, car insurance.

Regarding labor, Kaner said there continues to be some pricing opportunity that Boyd seeks daily and holds back its labor margins.

“Generally speaking, the inflation on wages has come back to normal levels,” he said. “The availability of technicians in this type of a demand environment is better than it is in a heavy demand environment… The types of things that we saw coming out of the pandemic have kind of eased; although it’s kind of set a new floor for what techs are paid and we’re catching up to that floor.”

According to Murray, operating expenses as a percentage of sales were positively impacted in 2024 by reductions in staffing that were “made to better align with current levels of demand as well as reduce incentive compensation and recruiting costs.”

“These impacts were more than offset by fixed costs on existing and new locations,” he said.

Kaner also shared that the company is working on changing its store staffing model, including right-sizing indirect staff numbers to match the volume of work under Project 360. The project was launched in Q4 and is aimed at company-wide profitability transformation, which is projected to generate $100 million in annual recurring cost savings and enhanced margins over the company’s new five-year plan period.

“There’s opportunities around paint margins and parts margins and increasing labor margins in certain locations,” Kaner said. “And then there’s another fairly sizable bucket around the indirect procurement expenses that we have to operate a business — things like shop supplies and equipment, and those areas are that will take a little bit longer for us to get after.”

Specific to parts use overall, Kaner said he hasn’t seen an increase in aftermarket parts.

“If there are significant tariffs and those tariffs impact the pricing of aftermarket parts in a way that makes the decision between an aftermarket and an OE part closer, would that actually push more OE part usage? I think it is too early to tell,” he said. “For us, what we do know is we’re putting on parts that a carrier is requesting that we put on and are the best part for the job, and we’ll continue to do that.”

Moving forward, Kaner said Boyd will continue to improve gross margins, for example, through internalization of scanning and calibration services.

“The need for scanning and calibration services continues to grow and Boyd’s ability to internalize these services continues to scale,” he said. “Growth through acquisition as well as through startup sites continues. Although startup sites have a longer development site and ramp period, these locations offer a number of advantages and as a result, the company plans to continue increasing the proportion of growth using this approach.”

Twenty-eight greenfield/startup locations are slated to open in 2025, and Boyd plans to match that number in acquisitions.

Images

Featured image: A Gerber Collision shop in Manistee, Michigan. (Repairer Driven News)