Came across an interesting few pieces of news from Canada regarding the smash repair industry there. Similar sized market, similar geographic spread.
In 2009, company called the Boyd Group had around $200 in annual sales. Now, that's about a quarter of their annual turnover. Five years ago, the major players had less than 10% of the total market, now they have double that at over 20%.
Economies of scale and efficiency come from management purchasing parts and infrastructure in bulk and negotiating discounts from major suppliers. Also back office efficiency in terms of scheduling, payroll management and other administration, allowing owned centers to do more work more quickly - which in turn drives repeat business and better customer reviews as well as the holy grail, more referred work from insurance agencies.
That's compelling from my point of view, and shows that AMA Group may well have the same sort of runway in front of it that Boyd Group had in 2009. Watching how industry dynamics and business cases play out in other countries doesn't mean it will be an exact carbon copy here, but it's good insight to see how it may play out here and a lot of factors are the same.
AMA Price at posting:
67.0¢ Sentiment: Buy Disclosure: Held
