3M: “There's considerable private equity coming into the collision-repair market”

Dave Gunderson (President, Automotive Aftermarket Division): I think what's new, or perhaps persistent this year, is a soft market decline, starting from the first half of 2024. Many people felt it was just temporary, but we've seen it continue this year in developed markets, like the United States and Europe. Europe is down in the high single digits as a market, which reinforces two priorities: how does the repairer keeps workshop profitability whilst still hiring and training new people? This enhances the need for digitalisation.

D.G.: Different markets are consolidating at different rates. The US are obviously the leader in consolidation right now with $9 billion of private equity funding in 2024 alone. We're seeing continued consolidation. About 30-35% of the market is served by five top multi-shop owners, so there's been considerable disruption, though it's starting to stabilise. We're now seeing similar factors emerging in Europe.
Jason Eaton (Automotive Aftermarket Division Director, EMEA): It's mainly being led in the Nordics and the UK with groups like Steer Automotive Group. The British body shop market consolidated years ago, but there's been significant consolidation over the last three years among multi-shop owners. But as markets become more challenging, you have to ensure consistency across the entire body shop network. That's where we're being called in to help: driving standard processes and supporting their extension across all shops.
D.G.: When you look at a fragmented market like France, where we're seeing consolidation but where the tide isn't rising as quickly, the pressure on consistency and efficiency is even greater. That's why I keep returning to digitalisation: how do I use available data in shops to understand where I'm spending money, where I have good consistent processes, and where I have opportunities?

D.G.: In developed markets, it's very much the same, even if sustainability is a much stronger driver in Europe than in the US or Latin America. But the need for skills is a global one. I think one primary cause is that people don't understand the body shop business. They see it as dirty and unsophisticated, but it actually offers great careers. There's a lack of awareness about what you can achieve. But the turnover is partly driven by people looking for better financial opportunities elsewhere.

D.G.: For years, the business was consistent: crashes generated consistent workflow. With workflow declining now, you have to work out how to make more money per repair. Meanwhile, consolidation increases competition. Think about the KPIs in the insurance industry. Are you delivering quality? Are you hitting your key-to-key times? All these metrics are being measured, and to really address them, you need to fundamentally understand your business. This isn't an easy industry. Many shops are now competing against top players. They have to understand not just the technical aspects but how everything impacts their productivity and profitability.
J.E.: Previously, many people grew up within the industry. They came off the workshop floor, knew repairs inside out, knew the employees and became shop managers. Now, especially with larger shops, we're seeing the need for people who can run businesses.
D.G.: There are more investors now. There's considerable private equity coming into this market with very high expectations. They're expecting returns. If you're not hitting your goals, the pressure's on. That's another key driver.

D.G.: We introduced Repair Stack three years ago in the United States as an inventory management system. Think of a cabinet in your shop. When you write your repair order, the technician takes materials out and scans them from the cabinet. It creates a consistent bill of materials that integrates directly with your body shop management system. We now have it in close to 5,000 US shops. It does inventory management, billables – helping shops turn costs into profit centres – and performance analytics, so shops can examine their material usage down to technician level. The materials we sell represent less than 2% of repair costs, but we impact 85% of labour in the shop. It’s not just about equipment cost but about equipment effectiveness. Can you train technicians to maximise product use for great workflow? Those who can are the future winners. They truly understand their cost structure. They're leveraging technology to enhance operations, drive profitability, and ultimately ensure high-quality repairs. Because cars are becoming increasingly complex to repair.

D.G.: I use the term MSO – multi-shop owner – all the time, but it's actually becoming multi-service owner, meaning they offer mechanical services, glazing, ADAS calibration. This is growing rapidly in Europe: very large shops integrating with fleets for repair and reconditioning. They're not relying solely on insurance-driven business. When a car comes in, the mindset is: how do I maximise the value I can add before it returns to the customer? The whole market started like this in China. We call them 4S shops: they sell you the car, they maintain it, and if there's a collision, it comes back to them. Same in India.
J.E.: As consolidation increases and we move towards multi-service operators, the range of products consolidated distributors carry is expanding. The requirement then falls to us to ensure we're working with those partners so they have the skills, knowledge and training to bring products to market and to drive end-customer relationships with direct sales teams, always providing support. That's why we're investing in training and technical centres. It's a critical part of our go-to-market strategy.

D.G.: Two years ago, we launched in the US our first, 15,000 square feet Skills Development Centre, in partnership with other industry partners: coatings companies, welding companies. We have more spot welders in the US than any spot-welding company, and we don't sell welders! But it's an important part of the repair process. Especially with aluminium now, there isn't enough training for aluminium welding. We train both technicians and overall processes. It's not product training: it's standard operating procedures, skills development. We're currently building a new facility in the UK: a centre of excellence for the automotive industry, especially larger customers. We're training their trainers, learning from them, sharing knowledge, so they can train others correctly. Shops that are winning now understand they need supplier partners, strategic partners who'll work with them to help them grow.

D.G.: That's where the Skills Development Centre comes in. We're bringing all the suppliers together, focusing on customer needs and how we train technicians and not just technicians, actually. One of our most popular classes now is how to write a quality repair, how to write a quality estimate, ensuring you tick all the boxes required for correct repairs. Because of consolidation, many people running shops in the US had never been in this industry before. They're general managers, they have no idea of what's needed to repair a car. They're just starting to run a business. We're now offering classes on body shop profitability: how do you make money? There's considerable opportunity beyond just technician education.

J. E.: For forward-thinking body shops, absolutely. When you look at contract development with work providers and private equity suppliers, we see very clearly that body shops being considered are incentivised to demonstrate how they're bringing more sustainable methods into their operations. As a company, we've recently launched a calculator allowing us to demonstrate to body shops exactly what the carbon footprint of all our products is.
D.G.: In the past, when demand was high, it was easy for estimators to say require new parts. But with used car prices having come down over recent years, you have higher total-loss percentages. It was fine when you had two to three weeks or a month's demand in your car park. Now you don't have months of demand waiting. So that's a very common dialogue we're having with customers today: how can you repair more, replace less, and keep costs down? Many people want their cars back because having to buy another one is a significant investment. 
Jason Scharton (Global Collision Industry Relations Leader): With the car park ageing and reaching 12 years in France or 15 years in the US, that really plays into our strategy of working with OEMs. We want to ensure vehicles going back on the road are repaired appropriately and safely, so they perform as they did before. But it also informs what we need to develop. Several years ago, we introduced an impact-resistant structural adhesive specifically to address an OEM’s request for an adhesive to repair structure and saving vehicles from total loss. We stay very close to OEMs, informing them not only what can be done in shops so they can write repair procedures using true shop capabilities, but also learning from them for the future.

J. S.: That’s not necessarily new. It's about changes in vehicle construction over time. Vehicles structures have become lighter, so we're using many different materials that aren't as repairable. Twenty-five years ago, we used a high percentage of mild steel: you could take a hammer and heat to reshape it. You can't do that with high-strength steels or many aluminiums now. If we can disassemble a B-pillar and only replace the outer shell using adhesives and rivets, that's now repairable. But if you have to replace the entire B-pillar by cutting it from the car, that generates a total loss. We’re trying to help OEMs enable to repair the new layered structures to avoid scrapping the car. OEMs are excellent at designing and manufacturing vehicles but aren't necessarily repair experts. When we can bring knowledge, it really helps them.
D.G.: OEMs are thinking about total lifecycle costs and sustainability, so they’re focusing much more on repairability, especially with insurance costs rising. They're paying far more attention than previously. The situation isn't new, but the focus on addressing it is.

J. S.: Some do. We're talking about evolution and learning over time. Many Chinese manufacturers are brand new, focused on starting a company and designing successful vehicles. We're seeing more mature Chinese manufacturers now turning their focus to having repair procedures available, certified repair networks, and focusing on these aspects. It's a maturity level: they'll either get there or won't survive.
J.E.: Models lifecycles are getting progressively shorter, though. So we need to work with them to respond faster as things evolve, because what was a model one year might change the next.
D.G.: With some, everything's fast: they're recycling new versions. So from an aftermarket repair perspective, who'll have parts available to fix these cars? Regarding this, I've heard some people have vehicle fleets with damaged or totalled cars. They're not scrapping them but keeping them in lots, using them for parts to keep their fleets running.

D.G.: We have a team working closely with Chinese OEMs. To be honest, it's a hyper-competitive market, with 300 brands. Many upstarts are just trying to get cars out and achieve sales to win in this extremely competitive market. The more mature Chinese OEMs are working to address these issues. The most established one is obviously BYD, and I know they're working hard to ensure good repair procedures and such.

D.G.: Absolutely. We work very closely with certain customers on their apprenticeship schemes. For example, we have a UK office where they send nearly 100 apprentices for innovation training. They use that as progress indicators for apprentices, giving them awards on their advancement. How we invest and support this makes the role more exciting. It's more exciting and ultimately builds brand loyalty. If we teach you how to have a career, we have a relationship with you over time.
J. S.: With WorldSkills, bringing parents into the equation is so important, especially helping them understand this is a career their child can prosper in long-term. You don't just see the competitor and their instructor: you see parents coming in, allowing them to see our perspective and understand this is a really important job their child wants to invest in and learn about. And in which they can earn really good money. That's a message we as an industry must continue getting out.

D.G.: It's hard to say yet, it's evolving. Currently, companies importing goods are bearing the brunt of tariff costs. But those costs are being passed on, raising material costs, which raises total cost of ownership, meaning more cars might be scrapped. So it is impacting total costs. But we're working as fast as we can to minimise costs. At 3M, we have what's called regional source of supply. We've been driving this for 20 years. It wasn't about tariffs, we just wanted fast, flexible supply chains as close to customers as possible. For 3M, US tariffs aren't impacting our business as much as perhaps some competitors or businesses importing many goods. We manufacture the majority of our goods in the United States, Asia and Europe. If we have an issue in a local market and we’re making that product in another market, we can bring it in to ensure we continue supplying customers. But as an overall industry, tariffs are raising prices currently.

D.G.: Oh yes. During COVID, we became much more flexible with dual sourcing materials. It took considerable effort from my development team: they did a fantastic job. But we've seen that calm down as supplies stabilised, enabling us to shift those resources back to the fun stuff, innovation. Finding new raw materials is nowhere near as exciting as developing a new performance spray gun.

J. S.: In Europe, I think the decline has slowed, with differences from country to country. We saw it in the UK, that's definitely better. Not growing, but definitely better. Where markets are soft, our focus is on share and support. That doesn't change.
D.G.: From a global perspective, in developed markets – specifically the US and Europe – there's much discussion around ADAS impact. You could have a market declining 1-3% annually going forward, just in repair numbers. But simultaneously, repair costs and complexity are increasing. I don't look just at claim numbers, I look at claim value and how you participate in that value. So it won't be as much volume, but there's still significant opportunity for this industry. Then there are rapidly growing markets: Asia, India, China. As a global leader, we have to look at the overall picture. I think 2026 will be better than 2025. As the market and volumes came down, many of our industry channel partners had to make their corrections too: it was a double blow this year. But I think people now have their inventory levels where they need to be, aligned with demand. So 2026 should be a much better year.