The trend for dealerships to invest in their own collision repair shops continues on an upward curve. A good example is One SMG, a mainly regional business, that is significantly scaling up its repair shop footprint. Sam Street reports.
John Zulian and I go way back. I visited his shop in Adelaide on my first ever awards judging tour back in 2015. Now he’s General Manager Bodyshop at One SMG – a forward thinking dealership group with ambitious plans for growth. I talked to chief financial officer (COO & CFO) Linh Bui about the group’s plans for the future and then to Zulian to find out what it’s like working in a dealership environment and what the challenges are for rural repairers.
The group itself was previously known as Smith Motor Company. It was established in 1922 by the Smith brothers, Bert and Mort. Right up to the 1980s it was a single car dealership in Port Adelaide – a South Australian icon.
In 1987 the dealership was taken over by Hans Ehmann, the current owner, and underwent a period of rapid expansion. Since then, the group has diversified into many different businesses. These are mainly regional car dealerships in South Australia, Victoria and NSW including major regional centres such as Broken Hill and Horsham.
The group has 18 different operating businesses, including car dealerships, caravan retailing, crash repairs and fleet management, employing around 300 staff.
Bui says: “One of the many advantages for us as a group is that we can provide a range of opportunities for young apprentices in regional centres, providing them with training, employment and an engaging career while staying in their hometown.
“Our group is quite diversified in terms of employment, both from age, as well as background and gender, so we’re proud of that. We’re very much integrated into our local communities and we support netball, football, cricket clubs and surf lifesaving and all sorts of community events as well. That’s very important to us because a thriving community is good for the region and it’s good for business as well,” he said.
Operating in regional areas is a very different scenario to the big cities and being embedded in the local community is vitally important.
“What we see in the regional centres is that our model is very much about customer service. A lot of our customers live two hours, sometimes four hours away from our dealerships. We’re the regional hub, so they drive in to see our people. At times we deliver. So for us it’s about building trusted relationships and providing quality customer service and the repeat patronage that comes with that, both from a vehicle sale point of view and from a service and parts as well as repeat business.”
The group currently has three bodyshops all in South Australia. “Now we’ve perfected that model for collision shops in our three sites, our idea is to have crash repair co-located or in the same town as each of our dealerships,” Bui said.
“We are also looking to expand our bodyshop footprint throughout SA and into other states. That’s our medium term goal, we’ll be opening dealerships in other states too.”
“It’s a value chain. The crash repair shops buy parts and provide repair services to the dealerships. The dealerships provide mechanical services to crash repair – so it’s a perfect ecosystem,” he said.
I maybe a tad biased, but I believe that One SMG are very lucky to have attracted John Zulian who has a wealth of experience in the industry and retains his passion for all aspects of it. He sold to AMA Group in 2015 and stayed on for the two year ‘earn out’. After a very long holiday (he’d started in the family business at 16 and sold at 50, so he was owed a break) he decided to try something new but couldn’t resist the pull of the industry.
“Yes I got sucked back into the vortex,” Zulian said, starting with One SMG around two and a half years ago.
Zulian is based at the bodyshop in Port Adelaide in the original building that Smith’s was founded in back in 1922, which started out as a wool store in the 1880s. The building has reached the end this incarnation and the group has development plans. The other shops are located in Port Augusta and Clare. You won’t be surprised that Zulian clocked up 46,000kms last year between the businesses.
I ask Zulian how different running bodyshops in a dealer group is to running your own.
“Dealerships are run completely differently. They run on sales of cars, service hours, parts spend or parts supply. They drill down to the ‘nth degree on every one of those departments. That’s easy for service – their services don’t go for more than 30-40 minutes. We’ve got cars that will stay here in Bodyshop for two months, three months even six months depending on parts delays. So we have repair orders open for months and, of course across month end, unlike dealerships,” Zulian said.
“Education has been key for both our bodyshop and management teams on how bodyshops work and why they can’t be measured in monthly cycles. We’re lucky that we have a really good COO/CFO who’s very understanding and open to learning. Obviously we need to work around the groups accounting methods and we have to try and fit our operations in there somehow.
“I’m really excited about the future of One SMG. We’ve got some really talented people in the dealership team and in the collision team. In collision it’s taken a lot of time to build.
We work really hard with local people. It’s important when you’re out in regional locations that you use as much of their local expertise as possible because it’s part of what you do.
“If you’re not part of the local community you won’t get any work, people just won’t use you. So all our shops are all staffed with local people. I’ll be sitting there and somebody will come in, ‘Oh hi, Martha. Hi George – we went to high school together” or “we were in the same basketball team” or ‘our kids play cricket together”. It is so much more family orientated in regional locations.”
The group is fully committed to attracting new, and especially young, talent into all of their businesses.
“We’re experiencing more traction now doing the school-based traineeships than trying to get apprentices. I think if we can get to talk to students early when they are considering leaving school, they’re a bit easier to engage in the opportunities available and teach them the way that we want things done.
“Our school-based traineeships are a blended model, usually they are students from Year 11 or 12 who don’t want to attend school. We’ll encourage them to stay in school for one or two days a week and then the other days a week, they’ll attend work and trade school.
“The trade school modules and the time they spend at work contribute towards their SACE points meaning the will be supported to finish Year 12 and matriculate. If we see potential, then we’ll offer them an apprenticeship and the modules that they’ve done during their traineeship come off of their apprenticeship. So normally they’ll get an apprenticeship knocked over early,” Zulian says.
“Another advantage is that they ease into a full working day. Taking kids out of school when they’re 16 or 17 and they go from 8:30 till 3.30pm with lunch and two recesses and then all of a sudden starting work at 8:00 to 4:30 Monday to Friday with a lunch break – it’s a big step for them. So there is an easier transition from going from school to work and we find it works a lot better.”
By way of support – as part of the group’s apprenticeship program there’s a $2,000 credit for apprentices to spend on good quality tools and PPE. If they finish their apprenticeship they get to keep those tools, a huge headstart on their collison career.
One SMG has harnessed technology to offer better service to their remote customers who don’t really want to drive five hours each way to get a quote.
“Through our estimating program we are able to send them a link on their phone so they can take some guided photos. We’ll write estimates based on those. We’ll get the car assessed, authorised and parts ordered and then get the vehicle in and we’ll start work on it straight away.”
This article was first published in the Nov/December issue of Paint & Panel Magazine