Following the announcement on October 22 that Driven Brands acquired CARSTAR Auto Body Repair Experts, Autobody News interviewed two key executives.
Jose Costa, who will be heading up Driven Brands’ Paint & Collision Division, talked about the benefits for shops as a result of the acquisition and what to expect moving forward. The new division is comprised of CARSTAR, Maaco and Drive N Style, a smaller mobile interior company.
Also, read comments from David Byers, CARSTAR’s CEO, about the reaction from employees and the company’s short- and long-term goals.
Q. Congratulations on your new position as the head of Paint & Collision for Driven Brands. What will this division focus on and who will be taking over as Maaco President?
A. Historically, it was just one brand in each category at Driven Brands. Maaco was the only brand in Paint & Collision and Meinke was the only brand in the repair and maintenance environment. With the acquisition of 1-800 Radiator earlier this year, it created the platform for us to focus on areas of specialties.
Now, anything that has to do with repairing the exterior of a vehicle, both cosmetically and collision repair, will be under Paint & Collision. Anything that falls under repair and maintenance will be our second division and anything related to parts will be under the distribution division.
After being promoted to head up the Paint & Collision division for Driven Brands, I will be based in Charlotte, North Carolina where Driven Brands’ headquarters are. Chief Operations Officer Jason Ryan was promoted to president of Maaco.
Q. Will Driven Brands’ employees notice any day-to-day differences?
A. They will see a lot more support and resources. We’re investing significantly back into hiring more people and putting more resources in the field.
For example, making sure shops have the right capabilities when it comes to equipment, facilities, IT and customer service. We want to put more ‘boots on the ground’ around training, operations and sales so the sales team can go out and get more business for the franchise owners.
Maaco will do $500 million in sales and about $80 million will come from the fleet side of the business. On the CARSTAR side, the company will do $700 million and about 90 percent is insurance based.
Q. What are the main benefits for shops?
A. Number one, it’s around profitability and procurement. I think that’s the biggest win for the franchise owner. We bring a lot of expertise in the franchising world. We’re backed by Roarke Capital, which is the largest private equity firm in the world, focusing on franchising.
We’re going to bring very sophisticated procurement to help both companies buy much smarter so our franchises are able to increase their bottom line by a couple of points at least.
I think there are a lot of cost-saving opportunities when you go from 470 to more than 700 body shops. Our purchases doubled almost overnight. Maaco will spend around $42 to $45 million in supplies and with CARSTAR it will be close to $100 million in purchases.
When we talk to suppliers going forward we now have a much bigger platform to leverage cost savings and best practices for both brands.
Q. What are the company’s long-term goals?
A. In the last six months, Maaco added more than 12 people to the business. I foresee with CARSTAR we’ll start investing back within three to six months and we’ll put a lot more resources behind the brand. We see a lot of wide space for both brands to continue to grow. Our dream is to double the size of both brands from a unit count standpoint and from a top line sales standpoint.
We’re very excited. It has been in the works for many months now and we’re very excited to welcome CARSTAR into our family and help them keep growing and become even more profitable.