Once considered a key part of dealership operations, the body shop is becoming an endangered species. More than 70% of all new-car dealerships had a body shop in 1974. Today, it's 40%. But there's hope.

The decline isn't because of dwindling business. Collision repairs cost $24 billion-$30 billion a year. Vehicle accidents went from 4.8 million in 2001 to 6.6 million in 2002, according to the latest government data.

Yet just capturing more business won't make body shops attractive profit centers once again.

"Dealers we talk to say, 'We're close. We just need a couple of more cars,'" says John Sweigart, a dealership body shop veteran. "But we see shops doing $5 million in business that are losing money."

Insurance companies control the pricing for most repairs and have transferred much of the administrative burden to the shops.

But dealerships still own the database of customer information. And dealerships can control costs. Waste in the body shop leads to unnecessary costs, says Sweigart.

Eliminate inefficiencies, he says. Areas that quickly become problems are excessive people and down time.

Sweigart and body shop pro Brad Sullivan co-founded The Body Shop@, (www.thebodyshop-at.com) a firm that helps dealers increase profitability in their collision shops by using principles from Toyota Motor Corp.'s lean manufacturing system.

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