Another Brick in the Wall

December 04

I was chagrined but not surprised when the news of the sale of the AGR-related assets of Guardian to Safelite was announced on Monday. The inexorable and unchecked expansion of Belron into the American automotive glass market continues. The landscape within the automotive glass industry proceeds to change and in many ways shrinks. One wonders what the industry will evolve to in the next decade or two. However it evolves, it is my guess that Indie shops and distributors will bear the brunt of that change.

It took less than 15 years for Safelite to achieve market supremacy in insurer glass claims and installs. The company has aggressively expanded and modernized all sectors of its operations from manufacturing, distribution, IT to brick and mortar locations that act as a nexus for mobile install vans. The company has no true national competition any more since the number of outlets it owns or controls far exceed anyone else.

Management correctly and aggressively targeted insurers with their Guaranteed Average Invoice pricing and claims management services that virtually guaranteed Safelite a golden funnel of automotive glass’ most profitable market. Until that sector becomes stagnant, one will expect Belron to exploit and concentrate its focus within that sector.

Also, Belron became the “golden goose” to many regional chain owners who were looking to retire or maximize their investments in a recession-burdened economy. In short, “they had the money, honey” and were the only viable shoppers. We’ve heard stories that Belron is not shy about applying hardball tactics against those chain operations they covet but have been spurned from buying.

If one is hoping that the FTC will step in and rein in Belron’s expansion, don’t hold one’s breath. The company’s growth and purchase of regional chains will largely go unrestricted due to the number of “independents” that exist. Most insurers will lobby in favor of this not-so-gentle giant because it provides the kind of services they want. While I would guess that Lynx Services largest claim checks go to Columbus, Ohio, its purchase or acquisition of Lynx’s main client would be the only action that might bring some regulatory oversight of Belron’s march to total domination.

Is having Safelite become the de facto Wal-Mart of automotive glass good for the overall industry in this country?

Some could argue yes. In this writer’s opinion, the greatest weakness AGR suffers from is its “easy entry” and “no repercussion” nature of its participants. Anyone can and does declare themselves installers with injurious results to both cars and clients. Even buying a franchise does not magically make a person a capable technician or knowledgeable enough to hire one. Simply put, there are far too many practitioners of AGR that are professionally inept or lack the conscience or intelligence to become competent.

Safelite does train and provide professional growth to its technicians. Say what you will about their practices, but they appear to be very concerned about professionalism or at least corporate liability. The wire systems whose use is mandated in some removals, along with the ‘banning” of the long knife, are genuine efforts to minimize E coat and collateral paint damage. The mini truck hacks that abound in our trade care virtually nothing about such things. In many ways, you will get a “Mickey D’s” style of install from Safelite; a bland cookie cutter and usually adequate replacement. “Mo betta” than some, less quality than others

I have to grudgingly respect the steamroller technique that Belron has practiced worldwide in promoting its growth. Safelite USA is merely one company that exists under the Belgium-based, but South African-born, AGR conglomerate’s umbrella. The company does not play nice but it does play for keeps. In many ways, it is no longer a true adversary because, due to their economic and political clout, a firm has little chance of directly defying or challenging Belron and winning time after time.

This brings us to the dark side of market control. In many ways, Belron can and does affect AGR worldwide. As a third-party administrator (TPA), how much customer and vendor data is shared and dispersed to further its growth and sales? As competition is eliminated or marginalized whether in the wholesale or installation end, more influence is gained. Take the Guardian purchase. Belron, when we knew them as Solaglas and Windshields America, bought and used Guardian product so they were not strangers to each other. Guardian recently entered the distribution and installation sector with a number of “old hands.” The company was building locations and marketing power slowly but certainly and had national aspirations. Not anymore. One more flank protected and a viable threat absorbed.

With that said: Is being big always better? Are independents doomed? I would resoundingly and emphatically answer No!

The first axiom of success this writer would suggest is contained in the opening line of the child’s doggerel; “Jack be nimble, Jack be quick!” Indies have the capability and resolve to move faster and be far more responsive to client’s needs than Safelite can be in many cases. Within my area of Northern California, one oftentimes hears complaints that it can take three to four days for Safelite to have an opening for service.

Make the consumer aware that you are local, that you care about their issues and that they are not just a claim number. I won’t disagree that some people will believe anything that they see or hear in advertising. However the widespread distrust that exists for many governmental or corporate institutions can easily be brought to bear and be used for one’s benefit.

As owners or techs, you have choices in the way you want to operate. Quality or quantity? Buy cheap, sell cheap? Have pride or be passionless?

One has to have a measure of respect for the largest company in our industry. Yet if one takes a defeatist attitude towards the Big B, you have already lost. There will be countless small battles for clients that Indies will win. We might get lucky legally to have industry stakeholders barred from owning or operating TPAs. From a historical perspective, it is highly unlikely that a single corporate entity will maintain its total dominance in the marketplace for more than a generation or two. Just consider two names; Blackberry and Sears as proof that it is very hard to maintain market supremacy. However, we have to be concerned with the here and now. Give them no quarter because they feel the same way about us.


Posted by on December 4, 2013 in Uncategorized


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5 responses to “Another Brick in the Wall

  1. John R. Allen

    December 4, 2013 at 6:46 pm

    This could be good for the smaller independents, they can get there faster and service the customer in a more timely manner….

  2. Tom

    December 5, 2013 at 1:59 am

    Once again Neal well said, and I am glad to have you our side. Thanks for all you do for us.

  3. x

    December 5, 2013 at 8:08 am

    It seems no one knows the definition of “vertical monopoly”.

  4. Glasseye

    December 6, 2013 at 5:15 am

    I agree with most of the points you have made but you have missed one very fundamental point. That is, who pays the bill?. The insurance companies are the paymasters and yes they do love what Belron bring to the negotiating table but what they don’t like is a monopoly. What is happening in the US happened in the UK years ago but since then, rival organisations have emerged which means that insurance companies can change preferred suppliers literally at the flick of a switch. Business changes and will continue to do so but there is still room for the independents. The keys are flexibility and professionalism.

  5. Allan G.

    December 9, 2013 at 9:15 am

    Unfortunately Neil, in my market (Atlanta) the customer cares not about quality; only price matters. This has been fostered by the “easy entry” and “minis” that you refer to. The first thing myself and my employees do is explain why our install is safer, and that a windshield does more than keep the June bugs out of your teeth. Nine times out of ten, the customer requests that we shut our damn pie hole and just give them the price. This is then followed by the “do you match or beat prices” or “I found it cheaper, ha ha” lines we are all too familiar with.
    I hate to say it, but I really think someone needs to die in my market for people to take notice and expose the “non-professionals” for whom they are. I don’t wish harm upon others really, just it takes a tragedy to wake people up out of this price focused AGR business model and economy.
    Esurance has a commercial ad referring to “Here a Cheep, There a Cheep” regarding the excess of companies pushing price over quality. Same with AGR! We’ve all seen it; “windshields from $99.” Yet how many times do you see an AGR company crowing about quality? “Cheap Price Auto Glass,” “Low Price Windshields,” etc. How many start out life as “Quality Windshield Repair,” “Best Service Auto Glass,” and the like? All we can do as independents is put our best game face on, do our best quality work, educate when we can and sell our expert “service.” Just my opinion; I welcome yours.


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