Auto Painter Is Switching Gears To Repair Work.

The major car manufacturers have found ways to improve the paintjobs on their vehicles considerably in recent years, which is welcome news for consumers. It's bad news for Earl Scheib Inc., however. The Beverly Hills-based king of the budget paintjob is expanding into collision work to compensate for slack demand in its core business.

Starting last year with a few isolated markets in Chicago and Denver, the company has been quietly introducing the collision repair services at its 175 shops around the country.

"Our business was founded on the idea of a complete paintjob," said Chris Bement, Scheib's president and chief executive. "But with the quality of the paintjobs coming out of Detroit and Japan, people have no need to have their entire car painted any mores."

Ten years ago, about 30 percent of the cars that got painted by Earl Scheib were six years old or younger, according to Bement, but that has fallen to just 7 percent currently. As a result, revenues have been flat and, for the fiscal year ended April 30, the company reported a net loss of $2.1 million (48 cents per share), compared to a net income of $56,000 (1 cent per share) the previous year.

"Spot jobs have become a larger part of our business," said Bement. "The problem is that, for those, you need to get paint from the Outside, to match the original paintjob, and we no longer have the cost advantage of using our own paint, which we use when we paint the whole car."

To market its collision service, the company plans to use the same strategy that differentiated its paint service -- low prices and fast service. For the next couple months, Earl Scheib will offer repair services (including paint and labor) for an introductory rate of $150 per panel, which elsewhere can easily cost more than $500, according to Bement. The company aims to have a turnaround time of two to three days per job.

The company is targeting drivers with minor collision damage -- the type that is often not covered by insurance because the repair cost does not exceed the deductible.

"This makes a lot of sense," said Andrew Shapiro, president of Lawndale Capital Management LLC in San Francisco, which has a 7 percent equity stake in Earl Scheib. 'That is an underserved marketplace where fast, quality turnaround is of substantial economic benefit to the customer."