Pain at the pump and tightness in the economy are exacerbating problems for already-beleaguered auto-repair businesses.

Because the cost of gas is so high, people are driving less than they did before. According to the Federal Highway Administration, Americans drove 12.2 billion fewer miles in June of this year than they did in June of 2007. That's a decline of about 4.7%. 

Fewer miles spent on the road translates into fewer collisions, said Tony Molla, Vice President of Communications for the National Institute for Automotive Service Excellence. And while that's largely a good thing, it's killing auto-body shops nationwide.

“The current downturn in business is unlike anything I’ve ever seen,” said Al Estorga, President and CEO of Estorga's Collision Repair, Inc., in Long Beach, Calif.

As if the high gas prices alone weren't enough, the problem is compounded by the economic difficulties so many Americans are facing right now. 

"Less accidents mean less repairs, and that, coupled with people directing insurance funds to their wallet instead of their local body shop, is resulting in a decline," Molla said. According to Molla, many people actually take insurance money they may get as the result of a wreck and keep it to spend on other things.

Estorga's business is down 35% from where it was this time last year, and things have gotten so bad that he has given a few employees $300 bonuses on their monthly paychecks out of his own pocket to help them take care of their families. 

The problem, Estorga said, is that people aren’t coming in to get small fender-benders repaired. Instead, they're saving their money and getting a repair only when it's absolutely necessary. "Nowadays, we only see cars that are non-drivable or with a door that doesn't open or something."

Scott Biggs, a spokesperson with the Assured Performance Network, an organization for certified auto body shops, blames economic weakness as well.

"Say you've got $2,000 worth of damage, but the insurance company only gives you $1,000. Most people aren't going to take that car in and spend an extra $1,000. They are going to pocket the money, and you'll see them running around with damaged doors, bumpers, etc."

Drivers are also increasing their insurance deductibles in order to reduce their monthly payments, according to Nick Gojmeric, Owner and CEO of Collision Plus Auto Body Repair Centers, based in Belleville, Ill. He said that cutting automobile costs in general has been a trend in the last several years, but increasing deductible costs has been happening a lot more in the past several months.

"We recognize that people are doing this because they have more important things to pay for, like groceries. There is food that has to get on the table, gas that needs to be put in the car, and things in between," Gojmeric said, adding that the last thing on many people’s list is getting a cosmetic repair for the car. 

Many auto-body shops are trying to entice customers with payment plans to pay off their bills over time, instead of in one lump sum, said Gojmeric.

To make matters worse, insurers are having a tough time as well. About 90% of Collision Plus's business is paid for by insurance companies, Gojmeric said. He said the dearth of disposable consumer income and  the lack of insurance-company money is pressuring the auto body industry to cut costs that have to come out of the bottom line.

Collision Plus's business is down about 10% to 15% from this time last year. 

Len Stuart, Owner of AutoBodyStore.com, an online supplier of tools and materials for the auto body industry, said that while 90% of his sales were for luxury restoration jobs two years ago, now only 40% of customers are interested that type of hobby. 
Stuart said that about a year ago, the discussions on his Web site's message boards began to change focus. "I noticed people who were discussing auto restoration shifted their conversations to collision repair. People were no longer doing it for fun, they were doing it out of necessity, and that's the way things still are."

"What we are seeing is an implosion of the collision repair industry. Far too many shops have too little work to keep them surviving, so they are closing up right and left, said Assured Performance Network spokesman Biggs.

But, some auto-body shop owners haven’t noticed any slacking sales. Steve Peek, CEO of Collision Works in Atlanta, said that auto body owners who complain of hard times are simply "whiners."

"There are a lot of people crying about the recession, but it's been going on for years. A lot of shops are dying, but the shops that are surviving are getting bigger and better," Peek said. Though he noted that the number of auto-body shops in the country is down to 43,000 from 50,000 just 10 years ago, he also mentioned that the average shop today makes around $1 million each year -- a figure that's almost twice what it was in 1990, depending on the region.

As for the one thing that might help pull the auto body industry out of its slump: Peek suggested rainy weather. "We like rush hour rains," he noted with a laugh.