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Ed Attanasio

Ed Attanasio is an automotive journalist based in San Francisco. Ed enjoys sports of all kinds and is a part time stand-up comedian.

 

He can be reached at era39@aol.com.

Wednesday, 08 April 2020 23:00

CCC Analyst Forecasts Impact of COVID-19 on Collision Repair Industry

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Director/Industry Analyst Susanna Gotsch from CCC Informational Services forecasts a rocky road that will drive up claim and repair cycle times for the rest of the year. Director/Industry Analyst Susanna Gotsch from CCC Informational Services forecasts a rocky road that will drive up claim and repair cycle times for the rest of the year.

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“During the Great Recession that ran from December 2007 to June 2009, total miles driven fell over 3% from its pre-recession peak in November 2007 to its lowest point in February 2010 during the post-recovery,” she said.

 

Logically, fewer drivers mean fewer potential accidents, Gotsch said.

 

“Countries, states and communities worldwide are on lockdown, asking residents to go out only for food and other essential needs. Businesses have begun to close for an unspecified amount of time, and many are having workers work remotely," she said. "This will most certainly lead to significant declines in miles driven, particularly at peak driving times, where congestion has been shown to drive auto accident and claim frequency.

 

“There was a steep decline in the frequency of auto claims during and after the Great Recession,” she said. “The number of claims per 100 insured vehicles for collision and liability coverages combined was 4.79 for the rolling four quarters ending Q1 2008, and fell nearly 12% to 4.22 claims per 100 insured vehicles for the rolling four quarters ending Q3 2008.

 

"Collision claim coverage alone fell nearly 16% from 6.29 claims per 100 insured vehicles for the four quarters ending Q1 2008 to a low of 5.3 claims per 100 insured vehicles for the four quarters ending Q2 2011. Independently, liability claims experienced a nearly 10 percentage decline during that same period.”

 

As more individuals are forced to work from home and discontinue all trips except those to stock up on essential items, it’s clear we can expect miles driven to plummet, and auto claim frequency to follow suit.

 

If we want to get a look at what U.S. auto sales will be doing this summer, China can give you a glimpse into our future. Auto sales in China fell 33% in January 2020, and fell another 79% in February 2020.

 

The car sales numbers in China are significant because they can forecast what is coming next in the U.S.

 

“We will really watch these numbers, because a full recovery later in the year is unlikely,” she said. “Auto sales in China had already fallen over the last two years, and analysts are projecting that sales will be down between 3-5% versus 2019 sales.”

 

In Gotsch’s detailed report, it states in the U.S., analysts are predicting CY 2020 auto sales will fall by as much as 20%, as opposed to previous forecasts of a 1-2% decline for the year. The largest decline in sales are anticipated in March and April.

 

Mid-March, the UAW and the Detroit automakers agreed to shutdowns of plants to stop the spread of COVID-19. Other automakers are continuing to halt production due to the shortage of parts, identification of employees testing positive for COVID-19, as part of broader community/state quarantine efforts or in anticipation of fewer sales in CY 2020.

 

COVID-19 will likely impact parts availability through the summer and possibly longer, Gotsch said.


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